Two cases of impossibility are provided for by sec. 56:
(i) an agreement to do an act which at the time of the contract is impossible in itself; such an agreement is void ;
(ii) and agreement to do and act which, after the contract is made becomes impossible or(by reason of some event which the promisor could not prevent), unlawful; such an agreement “becomes void”, when it so becomes impossible or unlawful;
(iii) a third rule laid by the sec. is that if, in such cases, the promisor knew or could have known with reasonable diligence that the act was impossible or unlawful, he must compensate the other party for the loss sustained by him through non-performances. Instances of the first case would be an agreement to discover a treasure by magic. “Impossible in itself ” here means, impossible in the nature of things. Hence contracts which are impossible of performance because of non-existence of their subject matter do not fall under this sec, but under sec. 20.
Subsequent impossibility: The second rule deals with cases of subsequent or supervening impossibility. Where a contract, after it is enter into, becomes “impossible” of performance or becomes “unlawful” both parties are discharged from their obligation to perform it, as it thereby “becomes void ”. “Impossibility”, however has here a technical meaning. It may be caused in various ways:
(i) By the specific subject matter of the contract being accidentally destroyed or failing to be produced: e.g. an agreement to let a musical hall for performance which however is subsequently destroyed by fire through an accident; an agreement to ship cargo by a specified ship in a fixed month, the ship suffering such injuries by stranding before the due date of shipment as to be unable to load the cargo. In both the cases, the contract would become void because of supervening impossibility of performance.
(ii) Impossibility may also arise by the reason of the foundation of the contract subsequently ceasing to exist. Thus in Krell v. Henry (1993), 2 K.B. 740, Henry having hired Krell’s rooms to see the coronation procession of King Edward VII pass, was sued by Krell for the balance of the rent due. Held, Henry was not liable, as owing to the King’s sudden illness, no procession had passed and the foundation of the contract therefore had totally failed.