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    Question

    Under the Contract Act where one party promises to

    perform an act that they knew, or could have known with reasonable diligence, to be impossible or unlawful, while the promisee was unaware of this fact, what is the promisor's obligation if the act is not performed?
    A The promisor has no obligation to compensate the promisee, as the contract is void from the outset Correct Answer Incorrect Answer
    B The promisor must compensate the promisee for any loss sustained due to the non-performance, regardless of the promisor's knowledge of the impossibility or unlawfulness Correct Answer Incorrect Answer
    C The promisor is required to compensate the promisee only if the promisee can prove that the non-performance directly caused them significant financial loss Correct Answer Incorrect Answer
    D The promisor must make compensation to the promisee for any loss sustained due to the non-performance, since the promisor knew or ought to have known about the impossibility or unlawfulness, while the promisee did not Correct Answer Incorrect Answer
    E The promisor is only liable to compensate the promisee if the impossibility or unlawfulness arose after the contract was formed. Correct Answer Incorrect Answer

    Solution

    Section 56.   Agreement to do impossible act: Compensation for loss through non-performance of act known to be impossible or unlawful.—Where one person has promised to do something which he knew, or, with reasonable diligence, might have known, and which the promisee did not know, to be impossible or unlawful, such promisor must make compensation to such promisee for any loss which such promisee sustains through the non-performance of the promise.

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