CA Foundation Business Law Practice Exam 2026 – Complete Prep Guide

Known impossibility in contract law refers specifically to situations where the parties to a contract are aware of the impossibility at the time the contract is formed. This means that both parties understand that the contract cannot be fulfilled as agreed because of certain known factors. When parties enter into a contract with an understanding that the performance is impossible due to an existing condition, the contract is typically considered voidable or unenforceable.

In many legal systems, contracts that are formed under known impossibility may not carry the same legal weight because the very foundation of an enforceable contract requires that the parties have a realistic ability to perform their obligations. Thus, if there is a conscious acknowledgment of impossibility at the time of formation, it undermines the validity of the agreement.

In contrast, the other conditions presented in the options imply situations where the parties were either unaware of the impossibility or where the impossibility arose after the formation of the contract, which do not fall under the definition of known impossibility.