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Discharge of Contract Full

A contract can be discharged through several methods: 1) Performance or tender of performance - when both parties fulfill their contractual obligations. 2) Mutual agreement or consent - when parties agree to cancel terms, substitute a new contract, or accept partial fulfillment. 3) Impossibility of performance - if an act becomes impossible or unlawful to perform after the contract is formed. 4) Lapse of time - if the contract is not performed within the statute of limitations period. 5) Operation of law - events like death, insolvency, or unauthorized contract alterations can discharge a contract automatically. 6) Breach of contract - if a party fails to meet their obligations, an actual

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Navneet Shrivastava
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1K views14 pages

Discharge of Contract Full

A contract can be discharged through several methods: 1) Performance or tender of performance - when both parties fulfill their contractual obligations. 2) Mutual agreement or consent - when parties agree to cancel terms, substitute a new contract, or accept partial fulfillment. 3) Impossibility of performance - if an act becomes impossible or unlawful to perform after the contract is formed. 4) Lapse of time - if the contract is not performed within the statute of limitations period. 5) Operation of law - events like death, insolvency, or unauthorized contract alterations can discharge a contract automatically. 6) Breach of contract - if a party fails to meet their obligations, an actual

Uploaded by

Navneet Shrivastava
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPT, PDF, TXT or read online on Scribd
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Discharge of contract

• A contract is discharged when rights and


obligations created by it comes to an
end, i.e., contracting parties no more
have any responsibility or liability to each
other.
Discharge of contract
• By performance- actual or attempted
• Mutual agreement
• Impossibility of performance
• Lapse of time
• Operation of law
• Breach of contract
Discharge of Contract by Performance or
Tender
Discharge by performance:
It takes place when the parties to a contract
fulfill their obligations arising under the
contract within the time and the manner
prescribed. The performance may be.
TYPES OF PERFORMENCE
(i) Actual Performance

(ii) Attempted Performance [Tender]

Example: “A” contracts to sell his car to “B” for


Rs. 2,00,000/-, as soon as the car is delivered
to “B” and he pays the agreed price to “A”, the
contract comes to an end by performance.
Discharge by agreement or consent
The contract rests on the agreement of the
parties. The parties may get discharged from
the obligations of performance of contract by
agreement or mutual consent
Discharge by agreement or consent
The discharge by consent may be express or implied.
Discharge by consent –
(a)Novation : When a new contract is substituted for an
existing one , either between the same parties or between
the one of the parties and the third party.
Example: “A” who owes “B” Rs. 2,00,000 enters into an
agreement with him thereby giving “B” a mortgage of his
estate for Rs. 1,50,000. This agreement constitutes a new
contract and terminates the old one.
(b) Rescission: When all or some of the terms of contract are
cancelled.
(c) Alteration : When one or more terms of the contract is/are
altered by the mutual consent of the parties to a contract.
Discharge by agreement or consent
d) Remission: Acceptance of a lesser fulfillment of the promise made
Example: “A” owes “B” Rs. 5,000. “A” pays “B” who accepts, in
satisfaction of the whole debt, Rs. 2,000 paid at the time and place
at which Rs. 5,000 were payable. The whole debt is discharged.
(e) Waiver: Intentional relinquishment or giving up of a right by a
party entitled thereto under a contract.
Example: “A” promises to paint a picture for “B”. “B” afterwards
forbids him to do so. “A” is no longer bound to perform his
promise.
(f) Merger: When an inferior right accruing to a party under a contract
merges in to a superior right accruing to the same party under a
new contract.
Example: “A”, who is holding a certain property on lease, buys it.
His rights as a lessee vanish; they are merged into the rights of
ownership which he has now acquired.
Discharge by impossibility
Impossibility of performance may be-
(1) Initial impossibility
(2)Subsequent impossibility
(3) Supervening impossibility

(1) Initial impossibility:


An agreement to do an impossible act in
itself is void.
Discharge by impossibility
(2) Subsequent Impossibility :
A contract to do an act which , after contract
is made , becomes impossible , or by reason of
some event which the promisor could not
prevent , unlawful , becomes void when the
act becomes impossible or unlawful.
Discharge by impossibility
(3)Supervening impossibility :
Impossibility which arises subsequent to the formation of
contract (which could be performed at the time when the
contract was entered in to) is called supervening
impossibility. The cases covered by of supervening
impossibility include:
(a) Destruction of the subject mater
(b) Non-Existence or non-occurrence of a particular state of
things
(c) Death or incapacity for personal service
(d) Change of law, &
(e) Outbreak of war
The contract is discharged in these cases.
Discharge by lapse of time

If the contract is not performed within the


period of limitation and if no action is taken
by the promisee in a law court, the contract is
discharged.
Discharge of a contract by Operation
of Law
Discharge by operation of law may take place in four
ways:
• By death: Death of the promisor results in termination of
the contract involving personal skill or ability
• By insolvency: The insolvency law provides for discharge
of contracts under certain circumstances ,where an
order of discharge is passed by an insolvency court , the
insolvent stands discharged of all previous debts
previously incurred.
• By merger: When the same parties enter into a new
contract, and a security of a higher degree or a higher
kind is taken, the previous contract merges in the higher
security contract.
CONTD…
• By the unauthorised alteration of terms of a
written document: When any of the parties
alters any of the terms of the contract without
seeking the consent of the other party, the
contract terminates
• Complete loss of evidence : If the evidence
proving the existence of a contract is lost ,it
stands terminated.
Discharge by breach of contract
If a party breaks his obligation which the contract
imposes, there takes place breach of contract.
• Breach of contract may be, (a) Actual or (b)
Anticipatory breach.
(1) Actual breach of contract may occur,
(a) at the time when the performance is due, or
(b) during the performance of the contract.
(2)Anticipatory breach of contract occurs when a
party repudiates his liability or obligation under the
contract before the time for performance arrives.

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