Discharge of the contract

Discharge of Contract

The cases in which a contract is discharged may be classified as follows:A. By performance or tender.B. By mutual consent.C. By impossibility of performance.D. By operation of law.E. By lapse of time F. By breach of Contract

DISCHARGE OF CONTRACTS

When the contract is performed by both the parties and there notthing remains to do, then it is called discharge by performance

Performance of contract is very common way of discharge. It may be

Actual PerformanceWhen both the parties perform their promises.

Attempted Performance or tenderOnly an offer to perform the obligation under the contract.

A. By performance or tender:

The termination of contract by further agreement or consent.Ways to do so:1.Novation2.Rescission3. Alteration4. Remission 5. Waiver6. Merger

B. Discharge by mutual consent or agreement: 

◦ When a new contract is substituted for an existing one between the same parties

◦ When a new contract is substituted for an existing one between one of the parties and a third party.

◦ Novation should take place before the expiry of the time of the performance of the contract.

Discharge by mutual consent or agreementNovation

◦ Takes place when all or some of the terms of the contract are cancelled.

◦ Could be done by a)mutual consent or b) when one party fails in the performance of contract, the other party could rescind the contract without fear of claim of compensation.

Discharge by mutual consent or agreementRescission 

Discharge by mutual consent or agreementAlteration

Modification of one or more terms of the contract by the mutual consent of the parties.

Discharge by mutual consent or agreementRemission

Remission means acceptance of lesser sum than what is contracted or lesser fulfilment of the promise.

When parties to the contract agree that they shall no longer be bound to the contract 

Discharge by mutual consent or agreementWaiver

RestitutionThe party rescinding a voidable contract shall, restore the benefit ,so far as may be ,to the part if he has received under the contract from him.

MergerMerger of two or more rights into one contract . When an existing inferior right of party merges into a newly acquired superior right by the same party , it is a merger of rights.

(a) Inherent impossibility Known to the partiesUnknown to the parties

(b) Subsequent impossibility

A contracr is discharged by superventing impossiblity in the following cases.

1. When the subject matter of the contract is destroyed 2. death or incapacity of the parties 3. change of law 4. outbreak of war.

C. BY IMPOSSIBILITY OF PERFORMANCE

1. By death2. By insolvency3. By merger4. Rights and liablities becoming vested in the same person.5. material alteration6. loss of evidence of contract

D. BY OPERATION OF LAW

According to law of limitation Act 1963, a contract should be performed with in a specified period

That period is called period of limitation If it is not performed and no action is taken

by the promiseee with in the period of limitation ,he can not take legal action in the court .

In other words , we can say that the contract is terminated.

E. By lapse of time

Where the promisor neither performs his contract nor tender his performances or where the performances is defective , ther eis a breach of contract.

It occurs when a party to the contract does bnot fulfil his contractual obligation or makes it impossible.

Breach of contract may be Actual Breach of Contract Anticipatory Breach of Contract

F. By breach