Download Discharge of Contracts: Modes, Impossibility, and Breach and more Summaries Contract Law in PDF only on Docsity! Contract Law By: Syed Aun Abbas Advocate LL.B, LL.M Discharge of Contract 1) Introduction A contract is said to be discharged when the obligations created by it come to an end. In other words discharge of contract means ' termination of the contractual relationship between the parties'. There are various modes of Discharge of Contract, a contract may be discharged either in a positive way (Positive - by performance) or in negative. (Negative - by breach or failure to perform contractual obligation by either of the parties). 2) Discharge of contract - There are various modes of discharge of a contract which are as follows: 1. By performance 2. By agreement or consent 3. By impossibility 4. By lapse of time 5. By operation of law 6. By breach of contract 1. By performance - A contract is said to be discharged if the parties to a contract fulfill their obligations arising under the contract within the time and in the manner prescribed. In such a case, the parties are discharged and the contract comes to an end. Performance of a contract is the most usual mode of its discharge. It may be Actual Performance or attempted Performance (tender) (a) Actual performance: When both the parties perform their promises, the contract is discharged. Performance should be complete, precise and according to the terms of the agreement. Most of the contracts are discharged by the performance in this manner. (b) Tender or Offer of Performance: Tender or offer of performance means "offer made by the promisor to promisee expressing his willingness to perform his part of the obligation under the contract. It is also known as attempted performance. Example- ‘A' offers to sell his house to 'B' for $100000 and 'B' accepts the same letter 'B' paid the amount in full and 'A' handed over the house to 'B'. Here the parties have fulfilled their obligations. The contract is said to be discharged by performance. If only one party performs the promise, he alone is discharged. Such a party gets a right of action against the other party who is guilty of breach of contract. 2. Discharge by agreement or consent: A contract rests on the agreement of the parties. As it is an agreement which binds them, so by their agreement or consent they may be discharged. A contract may be terminated by subsequent agreement. The new agreement may be by way of : a) Novation- Contract Act deals with the doctrine of novation. When a new contract is substituted for an existing one, either between the same parties or between the new parties. If the parties to a contract agreed to substitute a new contract for it or to rescind or alter it, the original contract need not be performed. b) Alteration-. i.e., when one or more of the terms of the contract is/are altered by the mutual consent of the parties to the contract. c) Rescission- i.e., when all or some of the terms of the contract are canceled. d) Remission- Contract Act 1872 speaks about the discharge of a contract by remission. i.e., acceptance of a lesser fulfillment of the promise made. e) Waiver - which means intentional relinquishment or giving up of a right by a party entitled thereto under a contract.
