DISCHARGE OF CONTRACT contract come to an When the rights and obligations arising out of 2 ated. A contract may end, the contract is said to be discharged or termin be discharged in any of the following ways: 1. DISCHARGE BY PERFORMANCE. Performance is the natural mode of discharge. When the parties to a contract perform their the contract is discharged. If only one of the share of the promises. promise, the alone is discharged. several parties performs the Performance may be: a), Actual Performance: When each party to a contract fulfils the ng under the contract according to the terms and obligations arisi alled Actual Performance of the conditions of the contract, it is e contract and the contract comes fo an end. b). Offer of Performance or Tender: When one of the parties to the contract offers to perform the contract but the other party there is offer of performance. It is called EMPTED PERFORMANCE”. It is not a lent to actual performance. In does not accept it. “TENDER” or “ATT actual performance but is equival case of offer of performance the promisor is then excused from performance and is entitled to sue the promisc@ for breach. The ww that the party was ready to perform object of tender is to sho the contract but was prey ented from doing so by the other party. rmance or tender. Essentials of a valid offer of perfo: If the tender is conditional, the It must be unconditional. ation to accept it. per time and proper place. ted for or of the other party is under no oblig: It must be made at pro It must be of the whole quantity contrac whole obligation.If the tender relates to delivery of goods, the promisee must be given opportunity to check that the goods are according to contract. It must be made by a person who is able to perform the promise. If there are several joint promises, a tender to any one of them is valid. In case of tender of money, exact amount should be tende be 2. DISCHARGE BY AGREEMENT. A contract can also discharged by the fresh agreement between the same parties. contract may be terminated by agreement in any of the following ways: it means replacement of an existing contract by tion the parties may change. If the a) Novatio: another contract. In nm parties are not changed then the material terms of the contract must be altered in the new contract because a mere variation is not novation but of some of the terms of a contract alteration. b) Alteration: It takes place when one or more of the terms of the I alteration in a written contract are changed. If a materi contract is made with the consent of all the parties the original jon and a new contract takes contract is discharged by alte place. An alteration may be a change in amount of money, the rate of interest, or the name of the parties. Alteration results in the discharge of the original contract. The difference between “Novation” and “Alteration is that in case of novation there may be a change of parties but in case of alteration parties remain the same and only terms of the contract are changed. @Destruction of Subj ub; i nee eres ject Matter. When the parties make a articul: i ii cy Particular subject matter, the contract is if the subject matter is d i " lestroyed without tl the promisor or promise, : ray Fa i = lure of Ultimate Purpose. Sometimes the contract is ntered into between two parties on the basis of occurrence of a particular state of things. If there is any change in the state of things which formed the basis of the contract, the contract is discharged. , ¥ Death vf Personal Incapacity. Where the performance of a contract depends upon the personal skill, or qualification or the existence of a given person, the contract is discharged on the illness or in capacity or the death of that person. Change of a Law. Contracts, which are lawful when made but become unlawful later due to change in law, become impossible to be performed. A subsequent change in law may render the contract illegal and in such cases the contract is deemed discharged. Impossibility created by law is valid excuse for non performance. Declaration of War. A contract entered into with an alien enemy during war is illegal and void ab-initio. Contract entered into before the commencement of war is suspended during the war. However, such contracts may be revived after the war is over if the nature of the contract permits. 4.DISCYHAGE BY LAPSE OF TIME: A contract is discharged by lapse of time. The LIMITATION ACT, 1908 lays down that a contract should be performed within a specified period. If the contract is not performed and no legal action is taken by the promisee within the period of limitation, he is deprived of his remedy at law. The contract is terminated in such a case.5.DISCHARGE BY OPERATION OF LAW. A contract terminates by operation of law in the following ways. a) Insolvency. Where the court declares a person as insolvent, such person is discharge from his liabilities incurred before his insolvency. b) Merger. it takes lace when an inferior right available to a party merges into a superior right available to the same party under some other contract. As a result of merger the former contract stands discharged automatically. c) Unauthorized Material Alteratio! where a party to the contract makes any material alteration in the contract, without the consent of the other party, the contract can be avoided by the other party. A material alteration is one, which changes the legal identity or character of the contract or the rights and duties of the parties to the contract. 6. DISCHARGE BY BREACH OF CONTRACT. A contract must be performed according to its terms. But where the promisor fails to perform the contract according to the terms of the contract, there is a breach of contract by him. Breach of contract may be of two kinds: a) Actual Breach. It occurs when a party fails to perform a contract, when performance is due. But, if a party, who has failed to perform the contract at the appointed time, subsequently expresses his willingness to perform, he can do so after paying compensation, if time is not essence of contract. b) Anticipatory Breach. It occurs before the time fixed for performance has arrived. It may happen in two ways. Express Breach. In this case a party to the contract communicates to the other party, his intention not to perform the contract, before the due date of performance has arrived. Implied Breach. In this case a party to the contract does an act, which makes the performance of the contract impossible. Effect of an Anticipatory Breach. In anticipatory breach, the promise gets the following rights: The promise is excused from performance.He may treat the contract as i party for ina eee rescinded and sue the other 2 diately. le may i opt ‘ay ignore the conduct of promisor and wait for the of performance and then sue the promisor. REMEDIES FOR BREACH OF CONTRACT. Where a party breaks the contract by refusing to perform his promise, the breach of contract takes place. The following remedies are available to the aggrieved party against the guilty party. 1). Suits for Rescission of the Contract. When one of the parties to a contract commits breach of contract, the other party is released from his obligation under the contract and can file suit for rescission of the contract. 2). Suits for Damages. The aggrieved party may sue for damages as well. The damages are awarded to compensate the injured person. Kinds of Damages: i) Ordinary or General Damages: the injured party can recover from the guilty party damages for loss, which is the direct result of such breach. ii) Special Damages: These arises when a party makes a special contract through which he expects a large profits. Examplary Damages: These are such damages, which are awarded in order to punish the guilty party for the breach and not to compensate injured party. iv) Liquidated Damages: Where a sum has been agreed between the parties then the actual or agreed amount whichever is less would be awarded. vy) Nominal Damages: When the aggrieved party suffers no loss, the court may award him nominal damages in recognition of his right.