Q. Explain briefly discharge of contract.

CONTRACT [Section 2(h)] – “An Agreement enforceable by law” (Agreement +

Enforceability by law)
S.37 – 39 : Obligations of parties to perform Contracts
S.37 : Who must perform the promise
• The parties to a contract must either perform or offer to perform, their
respective promises, unless such promises are dispensed with or excused by any
provisions of the act or any other law.
• The promises bind the representatives of the promisors in case of death of
promisor before performance, unless a contrary intension appears from the
contract.
E.g.: A promises to deliver goods on certain day on payment for Rs. 10000/-. A
dies before the day of delivery thus the representatives of A are bound to deliver
the goods to B on the day promised for the payment.

S. 38 : Effect of refusal to accept offer of performance

• The promisor must offer to perform his obligations under the contract to the
promisee. This offer of performance is termed as “Tender of Performance”.
• When a promisor has made an offer of performance to the promisee, and the
offer is not accepted, than the promisor will not be held responsible for the non-
performance nor will he lose his rights under the contract.
• The following conditions should be fulfilled in order of valid tender :
 It must be unconditional
 It must be made at proper time and place and under reasonable
circumstances, where there is willingness of the promisors to perform the
promise.
 If the offer is an offer of delivery of anything to the promisee, than the
promisee must have a reasonable opportunity to see the thing delivered is
the thing the promisor had promise to deliver.
E.g.: A promised B to deliver 10kg brown rice of Basmati A+ on 6 th Jan 2023 for
Rs. 10000/- . On delivery the promisee has the right to check that he has been
delivered the same type pf rice of the same brand as promised by A.

S. 39 : Effect of refusal of party to perform promise wholly.

• This section is also known as “ Anticipatory Breach of Contract”
• When a party to a contract has refused to perform, or disabled himself from
performing his promise in its entirety, the promiser may put an end to the
contract, unless he has signified, by words or conduct, his acquiescence in its
continuance"
E.g.: A, a singer, enters into a contract with B, the manager of a theatre, to sing
at his theatre two nights in every week during the next two months, and B
engages to pay her 1000 rupees for each night's performance. On the sixth
night A wilfully absents herself from the theatre. B is at liberty to put an end to
the contract.

S. 56 : Act to be performed becoming impossible or unlawful

• This section is also known as “ Doctrine of Frustration”.
• When an agreement states performance of an act which is impossible or
unlawful, than such promise is not considered and the agreement becomes
void.
Case law : Krell v. Henry (1903)
In this case, Henry agreed to hire the use of Krell’s rooms in London on the days
of 26th and 27th June 1902, for the purpose of seeing the intended coronation
processions.
By reason of the King’s illness no procession took place on either of those days.
It was held that, Krell could not recover the balance of the agreed rent, as the
taking place of the processions “was regarded by both contracting parties as
the foundation of the contract.”
S. 62 : By Novation, Rescission or Alteration of contracts
The parties to a contract agree to substitute a new contract for it, or to rescind
or alter it, the original contract need not be performed.
E.g.: A owes money to B under a contract. It is agreed between A, B and C that
B shall, henceforth, accept C as his debtor instead of A. The old debt of A to B is
at an end, and a new debt from C to B has been contracted.

S.63 : By waiver
Section 63 lays down that, the promises may dispense with or remit
performance of the promise.
Every promisee
• May dispense with or remit, wholly or in part, the performance of the
promise made to him, or
• May extend the time for such performance, or
• May accept instead of it any satisfaction which he thinks fit”.
E.g.: A promises to paint a picture for B. B afterwards, forbids him to do so. A is
no longer bound to perform the promise.
Accord and satisfaction
This part of the Section states that, instead of insisting upon performance, the
promisee accept any other consideration or satisfaction. This provision is based
on the principle of “Accord and Satisfaction.

S.64 : By Rescission of voidable contract

When a person at whose option a contract is voidable, rescinds it, the other
party there to need not perform any promise therein contained in which he is
promisor.
 The party rescinding voidable contract shall, if he has received any benefit
there under from another party to such contract, restore such benefit, so far as
may be, to the person from whom it was received.

S.67 : Refusal or neglect of promisee

If any promises neglects or refuses to afford the promisor reasonable facilities
for the performance of his promise, the promisor is excused by such neglect or
refusal as to any non-performance thereby.
E.g.: A contracts with B to repair B’s house. B neglects or refuses to point out to
A the places in which his house requires repair. A is excused for the non-
performance of the contract, if it is caused by such neglect or refusal.
 Q. What is breach of contract?[Types of damages and
remedies fro breach of contract]
CONTRACT [Section 2(h)] – “An Agreement enforceable by law” (Agreement +
Enforceability by law)
• The law expects parties to a contract to perform their respective obligations,
and naturally frowns upon breach by either party.
• Therefore, as soon as either party commits a breach of the contract, the law
gives to the other, three remedies.
• He may seek to obtain
 Damages for the loss sustained
 A decree for specific performance
 An injuction

Injuction: It is used as a means of enforcing a contract or a promise to

forbear, or it may be the only means of enforcing the specific performance
of a contact where damages are an adequate remedy.

Injuction are of two types :

Temporary: governed by CPC and be issued at any stage of the suit.
Permanent: governed by Specific Relief Act and issued when final order or
decree is passed.

The law relating to damages for breach of Contract can be discussed under four
heads :
(1) S.73 : Rules governing the measure of damages
Compensation for loss or damage caused by breach of contract:
• When a contract has been broken, the party who suffers by such
breach is entitled to receive, from the party which has broken the
contract, compensation for any loss or damage caused to him
thereby, which naturally arose in the usual course of things from
 such breach, or which the parties knew, when they made the
contract, to be likely to result from the breach of it.

• Such compensation is not to be given for any remote and indirect

loss or damage sustained by reason of the breach

• This Section provides for the loss or damage sustained

 which naturally arose in the usual course of things from breach,

 which the parties knew when they made the contract, to be likely to all
from the breach,
 the loss or damage sustained in not too remote

To Compensation for failure to discharge obligation resembling those created

by contract:
• When an obligation resembling those created by contract has been
incurred and has not been charged, and person injured by the failure
to discharge it, is entitled to receive the same Compensation from
the party in default, as if such person had contracted to discharge it
and had broken the contract.

Explanation : In estimating the loss or damage arising from a breach of

contract, the means which is existed of remedying the inconvenience caused
by the non performance of the contract, must be taken into account.

(2) S. 74 : Compensation for breach of contract where penalty stipulated for:

• When a contract has been broken, if sum is named in the contract as

the amount to be paid in case of such breach, or if the contact
contains any other stipulation by way of penalty, the party
complaining the breach is entitled whether or not actual damage or
 loss is moved to have been caused thereby, to receive from the party
who has broken the contract reasonable compensation not
exceeding the amount so named or, as the case may be, the penalty
stipulated for.
Explanation: A stipulation for increased interest from the date of
default may be a stipulation by way of penalty.
E.g.: A contract with B that, if A practises as a surgeon within
Calcutta, he will pay B Rs.50,000/-. A practices as a surgeon in
Calcutta. B is entitled to such compensation, not exceeding
Rs.5,000/-, as the Court considers reasonable.

(3) S.75 : Party rightfully rescinding contract entitled to compensation

A person who rightfully rescinds the contract is entitled to compensation

for any damage which he has sustained from the non fulfilment of the
contract.

E.g.: A, a singer, contracts with B, the manager of a theatre, to sing at his

theatre for two nights in every weak during the next two months, and B
engages to pay her 1,000 rupees, for each night's performance.
On the sixth night, A was wilfully absents herself from the theatre, and B. in
consequence, rescinds the contract. B is entitled to claim compensation for
the damage which he has sustained through the non fulfilment of the
contract.

(4) Quantum Meruit

 The term means ‘as much as earned’ or ‘as much as merited’ or ‘as
much as done'.
 In case of any contract, whenever no expressed promise is made to pay
the remuneration, or when the contract as a whole is not performed by
 the other party, or it is declared void, than the person may claim the
remuneration for what he has done on basis of quantum meruit.
 The service must be rendered by him on request of other party.

E.g.: A leaves certain goods with B by mistake, if B enjoys the goods than
B must make compensation for the use and enjoyment of the said
goods.

Claims of Quantum Meruit

 A claim of quantum meruit arises when one party who has performed
the part of his contract and who is prevented by the other party from
completing the remaining part of his contract. Such person who is
aggrieved can sue on the basis of "Quantum Meruit" for the value of
what be has done.

 When one party abandons or refuses to perform the contract

 When a work has been done or accepted under void contract.

 As contract is not performed fully, a party in default may also sue on the
basis of “quantum meruit for whatever he has done under a contract of
the party who has received any benefit from that work when the
contract is divisible

 Where a lump sum is promised to be paid on the completion of the

contract but if the contract is performed badly, the person performing
the contract is entitled to receive the whole sum less deduction for his
bad work

 When a person enjoys any benefit on non-gratuitous act, he must make

compensation for that act to another.