DISCHARGE OF CONTRACTS

Submitted to : Mrs. DHANYA JOHN

(Faculty : Contract Law)

Submitted by : GURIVELLI SISINDRA KUMAR

Submitted on :

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 CERTIFICATE OF DECLARATION
I, GURIVELLI SISINDRA KUMAR, have undergone research of the project work titled
“DISCHARGE OF CONTRACTS”, as a student of Contract Law, hereby declare that- this
Research Project has been prepared by the student for academic purpose only, & is the
outcome of the investigation done by me & also prepared by myself under the supervision of
Mrs. DHANYA JOHN. The views expressed in the report are personal to the student & do
not reflect the views of any authority or any other person, & do not bind the statute in any
manner.

I also declare that this Research Paper or any part, thereof has not been or is not being
submitted elsewhere for the award of any degree or Diploma. This report is the intellectual
property of the on the part of student research work, & the same or any part thereof may not
be used in any manner whatsoever in writing.

Gurivelli Sisindra kumar

2nd semester

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 CERTIFICATE OF ORIGINALITY
This is to certify that Gurivelli Sisindra Kumar, PRN : 2101040501004, student of 2nd
Semester of B.A.LL.B.(Hons.), Sandip university has undergone research of the project work
titled “DISCHARGE OF CONTRACTS”, in partial fulfilment of the subject of Contract
Law. His performance in research work is up to the level.

Place: Nashik Mrs. DHANYA JOHN

(Faculty- Contract Law)

Sandip University

Date:

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 ACKNOWLEDGMENT
At the outset, I would like to express my heartfelt gratitude & thank my teacher, for putting
her trust in me & giving me a project topic such as this & for having the faith in me to
deliver. Ma’am, thank you for an opportunity to help me grow.

My gratitude also goes out to the staff & administration of Sandip university for the
infrastructure in the form of our library & IT Lab that was a source of great help for the
completion of this project.

Gurivelli Sisindra kumar

(Semester Second)

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 LIST OF CASES

• CUTTER VS. POWELL (1795)

• RITCHIE VS. ATKINSON (1808)
• BOLTON VS. MAHEDEVA (1972)
• SUMPTER VS. HEDGES (1898)
• STARTUP VS. MACDONALD (1843)
• HOCHSTER VS. DE LA TOUR (1853)

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 LIST OF ABBREVATIONS

ICA :- Indian Contract Act

& :- And
Vs. :- Versus
AIR :- All India Record
DDA :- Delhi Development Authority
SC :- Supreme Court

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 TABLE OF CONTENTS

1. CHAPTER 1 : INTRODUCTION
2. RESEARCH METHODOLOGY
3. CHAPTER 2 : MEANING OF DISCHARGE OF CONTRACTS
4. CHAPTER 3 : DISCHARGE BY PERFORMANCE
5. CHAPTER 4 : DISCHARGE BY MUTUAL CONSENT
6. CHAPTER 5 : DISCHARGE BY LAPSE OF TIME
7. CHAPTER 6 : DISCHARGE BY OPERATION OF LAW
8. CHAPTER 7 : DISCHARGE BY SUPERVENING IMPOSSIBILITY
9. CHAPTER 8 : BREACH OF CONTRACT
10. CHAPTER 9 : CASE LAWS
11. CONCLUSION
BIBILIOGRAPHY

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 CHAPTER 1 : INTRODUCTION
If we see around the world we can see many contracts around us from buying a pen to selling
a property everything is a contract which means that in our day-to-day lives contracts are
happening everywhere without us even noticing it.

So what is a contract? It’s an agreement, either written or spoken, between two or more parties
that creates a legal obligation.

A contract is an agreement enforceable by law whereas, when two parties agree on common
point with free consent & all the terms & conditions it is known as an agreement. An
agreement can be both written or unwritten. However legal enforceability is necessary for an
agreement to be called a contract.

But in the legal field there are some requirements that need to be fulfilled to consider an
agreement a contract. If the requirements are not fulfilled the contract becomes void or
voidable. But, what if all the requirements are fulfilled but the parties want to end the
contract? Discharge of contract takes place. When both the parties mutually agree to
terminate a contract such contract is said to be discharged.

A discharged contract doesn’t have any legality & is not enforceable by the law But, the
contract can only be discharged under certain circumstances.

RESEARCH METHODOLOGY

PRESPECTIVE OF THE RESEARCH

This research paper deals with the Discharge of contracts & ways a contract can be
discharged in Indian law.

RATIONALE

The rationale behind this research is to understand what discharge of contract means how can
a contract be discharged under ICA 1872

NATURE OF STUDY

The nature of the study in this research is doctrinal & is descriptive & analytical.

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SOURCES OF DATA

The Research paper is primarily based on the ICA 1872 & largely referred from electronic
source and books, case laws, journals, and guided by faculty of Contract law.

REVIEW OF LITERATURE

Contract and specific relief by Avatar Singh1 published by Eastern Book Company (27
February 2021).

This book gave a clear idea about discharge of contacts and helped me in finding facts and
case laws related to the research

The Indian Contract act 1872 by Sir Dinshaw Fardunji mulla2 published by Lexis Nexis First
edition (28 October 2015).

This book helped me in knowing the concepts better and helped me in the research purpose
the author in this book has clearly explained the concepts in simple language.

OBJECTIVES

To understand different ways through which a contract can be discharged or terminated.

LIMITATIONS OF THE STUDY

The limitation of the study “Discharge of contracts” is that the contract can only be
discharged through the ways discussed in the research with various case laws.

CONTRIBUTION OF THE STUDY

The research has helped me to understand and clear my concepts regarding discharge of
contracts. It will help in understanding what are the various methods through which a
contract can be discharged.

1
Avatar Singh, “Contract and Specific relief”, ed. 12th, (Lucknow : Eastern publishing company, 2017), pp.3-9
2
Dinshaw Fardunji Mulla, “The Indian Contract Act 1872” , ed. 16th, (Gurgaon : LexisNexis, 2015), pp. 3-9

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 CHAPTER 2 : MEANING OF DISCHARGE OF CONTRACTS
The discharge of the contract takes place when the obligations of the contract between the
parties of the contract come to an end. This also ends the legal validity of the contract. The
discharge of the contract is also referred to as the termination of the contract. The best way to
discharge a contract is by going in accordance with the terms of the contract until the end of
the contract.

A contract can be discharged if the parties mutually agree to terminate the contract. There are
several ways to discharge contracts which are :

• Discharge by Performance

• Discharge by Mutual Agreement

• Discharge by Lapse of Time

• Discharge by Operation of Law

• Discharge by supervening impossibility

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 CHAPTER 3 : DISCHARGE BY PERFORMANCE
Performance regards to the completion of the deal in accordance with the terms of the
contract. To have a closure of the deal, both parties must live up to the end of their bargain.
The contract remains open until the parties perform correctly under the contract. The
performance can be either actual or attempted.

Actual

Both the parties in a contract must perform, or offer to perform, their promises. Unless The
ICA, 1872 or any other law excuses or dispenses such performance. The representatives of
the promisors are bound by the promises in the case where a promisor dies before
performance unless the contract denotes a contrary intention. This is the actual performance.

Illustration: A promises to deliver the goods to B on a particular day with payment of

Rs.1,000. But A dies before such day. So A’s representatives are to deliver the goods to B, in
turn, B has to pay Rs.1,000 to A’s representatives.

Attempted

Attempted performance is a tender or form which the promisors predict & perform in the
contract. However, an attempted performance should always be:

• Unconditional
• Should be for the complete obligation of the contract
• Formulate at a proper place & time
• A proper person or adequate agent for that person must formulate it

Illustration: The person A contracts to deliver to person B at his warehouse, on a certain

day, a 100 bales of cotton of a certain quality. To make an offer of performance, person A
must take the cotton to B’s warehouse, on that day. The delivered 100 Bales of cotton must
be of said quality for person B to be satisfied to contract.

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 CHAPTER 4 : DISCHARGE BY MUTUAL AGREEMENT
The parties of the contract need not perform if they come into a mutual agreement. This
requires the agreement of substituting with a new contract or altering the existing contract. If
the performance misleads from the terms of the agreement, then there would occur a breach
of the contract.

Illustration: Consider A owes a certain amount of money to B under a contract. A, B & C

agree to the contract that B will henceforth consider C as his debtor & not A as his debtor.
The old debt of A & B comes to an end, & a new contract debt from C to B is initiated.

Novation

At times the payment or performance does not coincide with the terms of the agreement.
Sometimes the debtor will also go into bankruptcy unless there is a reconstruction of the debt.
In such a case, the parties use the novation as it is the only way to pay the funds.

Rescission

It is the cancellation of the contract & unwinding of the transaction. This is to bring the
parties of the contract to the position they were before entering the contract.

Alteration

The modification or alteration of the contract with the consent of the parties. The effect of the
alteration is the formation of a new contract.

Remission

One of the parties allows the other to delay or extend the time of the performance or allows to
remit in part or as a whole. This means the discharge from the due, a release from the penalty,
forfeiture or debt, pardon of transgression, relinquishment of a right, claim or obligation.

Waiver

The waiver refers to a voluntary abandonment or surrender of the rights or privilege of the
contract. The waiver is generally in the form of writing. An example of it is the disclaimer,

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which after its acceptance becomes a waiver. Sometimes the action of a person also acts as a
waiver. The waiver has different other names. They are releases, exculpatory clauses or a
holding of the harmless clauses.

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 CHAPTER 5 : DISCHARGE BY LAPSE OF TIME
There will be a discharge of the contract if the performance is not completed within the given
period. This will likewise lead to the breach of contract. In such a case, the person can file a
suit in the court to enforce his rights from the contract. The person can file in the court in
regard to The Limitation Act, 1963. If the time period expires as stated in the Act, then there
is a discharge of the contract, & the promisee cannot enforce the promisor.

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 CHAPTER 6 : DISCHARGE BY OPERATION OF LAW
3
The provisions of the law do not allow the performance of the contract. This regards to the
changes in the existing laws also. But it does not concern the court order or an agreement.
The following are the situations where the law authorises the termination of the contract:

• Insolvency
• Death
• Alterations in the unauthorised materials
• Merger

Illustration: Michael Jackson had to perform on a world tour. But he was met with an
unfortunate death; this made all his contracts void & null.

3
Avatar Singh, “Contract and Specific relief”, ed. 12th, (Lucknow : Eastern publishing company, 2017), pp.15-
22

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 CHAPTER 7 : DISCHARGE BY SUPERVENING
IMPOSSIBILITY
4
This states the provisions which were possible at the establishment of the contract would
become impossible in the course of time. The following are the impossibilities:

Physical: This regards to the destruction of the subject matter.

Practical: It relates to the death of the incapacity of the party.

Legal: The changes in the law cease the existence of the foundation of the contract.

4
Abanti Bose, All about Discharge of Contract available at <https://blog.ipleaders.in/all-about-discharge-of-a-
contract/> last visited : 19th June 2022.

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 CHAPTER 8 : BREACH OF CONTRACT
If the parties do not abide by the terms of the contract, then there would be a breach of the
contract. In addition to that, the breach of contract occurs when the performance of the
contract cannot be excused by operation of law, tender, impossibility or mutual consent. It is
of two types, namely Anticipatory & Actual.

An anticipatory breach occurs through the anticipation of the parties. The parties might
prepare for such a breach beforehand.

An actual breach occurs where the party commits the breach & refuses to abide by the terms.

In short breach of Contract refers to not abiding the terms and conditions of the contract,
hence it is also way to discharge the contractual relationship.

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 CHAPTER 9 : CASE LAWS

CUTTER Vs. POWELL (1795)5

FACTS

Mr. Cutter, a sailor was hired by one Mr. Powell to sail as a second mate in the said ship
from Kingston, Jamaica to Liverpool, London. Cutter was given a promissory note by his
employer that ten days after the voyage reaches the agreed destination, that is when the ship
reaches Liverpool, he shall receive 30 guineas as a consideration for his services. As agreed
by both the party the voyage which was supposed to be of 10 weeks started, unfortunately,
Mr. Cutter died in the Sixth Week of the voyage & failed to complete his side of the bargain.
Powell refused to pay any consideration to Cutter’s wife based on the belief that the said
contract was an express contract & any delivery of consideration required full performance
& not past performance.

ISSUES

1. Did Mr. Powell owe any wages to Sailor under the Contract Act?

2. Was the deceased’s wife entitled to the sailor’s wages on the principle of Quantum
Meriut?

3. When can a contract be termed as substantially performed?

RULE OF LAW

• The above case was decided in the Court of King’s Bench that was majorly
governed by the common law principles.

• Common law principles of Contract Law were applied acknowledging the

arrangement between the parties to the contract.

• A Common Law Doctrine that “Entire Consideration cannot be apportioned”

5
Cutter vs. Powell (1795) 6 TR 320

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JUDGEMENT

The court stipulated that the agreed terms of the contract were conditional in nature &
absolute in existence. It never specified any remunerations based upon partial performance.
Contract being express in nature was immune from any deliverance of consideration based
on past performance, the court ruled in the favour of the defendant.

The court noted that the full payment after the completion of the voyage was likely to be
insurance for the employer keeping in the mind the hefty amount that was to be received by
the sailor as the consideration for the services rendered by him. Death of the Sailor might
have rendered the performance of the contract impossible but it did not violate the express
terms of the contract which specified payment of consideration only on the full performance
of the Services.

RITCHIE Vs. ATKINSON (1809)6

By contract the claimant agreed to carry a cargo of specified quantity of hemp & iron. The
price agreed was £5 per ton for the hemp & 5 shillings per ton of iron. The claimant only
carried part of the agreed quantity. The defendant argued the contract had not been fully
performed & therefore no payment was due.

Held:
The contract could be divided into separate parts as the parties had agreed a price per ton.
The claimant was thus entitled to payment for the amount carried although the defendant was
entitled to damages for non-performance in relation to the amount not carried.

BOLTON Vs. MAHEDEVA (1972)7

The claimant agreed to decorate & furnish the defendant’s flat for £750 payable by two
instalments & the balance on completion. The claimant completed the work but the defendant
was unsatisfied some of the furnishings & refused to pay the all the final instalment. The cost
of the defects in the furniture came to £56.

6
Ritchie vs. Atkinson (1809) 103 E.R. 877
7
Bolton vs. Mahadeva (1972) 1 WLR 1009

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Held : The claimant had substantially performed the contract & was therefore entitled to the
contractually agreed price minus the cost of the defects.

SUMPTER Vs. HEDGES (1898)8

The claimant agreed to build two houses & stables for the defendant. It was agreed that £565
would be payable on completion. The claimant commenced performance & then ran out of
money & was unable to complete. He had performed just over half of the contract. The
defendant completed the work himself. The claimant sought to recover £333 representing the
value of the work he had completed. He argued that in completing the work himself, the
defendant had thereby accepted partial performance & prevented the claimant from
completing the contract.

Held : The claimant’s action failed. The court held that the defendant had no choice but to
accept partial performance as he was left with a half-completed house on his land.

STARTUP Vs. MACDONALD (1843)9

A contract stated that 10 tons of oil were to be delivered to the defendant within the last 14
days of March. The claimant delivered the oil at 8.30pm Saturday March 31st. The defendant
refused to accept the delivery because of the lateness of the hour.

Held : The claimant had tendered performance within the agreed contractual period & was
thus entitled to damages for non acceptance.

PLANCHE Vs. COLBURN (1831)10

The claimant agreed to write a book on costume & armour for the defendant as part of a
series called ‘the Juvenile Library’. The agreed contract price was £100 to be payable on
completion. The claimant commenced writing & had completed a great deal of it when the
defendant cancelled the series. The defendant refused to pay the claimant despite his
undertaking & the fact that the claimant was still willing to complete. The claimant brought
an action to enforce payment.

8
Sumpter vs. Hedges (1898) 1 QB 673
9
Startup vs. MacDonald (1843) 6 Mann & G 593
10
Planche vs. Colburn (1831) EWHC KB J56

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Held : The claimant was entitled to recover £50 because the defendant had prevented the
performance.

HOCHSTER Vs. DE LA TOUR (1853)11

Applicants for three months from first June 1852 agreed that the defendants Messenger. 11
May in the work on the defendant did not want that rejected his services & wrote the
manuscript for compensation. Scored another service contract by the complainant, but not
until 4 July start. The plaintiff sued for breach of contract on 22 May Employees of the
contract due by 1 Begin in June, when the card is not a breach of contract claims to 22 days

Held : Before the injury occurred in the application until the parties of its intention not to
perform the contract if the innocent party would you mind passing. They shall immediately or
can choose their continued violation of this Agreement to wait.

D.D.A. VS. JOINT ACTION COMMITTEE (AIR 2007)12

Facts of the case: – The appellant, a contracting party, intended to alter or modify the terms
of allotment of flats, it was obligatory on its part to bring the same to the notice of the
allottee. Having not done so, the D.D.A. relying on or based on the purported office orders
which were not backed by any Statute, new terms of the contract could not be thrust upon the
allottees.

SC Held : In this case, the court held that the levy by the D.D.A. of additional amount of
20% and a surcharge of 20% over the ordinary cost of construction by issuing office order
after the allotment of flats was held improper.

AMAR NATH VS. BHARAT HEAVY ELECTRICALS (AIR 1972)13

Facts of the Case: – The appellant did some construction work for the respondent company.
The company made payment to him for the work done by him. The appellant, who was not
satisfied with the amount being paid to him, accepted the payment, by making an
endorsement on the receipt that he was accepting it under protest.

11
Hochster vs. De La Tour (1853) EWHC J72 (QB)
12
DDA vs. Joint action committee (2007)
13
Amar Nath vs. Bharat heavy electrical (1972) All 176

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SC Held : Since the payment was accepted under protest, it was held that the contract was
not discharged.

CONCLUSION

Contracts are an important part of our everyday lives & everywhere we see we can spot
contracts. Thus we can understand that discharge of contract refers to the contractual
relationship coming to an end when the obligations and duties have been fulfilled by the
parties to a contract. In this case, the parties are free from the obligations of the contract.

As mentioned earlier there are various modes of discharging a contract but the best way to do
it is by performing the promise within the stipulated time stated in the contract as the other
modes are quite unpleasant ways to release the parties from duties because it leads to
damages. In short discharge of contracts refers to a situation where there is a need to end a
contractual relationship and its obligations. So if a person intends to get rid of a contract
legally he has to do it through discharging the contract.

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 BIBLIOGRAPHY

BOOKS :-

Contract and specific relief by Avatar Singh published by Eastern Book Company (27
February 2021).

The Indian Contract act 1872 by Sir Dinshaw Fardunji mulla published by Lexis Nexis First
edition (28 October 2015).

WEBLIOGRAPHY : -

https://www.indiafilings.com/learn/discharge-of-
contract/#:~:text=The%20discharge%20of%20the%20contract,the%20termination%20of%20
the%20contract.

https://blog.ipleaders.in/all-about-discharge-of-a-contract/

https://legalpaathshala.com/discharge-of-contract/

https://www.jandkicai.org/pdf/16817Discharge.pdf

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