Name: Usman Ali Khan

Roll No: SP21-BBA-011

Semester: BBA-6
Assignment no: 3
Submitted to: Sir Minhas Sadiq
Question:
How a contract can be discharged explained with scenarios and example?
Answer:
Discharge of contract:
when the right and obligation arising out of a contract come to an end the
contract is said to be discharged .A contract may be discharged in any of following
mode.
1. Discharged by performance
2.Discharged by agreement
3.Subsequent illegality
4.Lapse of time
5.Operation of law
6.Breach of contract
Discharged by performance:
when the parties to a contract perform their obligation the contract is discharged
by performance.
for example:
A agrees to sell his car to B for Rs 6lacs. A delivers car to B and B make the
payment. This is known as contract discharged by performance.
Discharged by agreement:
A contract can be discharged in the following ways
Novation
Alteration
Rescission
Remission
Waiver
Novation :
Novation means replacement of an existing contract by a new cntract. The new
contract between the same parties r new parties.
example:
A owned to B an B to C . A debt to B is cancelled and C accept A as his debter.it is
novation.
Alteration:
Alteration of a contract take place when more or more term of contract is
changed.
example:
A agree to supply salt to B on 1st feb .later A and B agree to change the date of
delivery to 1st march. It is alteration of cntract.
Rescission:
The rescission means cancellation of contract by mutual consent.The cancellation
of agreement release the parties from their obligation sec 62.
example:
A promise to B to deliver package to B on a certain date. Before date of
performance A and B agree that the contract will not be performed the contract is
rescission.
Remission:
Remission means acceptance of lesser fulfilment of promise that was made.it is
an act of promisee discharging the obligation of another either wholly or partly.
example:
A owes B RS.50k B agrees to accept RS.20k in full satisfaction of his claim.The
whole debt is discharged.
Waiver:
waiver means the international abandonment of a right which a person is entitled
to under the act. When party waives his right under the contract the ther party is
released from the obligation.
example:
A promise to make a shirt for B and B afterward forbid him to do so. The contract
is terminated by waiver.
Discharged by sybsequent impossibility:
A contract capable to be performed after formation become immposible or illegal
and contract become void it means subsequent illegality make contract void and
contract will be discharged.
example:
A agrees to sell 100 bags of rice to B. Before delivery goverment banned private
trade in rice. The contract becomes void and discharged.
Discharged by lapse of time :
The limitation act 1908 state that in case of breach of cntract legal action should
be taken within a specified period of limitation he is debarred frm enforcing the
contract.lapse of time terminate the contract. the period of limitation f simple
contract is 3 years if 3 years expired and creditor failed to file a suit to recover
their amount the debtor is discharged from his liabilities.
example:
A owed Rs.2000 to B the last date of payment of loan is expired but B did not sue
A until 3 years. B lost the right to recover.
Discharged by operation of law:
A contract by operation of law in following case
Insolvency
Merger
Material alteration
Insolvency:
Where the court declared a person as insolvent the right and duties of such
person are transferred to official reciever. After order of court such persn is
discharged from his liabilities.
example:
A promises to sell his car to B for Rs 20 lac before performance A is declared
insolvent by court contract is discharged.
Merger:
Merger take place when an inferior right available to a party merger into superior
right available to same party under contract.
example:
Where a part time lecturer is made full time lecturer the contract of part time
lecturer is discharged by merger.
Material alteration:
Material alteration means changed which effect the right liabilities and legal
position of the parties to a contract. If the contract is cntained in a written
document and one party alter its material particulars without consent of other
party the contract is discharged.
example:
A executes a pro note in favour of B for Rs 300. B exceeds the amount from Rs
300 to 3000 by alteration. A may refuse to pay Rs 300.
Discharged by breach of contract:
The breach of contract means the failure of parties to perform their obligation.
When party fails to perform the contract there is breach of contract.
example:
A agrees to deliver 5 bags of wheat . He does not deliver the wheat on that day
this is called the breach of contract.