DISCHARGE BY

AGREEMENT
 Parties can agree to discharge their contract so that one or
both parties are released from their obligations.

Eodem modo quo, oriter eodem modo dissolvitur

 Parties can reach an agreement to terminate the original

contract or modify it.

 Like any other contract, a discharge agreement must contain

the elements of a valid contract- Offer, acceptance,
Consideration/be under seal.
Discharge by Agreements can be in the form
of:

 Rescission,
 Variation,
 Waiver,
 Accord and satisfaction,
 Substitution/Novation
 RESCISSION
 A Rescission Agreement is an agreement entered into
by the parties of an original contract to terminate the
original contract and bring the parties back to the
status quo ante.

 Rescission agreement differs from the rescission that

arises from mistake and misrepresentation

 For Recission to be valid, there must be Mutual

Consent- Offer, acceptance, consideration.

 The effect is that Parties are returned to their original

position - money paid and property exchanged are also
returned
A rescission agreements can be a simple contract or a contract under deed
Contracts Common law Equity

Contracts Under rescinded by a Deed rescinded by a Simple

Seal Contract
West v Blakeway (1841) 2
Man. & G, 729 Berry V. Berry (1929) 2
K.B. 316
R.C.C. v Edomwonyi
(2003) 4 NWLR (Pt. 811)
513.

Written Contracts Can be rescinded by a

simple contract

R.C.C. (Nig.) Ltd. v.

Edomwonyi [2003] 4
NWLR (Pt.811)513
Contracts Required Can only be rescinded
to be in Writing by a written contract

UAC v John Argo (1929)

2 KB 316
 Variation of contract is an agreement by the parties to
alter or modify the terms of the original contract by the
parties. Abdurrauf Bala Rabiu V. Auwalu Ahmad Zara
(2018) LPELR-46556(CA)

For a variation to be upheld,

 there must be a valid and subsisting contract;
 Mutual consent

Idufueko v. PFizer Products Ltd and Anor (2014) LPELR

22999 (SC);
Unity Bank Plc v Olubiyi (2015) NWLR (pt 7452) 203 at
242
Enterprises Ltd v. Saeby Jerntobery of Maskinfabric
(1992) 4 NWLR (pt. 235) 361,
 The common law rule cannot be varied or modified by
an oral contract- Parol Evidence Rule.
West v. Blakeway (1841) 2 Man. & G. 729)
UAC v John Argo (1929) 2 KB 316

 However, equity holds a contrary view.

 It permits an oral agreement to vary or modify an
agreement in writing or an agreement required by law
to be in writing.
Ekwunife v Wayne (W/A) Ltd (1989) 4 NWLR (Pt 122)
422
 Section 131 (1) (b)(c)(d) of the Evidence Act modifies
the common law position and supports the position of
equity

 By providing one of the exceptional circumstance

where the parol evidence rule does not apply. It
provides that oral evidence outside the written
contract can be admitted to prove the existence of any
distinct subsequent oral agreement which rescinds or
modifies any such contract.

 Mbonu v Nwoti (1991) NWLR (Pt 206) 737

• Accord & Satisfaction is a discharge agreement where a new contract replaces the
original one and the parties agree to give and take something different from that
which was originally agreed upon.

 For instance, Savannah Sugar Company Limited V. Wabbey Farms

Limited (2013) LPELR-22129

For this agreement to be operational and enforceable, there has to be:

 ‘Accord’ – true agreement to discharge a party from performing his
obligation. Offer and acceptance.
Alhaji Sanusi Dere v Pacific Insurance Co. Ltd
 ‘Satisfaction’ is the ‘extra’ consideration.

See also Shell Petroleum Development Company v FBIR (1996) 8 NWLR

(pt 466) 256
 A contract may be discharged by waiver where a party by words
or conduct leads the other party to believe that he gives up
some of his legal rights in the contract. In such an instance, he is
estopped from insisting on the strict enforcement of his legal
rights. It is a doctrine that rests on equitable principles

 Waiver does not require consideration to be valid since like

promissory estoppel it is not being used as a cause of action but
as a defence for an action in breach of contract.

Mbeledogu v Aneto (1996) 2 NWLR (Pt. 429)157

N.B.C.I v Integrated Gas (Nig) Ltd (2005) 4 NWLR (Pt 916) 617
United Calabar & Co v Elder Dempster Lines Ltd (1972) All
NLR 681
 NOVATION
 In N.N.P.C. v. Klifco (Nig.) Ltd. (2011) 10 NWLR (Pt 1255) 219 the
Supreme Court described novation as the substitution of a new
contract for an existing one between the same or different parties. It
is done by mutual agreement. It is never presumed. The requisites for
novation are: a previous valid obligation, an agreement of all the
parties to a new contract, the extinguishment of the old obligation and
the validity of the new one.

 The novation agreement may aim to substitute the subject matter of

he contract, parties to the contract or simply the terms of the original
contract.
A.C.B. Ltd. v. Ajugwo (2012) 6 NWLR (Pt 1295) 97

 The new contract could be oral or in writing even where the original
contract was a contract required by law to be in writing.
 As with variation of contract, for Novation in contract to be effective,
there must be a valid subsisting contract;
 there must be mutuality of agreement of all parties as to the
obligations which are to be altered, being an entirely a new contract.

 In addition, it must be supported by consideration.

See GROVER VS INTERNATIONAL TEXTILE IND.
UNITY BANK PLC VS OLATUNJI (2014) LPELR.

 See ONEGBEDAN VS UNITY BANK PLC