Unit – 2

Discharge of Contract
The term discharge of contract means ending of the contractual relationship
between the parties. A contract is said to have been discharged when it
ceases to operate i.e. when the rights and obligations created by the parties
came to an end. A contract can be discharged if the parties mutually agree to
terminate the contract. Also there are different methods through which
contracts can be discharged. In this article, we will discuss the different
methods of disc
Discharge of Contract Method
A contract is said to be discharged using the following methods:
Discharge by Performance
Discharge by Agreement or Consent
Discharge by Impossibility of Performance
Discharge by Lapse of Time
Discharge by Operation of Law
Discharge by Breach of Contract
Let us understand the discharge of contract methods in brief
Discharge by Performance
Performing means doing all those things which are required by a contract.
Discharge of performance occurs when the parties to the contract fulfil their
obligations set out under the contract within the specified time and in the
manner prescribed. In such a case, parties are discharged and contracts come
to an end. But if only one of the parties performs, he alone is discharged. Such
a party gets the right of action against the other party who is guilty. Discharge
of Performance may be:
Actual Performance
Attempted Performance
Actual Performance
When both the parties perform their performance, then the contract is said to
be discharged. Performance should be complete and precise according to the
terms of the agreement. Majority of the contracts are discharged by
performance in this manner.
Attempted Performance
Attempted performance is only an offer to perform the obligation under the
contract. When the promisor agrees to perform the contract but the promisee
refuses to accept the performance, then in such case, it is termed as discharge
of contract by attempted performance or tender.
Discharge by Agreement or Consent
 Novation
The term novation means the substitution of the new contract by the original
one. The new agreement may be with the same parties or with the new
parties. For a contract to be valid and effective, the consent of all the parties
including the new one if any is necessary. Moreover, the second party must be
capable of enforcement of law, the consideration for which is the exchange of
promise not to carry out the original contract.
 Alteration
This refers to change in one or more terms of a contract with the consent of all
the parties entered in the contract. Alteration leads to formation of new
contracts but the parties to it remain the same.
 Remission
This means the acceptance by the promisee of a lesser sum than what was
mentioned in the contract, or a lesser fulfilment of the promise made.
According to the section 63, every promise may:
a. May remit or give up with it
b. Extend the performance time
c. Accept any other satisfaction rather than performance
Recession
The term recession refers to cancellation of all or some of the material terms of
the contract. If the parties entered into the contract, mutually agreed to do so,
then in such case the respective contractual agreement of the parties gets
terminated.
Waiver
The term waiver means abandonment of rights. When one party deliberately
abandons his right under the contract, the other party is released of his
obligations, else binding upon it.
Discharge by Impossibility of Performance
If it is impossible for any of the parties entered in the contract to perform their
obligations, then the impossibility of performance of contract leads to
discharge of contract. If the impossibility of performing the contract exists from
the start, then it is termed as impossibility by ab-initio. However, impossibility
of performing the contract may also arise later due to:
 An unforeseen change in the law
 Destruction of subject-matter of the contract
 Non-existence or Non-occurrence of a particular state of things.
 Outbreak of War
Example:
John enters into the contract with this friend Tom to marry his sister within 6
months. Howbere, John met with an accident and became insane. This
impossibility of performance leads to discharge of contract.
Discharge of Contract by a Lapse of a Time
According to The Limitation Act, 1963, there is a specific time period for the
performance of a contract. If the promisor failed to perform his duties and the
promisee failed to take action within this specified period, then the promisee in
such a case cannot be deprived of his remedy through law. Here, the contract is
said to be discharged due to the lapse of time. For example: John takes a loan
from one of his friends and agrees to pay him installments every month for the
next five years. However, he does not pay even a single installment. His friend
calls him several times but then gets busy and takes no action. After three
years, he approaches the court to help him recover his money. However, the
court rejects his complaint because he has crossed the time-limit of three years
to recover his debts.
Discharge of Contract by Operation of Law
A contract can be discharged by the operation of law in the following
circumstance:
  Unauthorized Material Alteration of Written Document: A party can
discharge the contract i.e from his side if the other party changes the
terms such as price or quantity of contract without taking any permission
from the former.
 By Insolvency
 By Death
Discharge by Breach of Contract
A contract is obliged to perform according to its terms. But when a promisor
fails to perform a contract according to the terms of the contract, then he is
said to have committed a breach of contract. The breach of contract is of two
types
Actual Breach
Anticipated Breach
Actual Breach: Actual breach of contract refers to failure to perform the
obligation when the performance is due. For example, if a seller fails to deliver
the goods by the appointed time, or the goods are delivered but not up to the
mark in terms of quality or quantity specified in the contract.
Anticipatory Breach: Anticipatory Breach, also known as Breach by
Contradiction, takes place when one party before the arrival of the fixed date
for performance states that it cannot or will not able to perform material part
of the contractual obligation on the specified date or it aims to perform the
contract in a way that is inconsistent with the deeds specified in the contract at
the initiation.
Performance of Contract
The performance of a contract is the carrying out of promises made by the
parties. It can be done in several ways, including through action or inaction. For
a contract to be valid, both parties must perform their obligations as laid out in
the contract as agreed. If one party fails to do so, it can lead to disputes and
litigation.
Types of Performance
Three types of performance could occur in your contract: actual, substantial,
and perfect.
Actual Performance: An actual performance is one where both parties have
fulfilled their obligations as set out in the contract. It usually occurs when
goods or services are delivered following the terms agreed upon.
Substantial Performance: A substantial performance is one where only some
of the obligations under a contract have been met. For example, if a contractor
completes most of the work but does not finish, this would be considered a
substantial performance. It is up to the courts to decide whether or not it is
sufficient for one party to receive payment.
Breach of contract: Where the performance by any of the parties is not been
done or the substantial performance is not satisfactory.
Performance of the Contract of Sales
The performance of a contract of sales is the transfer of ownership from the
seller to the buyer. For this to happen, both parties must take action: the seller
must deliver goods or provide services while receiving payment from the buyer.
Performance in service contracts
The performance in service contracts is the completion of work by one party
(the provider) and payment thereof by another party (the recipient). This can
be done through either direct contact between providers/recipients or via
intermediaries such as brokers who match clients with professionals according
to their needs.
Tips for Ensuring Contract Performance
There are several things you can do to ensure that your contract is performed
as expected and avoid disputes down the road:
1. Make sure all parties understand their obligations: This may seem like
common sense, but everyone involved must know what they are
responsible for. If there are any ambiguities, they should be clarified
before signing the contract.
2. Include specific deadlines and milestones: This will help both parties stay
on track and make sure everything is completed on time.
3. Put in place penalties for late or incomplete performance: This will
provide an incentive for both parties to meet their obligations and avoid
costly repercussions.
4. Have a clear dispute resolution process: This will help resolve any
disagreements that may arise in a timely and cost-effective manner.
By following these tips, you can minimize the chances of performance issues
and ensure that your contract is carried out as expected.
Performance of Contract Notes
Contracts are important for businesses and individuals to establish the terms of
an agreement. Contracts must be written effectively so that there is no
confusion or misunderstanding about the agreed-upon terms. A contract must
meet certain requirements to be legally binding. There are several factors to
consider when drafting a contract, including performance, legality, and
jurisdiction. When creating a contract, it is important to remember that the
document needs to be effective. This means that all aspects of the agreement
need to be considered, from performance to jurisdiction. Contracts can have
serious legal consequences if not drafted properly, so it is essential to make
sure everything is in order before signing on the dotted line.
One of the most important aspects of a contract is how it will be enforced. The
performance of the contract needs to be clear and concise, with no room for
misinterpretation. If one party fails to meet its obligations, the other can take
legal action. For this to happen, however, the contract must be legally binding.
It means that it meets certain requirements to be valid in court. Jurisdiction is
another factor when it comes to contracts. It refers to which court has
authority over the agreement if a dispute arises. It is important to choose a
jurisdiction that will be favourable to your case should it go to trial.
Finally, legality is another critical consideration when drafting a contract. Make
sure all parties involved are aware of the laws regarding contracts in their
jurisdiction. It will help prevent disputes from being filed against them later on
down the road, saving both time and money.
Quasi Contract
Quasi contract is another name for a contract implied in law, which acts as a
remedy for a dispute between two parties that don't have a contract. A quasi
contract is a legal obligation—not a traditional contract—which is decided by a
judge for one party to compensate the other. Thus, a quasi-contract is a
retroactive judgment to correct a circumstance in which one party acquires
something at the expense of the other.
These arrangements may be imposed when goods or services are accepted by
a party even though they migt not have been requested. The acceptance then
creates an expectation of payment for the providing party.
Purpose
Quasi contracts outline the obligation of one party to a second when the first
receives a benefit or property from the second. A person might knowingly or
unknowingly give something of value to another without an agreement being
made. It is assumed that a reasonable person would pay for it, give it back, or
otherwise compensate the giver upon receiving the item or service.

Quasi contracts are awarded as a remedy to a giver to keep them from being
taken advantage of and keep others from being unjustly enriched.
Legality
Because the agreement is constructed in a court of law, it is legally enforceable,
so neither party has to agree to it. The purpose of the quasi contract is to
render a fair outcome in a situation where one party has an advantage over
another. The defendant—the party who acquired the property—must pay
restitution to the plaintiff—the wronged party—to cover the value of the item.
Quasi Contract vs. Contract
Quasi Contract Contract
Only Implied in Law Can Be Express or Implied
Ordered by a Judge Initiated by Party Agreement
No Contract Exists A Legal Contract Exists

Quasi Contract
 Only Implied in Law: Implied in law means that a payment obligation is
created by law, in this case, a judge who renders a remedy.
 Ordered by a Judge: Quasi contracts are ordered by a judge because
contracts implied in law are not covered under contract law.
 No Contract Exists: Quasi contracts are not contracts, they are remedies
for disputes between parties that are the result of one party receiving an
unjust enrichment.
Contract
 Can Be Express or Implied: There are generally two types of contracts,
express and implied. An express contract is one where terms are laid out
and both parties agree to abide by the terms. An implied contract is one
where mutual assent is given for an exchange, but there are no explicit
terms.
 Initiated by Party Agreement: The parties involved in an exchange agree
to the exchange.
 A Legal Contract Exists: Express and implied contracts are legally
recognizable and enforceable.
 Types of Quasi Contract
The types of quasi contract are outlined in sections 68 thru 72 of the Contract
Act of 1872, as follows:
 Section 68: A person who is incapable of making contracts is provided
with the supplies by a third party on behalf of the incapable person or
anyone he is legally obligated to support. Third parties can recover the
price of the supplier from the property of the unable person.
 Section 69: A person who makes a payment on behalf of another party
is obligated to pay the money according to law. Therefore, the person
who made the payment is entitled to reimbursement from the other
party.
 Section 70: When a person does something lawfully for another
person, or delivers something without intending to do the same
gratuitously, the receiving party is obliged to compensate the former
party.
 Section 71: A person who finds goods that belong to another party
and takes ownership of them has the same responsibility as a bailee.
 Section 72: Someone who has been paid or delivered under coercion
or mistakenly must repay or return the money.
Salient Facets of Quasi Contractual Rights
1. A quasi-contract is no longer than an actual contract.
2. It is no longer based upon the offer and acceptance rule.
3. It does not occur from any formal agreement but is imposed by means of
law.
4. It is a right that is reachable no longer against the whole world but
against a specific man or woman.
5. It is based on the idea of equity, appropriate conscience, justice, and
ideas of herbal justice.

Quasi Contract Pros and Cons

Pros Cons
Prevents one party from unfairly Not suitable in all cases
benefitting at the expense of another
Court order is legally binding Amount cannot include additional
damages
Example: Peter and Oliver enter a contract under which Peter agrees to deliver
a basket of fruits at Oliver’s residence and Oliver promises to pay Rs 1,500 after
consuming all the fruits. However, Peter erroneously delivers a basket of fruits
at John’s residence instead of Oliver’s. When John gets home he assumes that
the fruit basket is a birthday gift and consumes them. Does John have to pay
for the goods?
Yes, John has to pay for the fruit basket. Although there is no contract between
Peter and John, the Court treats this as a Quasi contract and orders John to
either return the basket of fruits or pay Peter.
Advantages
The principle of unjust enrichment specifically makes for an excellent legal
basis because it relies on creating a fair solution that undoes an injustice.
This makes quasi contracts, by their nature, a legal step towards fixing
something that went wrong.
Quasi contracts are also great for protecting vulnerable and especially innocent
parties.
If a small business owner has their products taken without compensation, they
can rely on quasi contracts to get back the money they need and deserve for
those products.
Also, quasi contracts being created by a court order makes them both legally
binding and less subjective.
This creates a fairer outcome, in principle, which is always a benefit.

Disadvantages
Like all things, quasi contracts are not without their disadvantages.
For one, they put the onus of proving that something unfair happened on the
person to whom it happened.
If you know you’ve had your things taken, and you know who did it, but you
don’t have proof, it can be very difficult to have a quasi contract made to fix the
damages.
Quasi contracts also come with a hard limit on how much the person who was
wronged can be compensated.
They can only recover the value of the goods that were taken from them —
they can’t add costs like legal fees or long-term damages.
Additionally, a quasi contract can’t be negotiated or amended in the way that a
traditional one can.
That means that neither party gets the chance to edit or adjust parts of it to
better suit them once the court has finalized the terms.
For the plaintiff, a quasi-contract also represents a complete nullification of any
benefits, including financial ones, they earned using the obtained goods.
So, they won’t be able to use what they took to continue making money, even
if they were doing so by combining the things they took with their own hard
work.
Remedies for Breach of Contract
When a promise or agreement is broken by any of the parties we call it a
breach of contract. So, when either of the parties does not keep their end of
the agreement or does not fulfil their obligation as per the terms of the
contract, it is a breach of contract. There are a few remedies for breach of
contract available to the wronged party. Let us take a look.
Remedies for Contract Violations
If a promise or Agreement is broken by any parties involved, we call it a Breach
of Contract. Therefore, if one of the parties does not comply with the terms of
the Agreement or does not fulfil its obligations under the terms of the
Contract, that is a Breach of Contract. There are several Remedies for Contract
Breach available from the Victim. Let's take a look.
1] Recession of Contract
When one of the parties to a contract does not fulfil his obligations, then the
other party can rescind the contract and refuse the performance of his
obligations. As per section 65 of the Indian Contract Act, the party that rescinds
the contract must restore any benefits he got under the said agreement. And
section 75 states that the party that rescinds the contract is entitled to receive
damages and/or compensation for such a recession.
2] Sue for Damages
Section 73 clearly states that the party who has suffered, since the other party
has broken promises, can claim compensation for loss or damages caused to
them in the normal course of business. Such damages will not be payable if the
loss is abnormal in nature, i.e. not in the ordinary course of business. There are
two types of damages according to the Act,
Liquidated Damages: Sometimes the parties to a contract will agree to the
amount payable in case of a breach. This is known as liquidated damages.
Unliquidated Damages: Here the amount payable due to the breach of
contract is assessed by the courts or any appropriate authorities.
3] Sue for Specific Performance
This means the party in breach will actually have to carry out his duties
according to the contract. In certain cases, the courts may insist that the party
carry out the agreement. So if any of the parties fails to perform the contract,
the court may order them to do so. This is a decree of specific performance and
is granted instead of damages.
For example, A decided to buy a parcel of land from B. B then refuses to sell.
The courts can order B to perform his duties under the contract and sell the
land to A.
4] Injunction
An injunction is basically like a decree for specific performance but for a
negative contract. An injunction is a court order restraining a person from
doing a particular act. So a court may grant an injunction to stop a party of a
contract from doing something he promised not to do. In a prohibitory
injunction, the court stops the commission of an act and in a mandatory
injunction, it will stop the continuance of an act that is unlawful.
5] Quantum Meruit
Quantum meruit literally translates to “as much is earned”. At times when one
party of the contract is prevented from finishing his performance of the
contract by the other party, he can claim quantum meruit.
So he must be paid a reasonable remuneration for the part of the contract he
has already performed. This could be the remuneration of the services he has
provided or the value of the work he has already done.
6] Contract Reduction
If one of the Contractors does not fulfil his or her obligations, then the other
party may withdraw the Contract and deny the performance of his or her
obligations. In terms of section 65 of the Indian Contract Act, a company that
rescinds a Contract must repay any benefits received under the specified
Agreement. And section 75 states that the entity withdrawing a Contract is
entitled to claim damages and/or compensation for such Recession.

Breach of contract is a legal procedure introduced to protect the rights of the

involved parties. With the increase in technologies, people are using
specialized methods to break contracts. Breach of contract is a legal procedure
and laws of the court should be followed properly.

In case one of the parties is not satisfied with the contract they can break it
within three days. If the contract is broken without any prior information then
the involved parties are eligible to take legal actions. You can contact the legal
professionals so that they can explain the remedies for breach of the contract
properly.