You are on page 1of 21

Presented To: Mr.

Asghar Ali
Presented By: Wajid Ali 3335

Discharge of contract
A contract is said to be discharged when the rights and obligation created by it come to end. The contract act 1872 provides various ways in which a contract may be discharge or terminated.

Modes of discharge of contract


1- Discharge by Performance: A contract can be discharged by performance in any of the following ways: (a) By Actual Performance: A contract is said to be discharged by actual performance when the parties to the contract perform their promises in accordance with the terms of the contract. (b) By Attempted Performance or Tender: A contract is said to be discharged by attempted performance when the promisor has made an offer of performance to the promisee but it has not been accepted by the promisee.

2- By agreement: A contract can also be discharged by the fresh agreement between the parties. Following are different ways to discharge a contract by agreement. (I) Novation: When the parties to the contract agree to substitute a new contract for a contract, that is called Novation. Kinds of Novation: (a) A Novation involving the change of parties. (b) A Novation involving substitution of a new contract in the place of old contract.

(ii) Rescission: When all or some of the terms of contract are cancelled the contract is said to be rescind. Rescission may occur. (a) By mutual consent of the parties. (b) When a party fails to perform his contractual obligation, the other party may rescind the contract.
(iii) Alteration: When one or more of the contract is altered by actual consent of the parties, the contract is said to be altered. (iv) Release of waiver: Waiver means the intentional abandonment of a right, which a person is entitled to under a contract.

(v) Remission: Remission of performance means that a promise can discharge the promisor also without a new agreement but not only without consideration. Creditors may accept lesser amount than what is due in discharge of the whole debt.

(vi) Merger: It takes place when an inferior right accruing under a contract merger into a superior right accruing to the same party or some other contract

3- Discharge by Operation of Law: A contract may be discharged by operation of law in the following cases:
(a) By Death of the Promisor: A contract involving the personal skill or ability of the promisor Is discharged on the death of the promisor. (b) By Insolvency: When a person is declared insolvent, he is discharged from his liability up to the date of his insolvency. (c) By Unauthorized Material Alteration: If any party makes any material alteration in the terms of the Contract without the approval of the other party, the contract comes to an end.

4- By Breach of Contract: A contract may be discharged by breach if one of the parties to a contract break the promise, the injured party has not only a right damages but it is also discharge from performing his part of the contract. (i) Actual breach: It occurs when a party fails to perform a contract, where performance is due. (ii) Anticipatory breach: An anticipatory breach contract occurs before the time fixed for performance has arrived. It may happed in two ways.

(iii) Express breach: In express breach a party to contract communicates to the other party, his intention not be perform the contract on his part. (iv) Implied breach: In implied breach party to the contract does not act. Which makes the performance of the contract impossible.

5- Discharge by Impossibility of Performance:


The effects of impossibility of the performance of a contract may be discussed under the following two heads: (a) Effects of Initial Impossibility (b) Effects of Subsequent Impossibility (c) Declaration of War: The pending contracts at the time of declaration of war are either suspended or declared as void. (d) Change of Law: The contract is discharged if the performance of the contract becomes impossible or unlawful due to change in law after the formation of the contract.

6- Discharge by Lapse of Time : A contract is discharged if it is not performed or enforced within a specified period, called period of limitation. The Limitation Act, 1963 has prescribed the different periods for different contracts. The contractual parties cannot exercise their rights after the expiry of period of limitation.

Conclusion
To conclusion it can be said that, when the rights and obligations arising out of a contract are extinguished the contract is said to be discharged. The contractual tie may be loosend and contract may be terminated under different modes under contract act.

In case of Breach of Contract the aggrieved party has the following remedies :
1. Suit for specific performance 2. Suit for injunction 3. Suit for damages for the loss sustained 4. Quantum Meruit

1- Suit for Specific Performance: In this case , the Court directs the party committing the breach of Contract to perform the promise according to the terms of Contract. Specific Performance of the Contract can be granted under Specific Relief Act 1877.
Specific Performance can be granted only when damages are an inadequate remedy or when the Court can supervise the execution of Contract, or when the Contract is Certain , Fair and Just.

Specific Performance cannot be enforced of the Contracts of Personal Service .

2- Suit for Injunction: An injunction is an order of the Court directing a person to do or to refrain from doing some act, which is subject matter , Court can on a suit restrain a party by an order of injunction from Committing the breach. The power of Court is discretionary and can be granted for a temporary or an indefinite period.

3- Suit for damages for the loss sustained: In case of a breach of Contract , injured party can claim damages for the loss caused by the breach of Contract.

Damages are given by the way of restitution and as a monetary compensation to the injured party.

The aggrieved party can recover the actual loss caused to him by the breach of Contract. And not any unusual damages.

4- Quantum Meruit : Quantum Meruit means as much as he has earned. Where one person has expressly or impliedly requested another to render him a service without specifying any remuneration but the circumstances of the request imply that the Service is to be paid for there is implied promise to pay quantum Meruit that is so much as the party doing the service deserves .

Types of Damages
1. Compensatory Damages : These damages are calculated to actually compensate or make up the loss suffered by the party. 2- Nominal Damages: Damages which naturally arise in the usual course of things from the breach are called nominal damages.

It is in the discretion of the Court whether to allow or refuse damages. Damages should however be actually suffered .

3- Exemplary Damages: Losses which arise due to remote or indirect consequences are not allowed. Exemplary damages are granted for Injured feelings, mental pain , suffering etc.

For e.g. : Breach of Contract of Marriage, Banker reg\fusing to honor the Cheque of his Client having sufficient funds etc .

4- Special Damages: These arise on account of unusual circumstances. Special damages can be recovered only if Stipulated in the Contract. Parties to the Contract must know of the damages likely to result from the Breach. Special damages are granted when the parties know at the time of making the Contract that the Special loss or damage would result or is likely to result from the Breach of Contract.

Thank You