Professional Documents
Culture Documents
Discharge of Contract PDF
Discharge of Contract PDF
CONTRACT
DISCHARGE OF CONTRACT
When an agreement, which was binding
on the parties to it, ceases to bind them,
the contact is said to be discharged. A
contract may be discharged in the
following ways:
1. By Performance of the contract ;
2. By breach of the contract ;
3. By impossibility of performance ;
4. By Agreement.
1. DISCHARGE BY PERFORMANCE
Illustration
A, a singer, enters into a contract with B, the
manager of a theatre, to sing at his theatre two
nights in every week during the next two months,
and B engages to pay her at the rate of 100
rupees for each night. On the sixth night A
wilfully absents herself. With the assent of B, A
sings on the seventh night. B has signified his
acquiescence in the continuance of the contract,
and cannot now put an end to it, but is entitled to
compensation for the damage sustained by him
through A’s failure to sing on the sixth night
(ii) ELECTION TO KEEP THE CONTRACT ALIVE
The case of Avery Vs. Bowden (1855) illustrates the point where the
promisee elects to keep the contract alive, and the promisor in spite of
his earlier repudiation of the contract is discharged from liability
because of supervening circumstances before the date of the
performance arrives. In this case, A chartered B’s ship at Odessa, a
Russian port, and undertook to load the ship with cargo within 45 days.
Before this period had elapsed, A failed to supply the cargo and
declined to supply the same. The master of the ship continued to insist
that the cargo be supplied but A continued to refuse to load. Before
the period of 45 days was over, Crimean War broke out between
England and Russia, whereby it became illegal to load cargo at a
hostile port. The question in this case was, whether by declaration of
the war A had been discharged from liability to load the cargo. In this
case, on A’s refusal to load the cargo B could have rescinded the
contract and brought an action against A, but B instead, by insisting
that the cargo be supplied, kept the contract alive. The contact
continued to be alive and subsisting for the benefit of both A and B. By
the declaration of war, the performance of the contract having become
unlawful, it was held that A had been discharged from his duty to
supply the cargo, and, therefore, A could not be made liable for non-
performance of the contract.
3. DISCHARGE BY IMPOSSIBILITY OF
PERFORMANCE
A and B contract to marry each other. Before the time fixed for
marriage, A goes mad. The contract becomes void.
Novation
Novation means substitution of an existing contract with
a new one. When, by an agreement between the parties
to a contract, a new contract replaces an existing one,
the already existing contract is thereby discharged, and
in its pace the obligation of the parties in respect of the
new contract comes into existence. Section 62 contains
the following provision in this regard:
“62. EFFECT OF NOVATION, RESCISSION
AND ALTERATION OF CONTRACT –