Discharge of Contract

DISCHARGE OF CONTRACT
• It means “termination” of a
contractual relationship between
the parties.
• By discharge the rights and
obligations of the parties come to
an end.
 How is the contract discharged?

1. By performance
- actual performance
- attempted performance
/tender
 2. By Breach of contract
(breach is breaking the obligation which a contract
imposes)
(i) Actual Breach
- at the time when performance is due

- during the performance

(a)expressly ( e.g railway chair order)
(b) doing some act that the promise
becomes impossible (e.g hire someone else)

(ii) Anticipatory breach of contract

- by expressly renouncing his obligation
- By doing some act which makes promise
impossible
3. By Lapse of time
(pay within 3 years)
4. By Operation of Law
- Insolvency
- Death
- Merger
- Rights & Liabilities becoming vested
in the same person
e.g bill coming in hands of acceptor
- By unauthorized material alteration
of a contract
5. By Agreement
5. By Agreement/ Consent
- Novation (replacing old with new
contract, should take place before the expiry of
contract)
- new contract with same parties
- same contract with different
party/parties
- Rescission (cancellation)
by mutual consent
when one party fails to perform
- Alteration
- Remission
- Waiver
- Merger
Example :
• (a) A owes money to B under a contract. It is agreed
between A, B and C, that B shall thenceforth accept C
as his debtor, instead of A. The old debt of A to B is
at an end, and a new debt from C to B has been
contracted.
This is __________________
Example :
(b) A owes B 10,000 rupees. A enters into an
agreement with B, and gives B a mortgage of his (A's)
estate for 5,000 rupees in place of the debt of 10,000
rupees. This is a new contract and extinguishes the
old.
This is __________________
NOVATION.
6. By Impossibility of Performance
(i) Impossibility existing at the time
of agreement (void) /

Pre-contractual/
Initial
- known to the parties
- unknown to the parties
 ???
• A contracts to marry B, being already married
to C and being forbidden by polygamy.
• A must make compensation to B for the loss
caused to her.
(ii) Impossibility arising subsequent to
the formation of the contract/
Post-Contractual/
Subsequent
- Destruction of subject-matter
- Non-existence/non-occurrence of
particular state of things
(e.g. party goes mad)
- Death/ Incapacity for personal
service
- Change of law
- Outbreak of war
Impossibility of performance –not an excuse

1.Difficulty of performance
e.g transportation destroyed
2. Commercial Impossibility
e.g sharp increase in shipping rates
3. Impossibility due to failure of a third
person
4. Strikes, lock-outs and civil disturbance
e.g ship not unloaded due to strike of dock
workers
5. Failure of one of the objects