Contract Act – Further Issues

Performance of Contract
Breach of Contract
Remedies of Contract
 Business Law & Taxation
Discharge/Termination of Contract

Breach Performance

Subsequent Operation Lapse of

Agreement
Illegality Of Law Time

From the desk of Accounting and Finance Faculty –

(Business Law and Taxation Team)
 Business Law & Taxation
Discharge/ Termination of Contract
1- Discharge by Performance
• It’s a natural mode of discharge
• Example
– Bashir agree to sell his watch to Niaz for 400 bashir deliver the watch and Niaz make the
payment its actual performance

• Meaning of Performance: Performance of contract means that each party to a contract

has done, whatever he has required to do under the contract, within the prescribed
time in a manner that no party to the contract has any claim, grievance or right out-
standing against the other party and the contract has come to an end.

From the desk of Accounting and Finance Faculty –

(Business Law and Taxation Team)
 Business Law & Taxation
Discharge/ Termination of Contract
2-Breach

• Actual
• Anticipatory (Expressed/ Implied)

From the desk of Accounting and Finance Faculty –

(Business Law and Taxation Team)
 Business Law & Taxation
Types of Breach

Actual Anticipatory

Actual Breach: it occurs when a party fails to perform a contract, when performance
was due. e.g A agree to deliver 5 Bags of wheat on 1st March. He does not deliver
wheat that day.

Anticipatory Breach: it occurs before the time fixed for performance has arrived which
can be either done expressly or in an implied manner(By his act).

From the desk of Accounting and Finance Faculty –

(Business Law and Taxation Team)
 Business Law & Taxation
Discharge/ Termination of Contract

3- Discharge by Agreement
• Rescission
• Remission
• Novation
• Alteration
• Waiver

From the desk of Accounting and Finance Faculty –

(Business Law and Taxation Team)
 Business Law & Taxation
Termination by Agreement

Both party Mutually

Agreed to cancel the Contract

By By By By By
Waiving Recession Remission Alteration Novation

Previous Contract Cancel; Previous Contract Canceled;

No new Contract New Contract comes into existence

From the desk of Accounting and Finance Faculty –

(Business Law and Taxation Team)
 Business Law & Taxation
Termination of Old Contract
• Novation (Change) in any Party
• Changes in the Party terminates
• the Old Contract

• e.g A owed B and B to C. A’s debt to B is cancelled and C ac-

cept A is his debtor.

From the desk of Accounting and Finance Faculty –

(Business Law and Taxation Team)
 Business Law & Taxation
Termination of Old Contract
• By Remission (Reducing)
• Old Contract is terminated and
• New Contract comes

• e.g A owes B 5000. B agrees to pay 2000 in full satisfaction of

claim.

From the desk of Accounting and Finance Faculty –

(Business Law and Taxation Team)
 Business Law & Taxation
Termination of Old Contract
• By Alteration
• One or more terms changes
• New Contract takes Place

e.g A agrees to deliver goods to B on 1st July, but later both

agree to deliver on 1st Aug.

From the desk of Accounting and Finance Faculty –

(Business Law and Taxation Team)
 Business Law & Taxation
Termination of Old Contract
• Rescission (Cancelation)
• Previous contract cancel
• No new contract

• e.g A agrees to deliver goods to B on 1st July, but later both

agree not to deliver the goods.

From the desk of Accounting and Finance Faculty –

(Business Law and Taxation Team)
 Business Law & Taxation
Termination of Old Contract
• Waiver
• Previous contract cancel
• No new contract

• e.g A agree to make a shirt for B and B afterwords forbid him

to do so.

From the desk of Accounting and Finance Faculty –

(Business Law and Taxation Team)
 Business Law & Taxation
Discharge/ Termination of Contract
• 4- Subsequent Impossibility/Changes in Law
terminates The Future Contract

• Gutka ban by Govt.

• In case of Fire
• Skilled person death
From the desk of Accounting and Finance Faculty –
(Business Law and Taxation Team)
 Business Law & Taxation
Discharge/ Termination of Contract
5- Discharge by Lapse of Time

• According to Limitation Act 1908, in case of breach of contract legal

action will be taken within a specified period, normally 3 years.

From the desk of Accounting and Finance Faculty –

(Business Law and Taxation Team)
 Business Law & Taxation
Discharge/ Termination of Contract
6- Discharge by Operation of Law

• Marriage age is 18.

• Person become insolvent

From the desk of Accounting and Finance Faculty –

(Business Law and Taxation Team)
 Business Law & Taxation
Remedy for Effected Party against Breach Committed Person

Suit for Suit for Suit for

Suit for
Injunction Quantum Specific
Damages
Order Meriut Performance

Liquidated
Suit for
Nominal
Rescission
Ordinary Of the Contract

Special

Exemplary
From the desk of Accounting and Finance Faculty –
(Business Law and Taxation Team)
 Business Law & Taxation
Remedies for Breach of Contract
• Suit for Rescission of the Contract
• Suit for Damages
• Suit upon Quantum Meruit
• Suit for Specific Performance
• Suit for Injunction

From the desk of Accounting and Finance Faculty –

(Business Law and Taxation Team)
 Business Law & Taxation
1- Suit for Rescission of the Contract
• If one party breach the contract other may sit home if he does not wants to take
any legal action against the guilty party. If file a suit for rescission of contract,
when court grant rescission aggrieved party is free from all obligations and enti-
tled to compensation.

From the desk of Accounting and Finance Faculty –

(Business Law and Taxation Team)
 Business Law & Taxation

2- Remedy for Breach in (Damages)

Effected Party Claims for
Valid Contract not for Voidable or Void Contract

Nominal
Ordinary

Special Exemplary
Liquidated

From the desk of Accounting and Finance Faculty –

(Business Law and Taxation Team)