Contract Act – Further Issues

Performance of Contract
Breach of Contract
Remedies of Contract
Book Page 90-110
 Business Law & Taxation
Discharge/Termination of Contract

Breach Performance

Subsequent Operation Lapse of

Agreement
Illegality Of Law Time

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Discharge/ Termination of Contract
1- Discharge by 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 outstanding against the
other party and the contract has come to an end.
• 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

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Discharge/ Termination of Contract
2- Discharge by Agreement
• Rescission
• Remission
• Novation
• Alteration
• Waiver

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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

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Termination of Old Contract
A-Novation (Change) in any Party
• Replacement of existing contract with new one
• 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 accept
A is his debtor.

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Termination of Old Contract
b- 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.

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Termination of Old Contract
c- Rescission (Cancelation)
• Previous contract cancel by mutual consent
• No new contract

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

agree not to deliver the goods.

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Termination of Old Contract
d-By Remission (Lesser Fulfillment)
• Old Contract is terminated and
• New Contract comes with lesser claim

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

claim.

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Termination of Old Contract
e-Waiver
• Previous contract cancel
• No new contract
• Intentional abonnement of one’s Right

• e.g A promises to make a shirt for B and B afterword's forbid

him to do so.

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Discharge/ Termination of Contract
3- Discharge by Subsequent Impossibility
When the subject matter after the formation of the contract is destroyed without
the fault of the promisor or promise.
Changes in Law terminates The Future Contract
• Destruction of subject matter (Hall destroyed)
• Failure of Purpose (Happening of certain event)
• Death of Personal incapacity (Death of skilled person)
• Change of Law (Become unlawful due to change in law)
• Declaration of War (Contract with enemy country void)

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Discharge/ Termination of Contract
4- 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

e.g. A owed Rs 5000 to B. The last date of repayment of the loan is

expired but B did not sue A until 3 years. B lost the right to recover.

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Discharge/ Termination of Contract
5- Discharge by Operation of Law
a-Insolvency (Person become insolvent)
b- Merger (Inferior right merge into superior right)
c-Material Alteration (Change with effect the right, change in
cheque amount intentionally)

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Discharge/ Termination of Contract
3-Breach
Failure of party to perform his obligation
A- Actual Breach
When the party fails to perform the contract (fully/partially) when performance is
due.
B-Anticipatory (Expressed/ Implied)
When party clear his attention not to perform the contract before the due date

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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).
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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

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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
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Remedies for Breach of Contract
1- Suit for Rescission of the Contract (Cancellation)
• 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 entitled to compensation.

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Remedies for Breach of Contract
2- Suit for Damages
The aggrieved party may suit for damages in case of breach of contract. Damages are
monetary compensation allowed to aggrieved party.
A- Ordinary Damages
A contract to pay 1 Lac to B on 1st JAN. A did not pay on that day. A is liable to pay
principal and interest.
B-Special Damages
These include indirect losses which may arise due to breach of contract. e.g A Contract
C to buy 1 ton iron for Rs. 80K, A also contract B to sell iron for Rs. 100K. A inform C
about the purpose of contract. C fails to supply, C is liable for loss of profit which A
would have earned.

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Remedies for Breach of Contract
2- Suit for Damages
C-Exemplary Damages
These are awarded to punish the guilty party for the breach of contract. The breach of
contract results in monetary loss to the aggrieved party. e.g. in case of marriage con-
tract or in case of dishonored of cheque
D-Liquidated damages
When parties of contract fix the amount of damages for the breach of contract at the
time of formation.
E. Nominal Damages
When aggrieved party suffer no loss the court may award nominal damages in recogni-
tion of his right.

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Remedies for Breach of Contract
3-Suit upon Quantum Merit
The Quantum Merit mean payment to proportion to work done or reasonable work
done. When a party done some work under the contract and other party cancel the
contract, such party can claim remuneration of work done.
4. Suit for Specific performance
It mean actual carrying out of the contract by the party. In some cases where money
is not the alternate remedy the court may ask to perform contract.
e.g. A agree to sell his painting to B but commits breach. B cannot sue for damages. A
shall be ordered to make specific performance.

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Remedies for Breach of Contract
5. Suit for Injunction
Injunction is an order of court, restricting a person from doing something which he
promised not to do.

e.g. W agreed to sing at Lu’s theater and for no one else. Afterword W contracted
Z to sing at another theater and refused to sing for Lu. W can be restricted to sing for
Z.

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Case study 1-A
"B offers to sale his car to A for Rs. 950,000. A accepts to purchase
it for 920,000, B refuse to sale the car for 920,000. Subsequently A
aggress to purchase the car for 950,000 but B refuses to sale. .
a. A sues for the specific performance of contract will he succeed?
b. Justify with reference to Contract Act"

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Case study 1-B
A minor fraudulently represent to a money lender that he was of
full age and obtain the loan of Rs. 50,000.
a. Has the money lender any right of action against the minor for
the money lend or for damages for fraudulent miss-representation?
b. Justify with reference to Contract Act. Justify with reference to
Contract Act"

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Case study 2-A
"Sana (22-year-old working professional) offered Hina (20-year-old
student) to buy her laptop for the price Rs 40,000. Hina told Sana
that I will get back to you after taking permission from my father.
a. Is this an example of a Valid contract? Answer as YES OR No
b. Give reason to support your answer in part a. Consider the
concept of Offer and Acceptance.

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Case study 2-B
Mr Ali agrees to service all the air conditioners in a building that has
15 floors. He has completed the work till 12 floors only at the moment.
a. The above example is an example of Executed contract. Answer as
YES OR No?
b. Give reason to support your answer in part a

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