DISCHARGE OF CONTRACT

BUSINESS LAW

-MADE BY
-NIDHI RASTOGI
-BBA (IV)(M)

BY PERFORMANCE
BY ACTUAL PERFORMANCE
-> The contracts of the parties have
performed their respective promises
under the contract

BY ATTEMPTED PERFORMANCE
-> The promisor has made an offer of
the performance of promise but it
has not been accepted by the

BY MUTUAL AGREEMENT
(IMPLIED CONSENT)

NOVATION (SEC 62)

-> New contract is entered into in consideration of old
contract.
-> New contract may be entered into between the
same parties or new parties.
-> After all parties consent, novation is valid.
Eg. Ram owed Shyam .1000. Shyam owed Mohan
Rs.1000. It was agreed between Ram, Shyam and
Mohan that Ram will pay Mohan Rs.1000.

BY MUTUAL AGREEMENT
(IMPLIED CONSENT)

Alteration(sec 62)
->Modification of one or more terms of the
contract by the mutual consent of the parties.
Eg. A agreed with B to supply 100 television
sets at a certain price by the end of October.
Subsequently A and B agree that supply be
made by the end of November.

BY MUTUAL AGREEMENT
(IMPLIED CONSENT)

rescission(sec 62)
-> Cancellation of the contract by one or all parties to

the contract.
-> It may take place
=> with mutual consent of the party
=> by a party whose consent was not freely
obtained
=> one party may rescind a contract, if breach of
contract by other party

BY MUTUAL AGREEMENT
(IMPLIED CONSENT)

REMISSION( SEC 63)

->Acceptance of a lesser consideration
than what is agreed under contract.
Eg. A owes B Rs.5000. B pays A
Rs.3000 and A accepts the amount in
satisfaction of the whole debt.
The whole debt is discharged.

BY MUTUAL AGREEMENT
(IMPLIED CONSENT)

Waiver
-> It means giving up of the right by the
party under contract.
-> No consideration is necessary.
Eg. A promises to deliver the goods to Y.
Later on, Y exempts A from carrying out
the promise.

BY MUTUAL AGREEMENT
(IMPLIED CONSENT)

Merger
-> Conversion of inferior right into
superior right is called merger.
Eg. A person holding property under
lease, purchases the property. On
purchase, his lease agreement is
discharged.

BY IMPOSSIBILITY OF PERFORMANCE
INITIAL IMPOSSIBILITY
- Means impossibility at the time of making
contract
KNOWN IMPOSSIBILITY
- Means one or both the parties have knowledge that
promise is impossible to perform even though they
have entered into a contract

=> UNKNOWN IMPOSSIBILITY

- Both the parties believe that performance of a promise
is possible but it is impossible to perform

BY IMPOSSIBILITY OF PERFORMANCE
SUPERVENING IMPOSSIBILITY
The contract becomes void on account of
subsequent impossibility.
Contract is discharged under following cases
DESTRUCTION OF SUBJECT MATTER
Eg. A music hall was let out on rent by
Mohan to Ram for a series of concert. The
hall was burnt down before the date of
concert.

BY IMPOSSIBILITY OF PERFORMANCE
SUPERVENING IMPOSSIBILITY

INCAPACITY OR DEATH
Eg. A piano player agreed to perform a
concert on a particular day. She was not
able to give the concert due to her illness.
CHANGES IN LAW
Eg. A agreed to sell his land to B.
Subsequently the land was acquired by
the government.

BY IMPOSSIBILITY OF PERFORMANCE
SUPERVENING IMPOSSIBILITY

DECLARATION OF WAR
Eg. A contracts to take in cargo of B
at a foreign port. As government,
afterwards declares a war against
the country in which the port is
situated.

BY OPERATION OF LAW

DEATH
- In case of personal contracts, the death of either of the
party before performance brings end to contract.

INSOLVENCY
The insolvency law provides for discharge of
contracts under circumstances so where an order
of discharge is passed by an insolvency court, the
insolvent stands discharged of all debts incurred
previous to his abdjucation.
-

BY OPERATION OF LAW
MERGER
- Eg. A decided to work as a part time employee for B.
Later they may decide that A will work as a full time
employee. The second contract is a broader version of the
first. So the first contract automatically merges with the
second. This marks discharge of first contract.

UNAUTHORISED MATERIAL ATTENTION

- Where any of the party alters any terms of the contract
without seeking the consent of the other party to it, the
contract terminates.

BY LAPSE OF TIME
-> A contract must be performed within
the stipulated time or reasonable time. If
time is of essence of the contract then,
performance must take place at the
stipulated time.
->Delay will make contract voidable at
option of the other party.

BY BREACH

A contract is said to be broken if a

party to it renounces his liability
under it expressly or impliedly.

Once it becomes clear that the

contract has been broken it stands
discharged by breach.

BY BREACH
1. ANTICIPATORY BREACH
- Takes place when the promisor breaks the
contract even before the date of
performance fixed by the parties.
-Eg. A contracts to supply to B with certain
articles on 1st august. On 20th july, he
informs B that he will not be able to supply
goods.
B is entitled to sue A for breach of promise

BY BREACH
2. ACTUAL BREACH
- Actual breach can occur by
(i) failure to perform as promised
(ii) making it impossible for the other
party to perform
Thus if a person does not perform his part
of the contract at stipulated time, he will
be liable for its breach.