Meaning and need for discharge of contract

1. DISCHARGE OF CONTRACT
MADE BY – JASPREET KAUR

2. What is Contract?
It is a legally binding agreement between two or more parties that sets out
certain agreed promises in exchange for something of value, like money.
Essentials of a Valid Contract
• Offer
• Acceptance
• Consideration
• Capacity of parties
• Free consent
• Lawful object

3. DISCHARGE OF CONTRACT
MEANING
Cessation of rights and obligation of parties to the contract.
Cessation of the binding force of an agreement.
Cessation of contractual relationship between the parties to
the contract.

4. NEED FOR DISCHARGE OF CONTRACT
 For ending of legal obligations of both the parties, by performing contract.
 Putting end to the existing contract, in which party refuses to perform.
 In order to terminate the contract which does not possess any end.
 To provide remedies or compensation to the aggrieved party by the court.
 To reduce burden of the Indian judiciary.

5. MODES OF DISCHARGE OF CONTRACT
MODES
By
Performance
- Actual
- Attempted
By Agreement
- Novation
- Rescission
- Alteration
- Remission
By Operation of
Law
- Death
- Merger
- Bankruptcy
- Material
Alteration
By
Impossibility
of
Performance
By Lapse of
Time
By Breach of
Contract
-Actual
-Anticipatory

6. DISCHARGE BY PERFORMANCE
By Actual
Performance
By Acceptance
of Partial
Performance
(Specific
Relief Act
1963)
By Substantial
Performance
By Tender of
Performance
By Completion of
Performance
prevented by
promise

7. DISCHARGE BY AGREEMENT
 By Novation (Section 62)
 Replacement of existing contract by new one.
 It is between the new parties or same parties.
 By Alteration
 When one or terms of contract are changed.
 By Rescission
 Cancellation of contract by mutual contract.
 By Remission and Waiver (Section 63)
 Acceptance of lesser fulfilment of a promise that was made
 Intentional relinquishment of a right which a person is entailed to under a
contract. It means abandoning the rights.

8. DISCHARGE BY OPERATION OF LAW
 By Death: Death of the promisor discharges a contract if contract envisages
personal skill of the promisor.
 By Insolvency: When court declares person (one of the party) insolvent.
 By Merger: Merger takes place when an inferior rights available to a party
merges into a superior right available to the same party another contract.
 Material Alteration: When one of the party makes a material alteration in a
written document or contract without the consent of the other party.

9. DISCHARGE BY LAPSE OF TIME
 Contract discharge by lapse of time, limitation of time period in case
of breach of contract (Limitation Act 1963).

10. DISCHARGE BY IMPOSSIBILITY OF
PERFORMANCE
 Initial impossibility: An agreement to perform an impossible act is
void ab initio.
 Subsequent impossibility: When contract is quite possible to perform
when it is made, but by the happening of subsequent event its
performance become impossible and it results void.

11. DISCHARGE BY BREACH OF CONTRACT
1) ACTUAL BREACH
Occurs when party fails to perform the contract, when performance is
due
 Party fails to perform on due date of contract.
 Party performs part of contract but refuse to perform the remaining
part.
2) ANTICIPATORY BREACH
Occurs when party declares his intention not to perform the contract
before the due date of performance.

12. CONCLUSION
 Discharge of contract is referred when, there is a need to put an end to a contract.
 Discharge of contract can be performed by various forms as described earlier.
 It is opted when the parties to the contract are unwilling to perform the contract or refuse to
perform the contract etc.
 It is basically an act of making a contract or agreement null. So that, contract will no longer in
remain in existence.
 It is the duty of both the parties to execute the contract in which they have entered in order to
perform, as they are bound by the law accordingly.
 It is the discretion of the court either to award compensation for the non-performance of
contract or order to perform, non-performed contract.

13. STATUTORY PROVISIONS FOR DISCHARGE OF
CONTRACT
SR. WAYS TO DISCHARGE
CONTRACT
SECTIONS DESCRIPTION
1. By Performance Sec 37 Both parties to the contract have
performed what they have agreed to do,
the contract is discharged.
2. By Agreement Sec 62 to 67 Contract can be discharged by mutual
express or implied agreement between
the parties by – A) By Novation B) By
Alteration C) By rescission D) By
Remission and Waiver.
3. By Frustration Sec 56 When the performance of a contract
becomes subsequently impossible, the
contract becomes void.
4. By Death Sec 37 Where a contract is personal in character,
or where personal skill or ability is
involved, death of the promisor discharge
the contract

14. SR. WAYS TO DISCHARGE CONTRACT SECTIONS DESCRIPTION
5. By Operation of Law By Operation of Law. A contract is
discharged by the operation of law, in
the cases – By insolvency or
bankruptcy, By merger, By death.
6. By Breach of Contract Sec 39 Breach of contract occurs where a
party refuses to perform his part of
the promise. Breach of contract may
be – (i) Actual breach of contract. (ii)
Anticipatory breach
7. By Refusing Tender of
Performance
Sec 38 Refusal to accept “offer of
performance”, discharge the party
making the offer.
8. By Lapse of Time Limitation Act
1963
Discharge by lapse of time. Contract
is discharged also by lapse of time.