3. Discharge Of Contract
Definition
When an agreement, which was binding on the parties
to it, ceases to bind them, the contact is said to be
discharged. A contract may be discharged in the
following ways:
Discharge By Performance
Discharge By Agreement Or Consent
Discharge By Impossibility Of Performance
Discharge By Lapse Of Time
Discharge By Breach Of Contract
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4. Discharge By Performance
“Under a contract each party is bound to perform his part of the obligation.
After the parties have made due performance of the contract, their liability
under the contract comes to an end. In such a case the contract is said to be
discharged by performance”.
ACTUAL PERFORMANCE
• When both parties perform their promises & there is nothing remaining to
perform
ATTEMPTED PERFORMANCE
• When the promisor offers to perform his obligation ,but promisee refuses
to accept the performance. It is also known as tender
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5. Essentials Of Valid Tender
A Valid Tender Must Fulfill The
Following Conditions.
• It must be unconditional. It must be
made in accordance with the terms of the
contract.
• It must be made at proper time and
proper place as specified in the contract.
• It must be of whole obligation and not in
part.
• If the tender relates to delivery of goods,
the performance must have opportunity
to check the goods.
• It must be made by a person who is
able to perform the promise, E.G.
tender by minor is not a valid tender
• If there are joint promises a tender to
anyone of them is vaild
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6. Discharge By Agreement Or Consent
• NOVATION (Sec 62):
• New contract substituted for old contract with the
same or different parties
• RESCISSION (Sec 62) :
• When some or all terms of a contract are cancelled
• ALTERATION (Sec 62):
• When one or more terms of a contract is/are altered by
the mutual consent of the parties to the contract
• REMISSION (Sec 63) :
• Acceptance of a lesser fulfilment of the promise made.
• WAIVER :
• Mutual abandonment of the right by the parties to
contract
• MERGER :
• When an inferior right accruing to a party to contract
merges into a superior right accruing to the same
party
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• Discharge By Subsequent Impossibility
Initial Possibility
• An agreement to perform an impossible act is void ab-initio.
It means agreement which is impossible cannot be binding,
E.g. agreement to discover treasure by magic is void
agreement [Sec. 56]
DISCHARGE BY IMPOSSIBILITY OF
PERFORMANCE.
• When performance of contract becomes impossible due to
subsequent development of events or change in circumstances
which are beyond to control of parties, the contract becomes
void. This is known as the doctrine of frustration or doctrine
of supervening impossibility [Sec. 56]
8. Discharge By Subsequent Impossibility
• Destruction Of Subject Matter
• Non-existence Of State Of Thing
• Death Or Incapacity Of Personal
Service
• Change Of Law
• Outbreak Of War
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9. • The limitation act, 1908 states tat in case of
the breach of contract, legal action should be
taken within a specified period. If the
contract is not performed and no legal action
is taken by the promisee within the period of
limitation; he is debarred from enforcing the
contract.
• The period of limitation to recover debt is 3
years. If 3 years expire and creditor fails to
file a suit to recover is amount, the debtor is
discharged from his liabilities
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Discharge By Lapse Of
Time
10. • Death
• Merger
• Insolvency
• Unauthorized Alteration Of The
Terms Of A Written Agreement
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Discharge By Operation Of Law
11. • The breach of contract means failure
of a party to perform is obligations
when a party fails to perform te
contract, there is breach of contract.
It discharges the aggrieved party
from performing his obligations. It
may be
• (1) Actual Breach
• (2) Anticipatory Breach.
Actual Breach
• By the act of promisor
(Implied Repudiation)
• By renunciation of obligation
(Express Repudiation)
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Discharge By Breach
Of Contract
Anticipatory Breach
• On the date of performance
• In the course of performance
