discharge of contract


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discharge of contract

  1. 1. Abdul Tawab Asif Masood Abdul Wahab Bashir Farast Anees Hamza Saeed Abdul Saboor
  2. 2. MODES OF DISCHARGE OF CONTRACT  Means termination of the contractual relation between the parties to a contract.  Modes of discharge:  Performance  Agreement  Subsequent impossibility  Lapse of time  Operation of law  Breach of contract
  3. 3. Discharge by performance  Natural mode  When parties to a contact perform their promises  Performance may be:  Actual performance  Tender
  4. 4.  Actual performance  When parties fulfil the obligation according to the terms and conditions of the contract.  Tender  Also known as offer of performance or attempted performance  Parties offer to perform the contract but the other party does not accept it.
  5. 5. Essential to a valid contract  It must be unconditional.  Made at proper time and proper place.  Made by person who is able to perform the promise.  Made to the promisee or his agent.  In case of money tender, exact amount should be tendered.
  6. 6.  Can be discharge in following ways:  Novation  Alteration  Rescission  Remission  Waiver
  7. 7.  Novation  Means replacement of existing contract by a new one.  May be between same or new parties.  Alteration  When one or more terms of the contract are changed.  Rescission  Cancellation of contract by mutual consent.
  8. 8.  Remission  Acceptance of lesser fulfilment of a promise that was made.  Waiver  Intentional abandonment of a right which a person is entailed to under a contract.
  9. 9.  Initial impossibly  An agreement to perform an impossible act is viod abinitio.  E.g. discover treasure by magic.  Subsequent impossibility  A contract capable to be performed after formation becomes impossible, or unlawful and as a result void.
  10. 10. Factors that make contract void  Destruction of subject matter  Contract destroyed without the fault of the promisor or promisee.  Failure of purpose  Formation of contract depends upon happening of a certain event and if event does not happen, the contract discharged.
  11. 11.  Death or personal incapacity  Contract depends upon existence of a particular person, the contact discharged on the illness, incapacity or death of that person.  Change of law  Contract which are lawful when made, become unlawful due to change in law.  Declaration of war  Contract entered into within enemy during war is void ab-inito.
  12. 12.  Contract discharge by lapse of time  The limitation act 1908  In case of breach of contract, legal action should be taken within a specific period.
  13. 13.  Contract terminates by operation of law in following ways:  Insolvency  Merger  Material alternation
  14. 14.  Insolvency  Court declares a person as insolvent.  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  Change in material term of the contract without the consent of other party.
  15. 15.  The failure of party to perform his obligation.  Breach of contract may be:  Actual breach  Anticipatory breach
  16. 16.  Actual breach Occur when party fails to perform the contract when performance is due.  On due date of performance  Party fails to perform on due date of contract.  During the course of performance  Party perform a part of contract but refuse to perform remaining part.
  17. 17.  Anticipatory breach Occur when party declares his intention not to perform the contract before the due date of performance.  Express breach  Party communicate to other party not to perform the contract.  Implied breach  A party does an act which makes the performance of contract impossible.
  18. 18. Effect of anticipatory breach  The promisee is excused from performance.  He may treat the contract as rescinded and sue the other party for damages.  He may ignore the conduct of promiser and wait for time of performance and then sue the promisor.