contract law

1. Sc
S y l l a b u s o f c o n t r a c t l a w f o r s e m e s t e r 1
Discharge of contract
Various modes of discharge
Frustration
202026/10/2020
Contract Law
Discharge of contract
Nirav H Bhatt
School of law Rai University
Semester - 1

2. Revocation or lapse of offer
 By communicationof notice of Revocation.
 By lapse of time
 By non-fulfilmentof precedingconditionstoacceptance
 By deathor insanityof Offeror
 If counter offerismade
 If offerisnot acceptedaccordingto prescribedorusual mode
 Law ischanged
Discharge of contract
Discharge meanstermination. Discharge of contractmeansterminationof the contractual
relationshipbetweenthe parties.A contractissaidto be dischargedwhenthe partiesare freedfrom
the task of performingtheirrespective obligationsasarisingfromthe contract.
Whena contract isdischarged,all the rightsandliabilitiesof the contractingpartiesare extinguished
and theirrelationshipcomestoanend.
Various modes of discharge
• A Contract can be dischargedby:
o By performance:
 Actual Performance (Section37)
Whenbothpartiesfulfil theirpromisesasmentionedincontract.
 Attemptedperformance
Whenone party attemptto complete the taskbygivinghisfull effortsbut
somehowcan’tsucceed orA personwhoisboundto performa promise will
be readyto performhispromise butsometimesthe otherpartyrefusesto
accept that performance.Thisisknownasattemptedperformance.
o By breach of contract:
Breach meansfailure of aparty to performhisobligationunderacontract. Whena
promisorhasfailedtoperformhispart of contract, he has committedabreach of
contract. Breach of contract is of two kinds.
 Actual breach:
Actual breachof contract may take place at the time whenthe performance
becomesdue andinsuch cases,one party,failsor refusestoperformhis
obligation.
 Anticipatorybreachof contract:
Whena party to a contract refuses toperformhisobligationbefore the due
date of performance,itiscalledanticipatorybreachof contract.

3. o By impossibilityofperformance:
By impossibilityof performance Contractwill be dischargedwhenthe performance
of contract becomesimpossible.
Whenboththe contractingpartiesare aware of impossibilityof performance of the
contract evenat the time of formationof the contract itself,thenthe agreement
becomesvoid.If theyare notaware,contract becomesvoidwhensuchimpossibility
isdiscovered.
o Doctrine of Frustration:
Due to some eventsubsequentlyhappensperformance underacontract becomes
impossible orunlawful.
o By agreementor by consent
As contract emergesfromanagreementof bothparties,itmayalsobe terminated
by anotheragreementorconsentof bothparties.
 By novation:
Sometimes,the contractingpartiesmayagree tosubstitute anew contract
inthe place of the original contractbetweenthemselvesanddifferent
parties.The substitutionof new contractiscalled “Novation”.
o If Ram owesRs 1000 from Shyam. AndShyamasks Bharat to payRs
1000 to Ram and if Both Ram andBharat agreesthena new contract
ismade inplace of oldone betweenthese two.It’scalledNovation.
 By alteration:
Alterationmeansachange inone or more of the termsof the contract. By
mutual agreement,partiestocontract can alterone or more terms of the
contract. By suchalteration,the contractis discharged.
 By remission:
Remissionmeansacceptance of alesserperformance thanwhatwas
actuallydue underthe contract. It isa unilateral actof promise discharging
at hiswill andpleasure the obligationof another.
 By waiver:
Whenbothpartiesby mutual consent,agree of abandontheirrespective
rights,the contract neednotbe performedandthe same is discharged.Itis
calledwaiver.
 By merger:
Sometimes,bothparties,whohave alreadyenteredintoacontract within
inferiorrights,mayentersubsequentlynew contractandthe new contract
createssuperiorrights.Now the previous contractwithlesserrightissaidto
be mergedwithsubsequentcontractwithsuperiorrights.
 By recession:
Recessionmeanscancellationof contract.In thatcase, the original contract
neednotbe performed.Boththe contractingpartiesmayagree,bymutual

4. agreement,torescindthe contractby cancellingsome orall the termsof the
contract.
o By operation of law:
A contract may be dischargedbyoperationof law.Inotherwords,law itself
dischargesthe contract inthe followingcircumstances.
 By death:
An contract whichisbaseduponpersonal skill andqualificationof the
promisoristerminatedonthe death of the promisor.Inothercontracts,
the rightsand liabilitiesof deceasedpersonpassof hislegal
representatives.
 By insolvency:
If a personisadjudicatedinsolventbya competentcourt,all hisrights
and liabilitiesare vestedwiththe official receiverandthe insolventis
dischargedfromall hisrightsand liabilitiesarisingfromall hisearlier
contracts.
o Discharge by lapse of time:
Everycontract must be performedwithinspecifiedperiodanditiscalledthe period
of limitation.If the contractisnot performedandthe promise failstotake any
actionwithinthe periodof limitation,thenthe contactisterminatedordischarged
by lapse of time.
.
Some grounds of frustration
 Destructionof subjectmatter
Where a party to a contract makesany material alterationinthe contractwithoutthe
consentof the other party.
 Deathor personal incapacityof parties:
A contract whichisbaseduponpersonal skill andqualificationof the promisoristerminated
on the deathof the promisoror if he getssome personal injurywhichmakeshimincapable
to complete the promise.
 Change of law
If law of a countrygetsalteredandmakesthe subjectof contract unlawful oralterationin
lawmakesthe promisorincapable tocomplete the contract.
 Declarationof war
In case of emergencydeclareddue todeclarationof warall contracts getsstandstill and
neitherpartyisforcedto compile promisesmade incontract.Howeverwithchange in
circumstancescontractmay or may not be revokedoncompletionof war.

5.  By an act of God
Whenbothpartiesare readyto performbutdue to some natural calamitieslikeearthquake,
floodsorcyclonesor anyotheract where nature isresponsible,eitherpartycan’tcomplete
the promise insuchcase contract may get discharged.
Remedies to Aggrieved party
 Suitfor specificPerformance
 Suitfor injunction
 Suitfor damages,forthe losssustained
 SuituponQuantumMerit
o Means as muchas earned.
 A claimcan be made for part of performance.
o The injuredpartycan claimreasonable compensation
o Whencontract is void,compensationcanbe askedfrombenefitingparty
o Where a contract is divisible,partyindefaultmaysue onquantummerit.
Whenan indivisible contractforlumpsumis completelyperformedbutbadly,partycan claimfor
lumpsumlessdeduction.