legal aspects of business

1. Discharge of contract
Prepared by Dr. Seema H. Kadam,Associate
Prof.,TMES-MBA,GTU

2. Discharge of contract
 Discharge of contract means termination of the
contractual relationship between the parties.
 The various modes of discharge of contract-
1. By performance
2. By agreement or consent
3. By impossibility of performance
4. By lapse of time
5. By operation of law
6. By breach of contract
Prepared by Dr. Seema H. Kadam,Associate
Prof.,TMES-MBA,GTU

3. Discharge by performance
 Discharge of a contract by performance takes place when
the parties to the contract fulfill their obligations arising
under the contract within time and in the manner
prescribed.
 The Performance may be-
1. Actual performance
2. Attempted performance or tender-tender is only offer
to perform the obligation under the contract.
Prepared by Dr. Seema H. Kadam,Associate
Prof.,TMES-MBA,GTU

4. Discharge by agreement or consent
 As it is the agreement of parties which binds them, so by their
further agreement and consent the contract may be terminated.
Discharged by agreement can be expressed or implied.
 Discharge by implied consent takes place by-
 Novation-when a new contract is substitutes for an existing
one, either between same parties or between one of the party
and thirty party.
 Alteration-one or more of the terms of the contact is altered by
mutual consent.
Prepared by Dr. Seema H. Kadam,Associate
Prof.,TMES-MBA,GTU

5. Contd..
 Rescission - when all or some of the terms are
cancelled.
 Remission- acceptance of a lesser fulfillment of the
promise made.
 Waiver – intentionally giving up of a right of the
party entitled there to under a contract.
 Merger - when inferior right accruing to a party
under a contract merges into a superior right
accruing to the same party under a new contract.
Prepared by Dr. Seema H. Kadam,Associate
Prof.,TMES-MBA,GTU

6. Contd..
 Discharge by lapse of time.
 Discharge by operation law-
1. Death
2. Merger
3. Insolvency
4. Unauthorized alteration of the terms of a written
agreement.
5. Rights and liabilities becoming vested in the same
person.
Prepared by Dr. Seema H. Kadam,Associate
Prof.,TMES-MBA,GTU

7. Discharge by breach of contract
 If the party breaks his obligation which the contract
imposes, there takes place breach of contract. It may be
actual breach or anticipatory breach.
 Actual breach of contract may occur when performance
is due or during the performance of the contract.
 Anticipatory breach of contract occurs when a party
repudiates his liability or obligation under the contract
before the time for performance.
Prepared by Dr. Seema H. Kadam,Associate
Prof.,TMES-MBA,GTU

8. Remedies for breach of contract
Prepared by Dr. Seema H. Kadam,Associate
Prof.,TMES-MBA,GTU

9. Remedies for breach of contract
In case of breach of a contract , the injured party has one or more
of the following remedies:
 Rescission –when there is breach of a contract by a party, the
injured party may sue to treat the contract as rescinded.
 Quantum meruit- A right to sue on a quantum meruit(as much
as earned) arises where a contract, partly performed by one party,
has become discharged by the breach of the contract by the other
party.
Prepared by Dr. Seema H. Kadam,Associate
Prof.,TMES-MBA,GTU

10. Contd..
 Specific performance-in certain cases the court may direct the
party in breach of a contract to actually carry out the promise,
exactly according to the terms of the contract.
 Injunction - It is a mode of securing the specific performance of
the negative terms of a contract.
Prepared by Dr. Seema H. Kadam,Associate
Prof.,TMES-MBA,GTU

11. Contd..
 Damages- monetary compensation compensation awarded to the
injured party by court for the loss or injury suffered by him.(sec.
73 of Indian contract law) based on Hadley v. baxendale. The
four types of damages are :
1. Ordinary damages-damages arising naturally
2. Special damages-damages in contemplation of the parties
3. Vindictive or exemplary damages-given by way of
compensation for loss suffered, and not by way of punishment
4. Nominal damages.
5. Damages for loss of reputation
6. Damages for inconvenience and discomfort.
Prepared by Dr. Seema H. Kadam,Associate
Prof.,TMES-MBA,GTU

12. Contd..
Prepared by Dr. Seema H. Kadam,Associate
Prof.,TMES-MBA,GTU
6. Mitigation of damages
7. Difficulty of assessment
8. Cost of decree
9. Damages agreed agreed upon in advance in case of breach.
 Liquidated damages and penalty.
 Payment of interest

13. Quasi contracts
Prepared by Dr. Seema H. Kadam,Associate
Prof.,TMES-MBA,GTU

14. Contd..
 Quasi contracts rest on the ground of equity that a person shall
not be allowed to enrich himself unjustly at the expense of
another.
 Strictly speaking , a quasi contract is not a contract at all and at
the other hand it is created by law. It is an obligation which law
creates in absence of any agreement.
Prepared by Dr. Seema H. Kadam,Associate
Prof.,TMES-MBA,GTU

15. Contd..
Sec 68 to 72 deal with the following quasi – contracts:
1. Claim for necessaries supplied to a person is incapable of
contracting or in his account.
2. Reimbursement of a person paying money due by another in
payment of which he is interested.
3. Obligation of a person enjoying benefit of a non-gratuitous act.
4. Responsibility of finder of goods.
5. Liability of person to whom money is paid or thing delivered
by mistake or under coercion.
6. Quantum meruit.this means ‘as much as earned’
Prepared by Dr. Seema H. Kadam,Associate
Prof.,TMES-MBA,GTU

16. Practical cases
1. In July 1989 Radhey Shyam entered into a contract with Raja
Ram to build a house for a fixed sum of Rs. 10,00,00.Owing to
unexpected shortage of skilled labor and of certain materials,
the contract took 24 months to complete instead of the 12
months expected and cost about Rs. 1,50,000.Radhey Shyam
contended that the contract had been frustrated and that he was
entitled for the cost actually incurred. Advice Raja Ram.
2. P hired a godown from D for a period of twelve months and
paid the whole rent to him in advance. After six months the
godown was destroyed by fire and P claimed a refund of a
proportionate amount of rent. Is the claim valid?
Prepared by Dr. Seema H. Kadam,Associate
Prof.,TMES-MBA,GTU

17. Contd..
3. The unloading of a ship was delayed beyond the date agreed
with the ship owners owing to a strike of dock labourers.On a
suit by the ship owners for damages, the plea of impossibility
of performance was raised. Advice the ship owners.
4. A and B jointly owe Rs. 200 to C.A pays the amount to C , B,
not knowing this fact , pays Rs. 100 over again to C.Discuss
the rights of A and B as against C.
5. Is a claim enforceable on the ground of quantum merits in the
following case: a)A is employed as a managing director in a
company. After he renders service for some time it is found
that that the directors were not qualified to appoint him as
such. b)A undertakes to build a house for B for Rs. 25,000,
but after having done half the work he abandons the contract.
B afterwards completes the house.
Prepared by Dr. Seema H. Kadam,Associate
Prof.,TMES-MBA,GTU

18. Contd..
6. A left his carriage on B’s premises.B’s landlord seized the
carriage as distress for rent. A paid the rent to obtain the release
of carriage. Can A recover the amount from B?
7. D voluntarily renders substantial assistance to B whose house
has caught fire. Can D claim any compensation from B for such
assistance.
Prepared by Dr. Seema H. Kadam,Associate
Prof.,TMES-MBA,GTU