The document discusses various modes of discharge of a contract, including: 1) By performance, where both parties fulfill their obligations under the contract. 2) By impossibility of performance, such as an agreement becoming impossible or unlawful to perform. 3) By agreement between the parties, through novation, alteration, rescission, remission, or waiver. 4) By operation of law, such as due to insolvency or the lapse of time under limitation laws. 5) By breach of contract, where a party fails to perform their obligations or makes performance impossible.

1. DISCHARGE OF CONTRACT
JUNAID SUBHANI BS A&F 5
BUSINESS LAW

2. MODES OF DISCHARGE OF CONTRACT
 A contract shall be treated to have been discharged in the following situations:
 (a) By Performance
 (b) By Impossibility of performance
 (c) By Agreement of parties
 (d) By Operation of law
 (e) By Breach of contract

3. DISCHARGE BY PERFORMANCE OF CONTRACT
 Actual performance (sec. 37)
 Obligation of parties to contracts (sec. 37): ---The parties to a contract must
either perform or offer to perform, their respective promise, unless such
performance is dispensed with or excused under the provisions of this Act,
or of any other law.
 Promises bind the representatives of the promisors in case of the death of
such promises before performances unless a contrary intention appears
from the contract.

4.  Illustrations
 (a) A promises to deliver goods to B, on a certain day on payment of Rs.
1,000. A dies before that day. A's representatives are bound to deliver the
goods to B, and B is bound to pity the Rs. 1,000 to A's representatives.
 (b) A promises to paint a picture for B by a certain day, at a certain price. A
dies before the day. The contract cannot be enforced either by A's
representatives or by B.

5. TENDER
 It is also called offer to the performance or attempted
performance. When one of the parties to the contract offers to
perform the contract but the other party does not accept it, there
is a tender. It is not an actual performance but is equivalent to
actual performance. In offer of performance, the promisor is
excused from performance and is entitled to use the promise for
damages.

6. EVERY SUCH OFFER MUST FULFILL THE FOLLOWING
CONDITIONS
 (1) it must be unconditional;
 (2) it must be made at a proper time and place, and under such circumstances that the person to
whom it is made may have a reasonable opportunity of ascertaining that the person by whom it
is made is able and willing there and then to do the whole of what he is bound by his promise to
do;
 (3) if the offer is an offer to deliver anything to the promise, the promise must have a reasonable
opportunity of seeing that the thing offered is the thing which the promisor is bound by his
promise to deliver.
 (4) An offer to one of several joint promises has the same legal consequences as an offer to all
of them.

7. ESSENTIALS OF VALID TENDER
 (a) The tender should be unconditional--There is no obligation on the counter party to accept a
conditional tender.
 (b) Tender to be made at proper time and proper place.
 (c) Tender should be in entirety as per stipulations of the agreement.
 (d) In case of tender relating delivery of goods, the Promise should be provided opportunity to
examine the goods according to the stipulations of the contract
 (e) Tender must be offered to a person who is able to perform the promise under the contract
 (f) Tender to be made to the Promise or his agent
 (g) In case of joint Promise, tender can be made to any of the joint promises.
 (h) In case tender of money, the exact amount should be mentioned.

8. EFFECT OF REFUSAL
 In case of refusal to accept offer of performance, the
contract is deemed to have been performed by the
promisor and a suit can be filed against promise for
breach of contract. (Sec 38)

9. DISCHARGE BY AGREEMENT BETWEEN THE PARTIES TO
A CONTRACT
 A- Novation
 Novation of contract means replacement of an existing
contract by a new contract. The new contract may be
between same parties or between different parties.

10.  Example
 A owed to B and B to C. A’s debt to B is cancelled and C
accepts A as his debtor. It is novation

11.  B- Alteration
 Alteration of a contract takes place when one or more of the terms
of the contract are changes. If alteration is made with the consent
of all the parties., the original contract is discharges and a new
contract takes its place. In case of alteration parties remain the
same and only the terms of the contarct are changes. (Sec 62)

12.  Example.
 A agrees to supply salt to B in 1st Feb. later A and B agree
to change the date to 5th Feb.

13.  C- Rescission
 Rescission means cancellation of contract by mutual
consent. A contract may be cancelled by agreement
between the parties at any time before is discharged by
performance. The cancellation of agreement releases the
parties from the obligation. (Sec 62)

14.  Example.
 A promised to deliver goods to B on a certain date. Before
the date of performance, A and B agrees that the contract
will not be performed. The contract is rescinded.

15.  D- Remission
 Remission means the acceptance of lesser fulfillment of a
promise that was made. It is an act of the promise
discharging the obligation of another either wholly or
partly. Thus the contract may be discharged by remission
of performance or extension of time etc. (Sec 63)

16.  Example.
 A owes B Rs 5,000. B agrees to accept Rs. 2,000 in
full satisfaction of his claim. The whole debt is
discharged.

17.  E- Waiver
 Waiver means intentional abandonment of a right which a
person is entitled to under the contract. When a party
waives his right under the contract, thee other party is
released from his obligations. For a waiver neither an
agreement nor consideration is necessary.

18.  Example
 A promised to make a short for B and B afterwards forbids
him to do so. A agrees. The contract is terminated by
waiver.

19. DISCHARGE BY IMPOSSIBILITY OF PERFORMANCE OF CONTRACT
AGREEMENT TO DO IMPOSSIBLE ACT (SEC. 56)
 An agreement to do an act impossible in itself is void.
 Contract to do act afterwards becoming impossible or unlawful:
 A contract to do an act which, after the contract is made, becomes impossible, or , by
reason of some event which the Promisor could not prevent, unlawful, becomes void
when the act becomes impossible or unlawful.
 Compensation for loss through non-performance of act known to be impossible or
unlawful.---Where one person has promised to do something which he knew, or, with
reasonable diligence, might have known, and which the promise did not know to be
impossible or unlawful, such promiser must make compensation to such promise for any
loss which such promise sustains through the non-performance of the promise.

20. ILLUSTRATIONS
 (a) A agrees with B to discover treasure by magic. The agreement is void.
 (b) A and B contract to marry each other. Before the time fixed for the marriage, A goes mad.
The contract becomes void.
 (c) A contracts to marry B, being already married to C, and being forbidden by the law to which
he is subject to practice polygamy. A must make compensation to B for the loss caused to her by
the non-performance of his promise.
 (d) A contracts to take in cargo for B at a foreign port. A's Government afterwards declares war
against the country in which the port is situated. The contract becomes void when war is
declared.'
 (e) A contracts to act at a theatre for six months in consideration of a sum paid in advance by B.
On several occasions A is too ill to act. The contract to act on those occasions becomes void.

21. DISCHARGE OF CONTRACT BY OPERATION OF LAW
 In case of insolvency of a party to a contract (Adjudicating a party as
insolvent by a court of law.); or say by lapse of time under Limitation Act,
contract shall stand discharged.

22. DISCHARGE BY BREACH OF CONTRACT
 “A breach of contract occurs when a party thereto renounces his
liability under it, or by his own act makes it impossible that he
should perform his obligations under it or totally or partially fails
to perform such obligations.”