This document discusses the various modes of discharge of a contract under Indian law. It defines discharge of a contract as the termination of contractual obligations between parties. There are several ways this can occur, including performance, agreement between parties, impossibility of performance, lapse of time, breach of contract, and operation of law such as death or insolvency. Specific modes like novation, rescission, alteration, and remission are described in detail as ways a contract can be discharged through agreement.

2. INDEX
• Introduction to Discharge of Contract.
• Modes of Discharge of Contract.
• Reference

3. DISCHARGE OF CONTRACT
What is contract?
A verbal agreement or a written agreement between parties,
Creating mutual obligations that are enforceable by law.
What is discharge of contract?
As per the Indian Contract Act 1872, Discharge of contract
means the termination of contractual relationship between
parties are free from further obligation arriving from it.

4. MODE OF DISCHARGE OF
CONTRACT
By performance
 Actual
 Attempted
By impossibility
of performance
By lapse of time
By breach of a
contract
 Actual
 Anticipatory
By mutual agreement
(by implied consent)
1. Novation-Sec 62
2. Rescission-Sec 62
3. Alteration-Sec 62
4. Remission-Sec 63
5. Waiver
6. Merger
By operation of law
1. Death
2. Merger
3. Insolvency
4. Unauthorized alteration

5. Discharge by Performance
Performance means doing of that duty which is required by a contract discharge
by performance takes place when the parties to the contract fulfill their
obligation arises under contract within the time and manner prescribed.
Discharge by performance arrived by two ways:-
1. Actual Performance:- when both the Parties perform their promises the
contract is discharged. This is the most common method of discharge of
Contract.
2. Attempted Performance :- where the promissory offer to perform his
obligations but the promise refuses to accept the performance.

6. Discharge by Agreement
As an agreement binds the parties perform the contract. Similarly a
future agreement is made to terminate the contract.
Discharge by agreement arises in different ways :-
(i) Novation-Sec 62
(ii) Rescission-Sec 62
(iii) Alteration-Sec 62
(iv)Remission-Sec 63
(v) Waiver
(vi) Merger

7. (i) Novation :-
When a new contract is substituted for an existing one between the same parties.
When a new contract is substituted for an existing one between one of the parties and
a third party.
Novation should take place before the expiry of the time of the performance of the
contract.
(ii) Rescission :- rescission of a contract takes place, when all of some of the terms of
contract are canceled.
Illustration:
A promises to supply goods to B after 6 months but the goods goes out of fashion.
A&B mutually rescinded the contract.

8. (iii) Alteration :- Alteration of a contract means change in one or more of the material
terms of the contract by mutual consent of the parties in such a case a old contract is
discharged by alteration.
( iv) Remission :- Remission may defined as the acceptance of a lesser Sum chain
what was contracted for a lesser fulfillment of the promise made.
(v) Waiver :-
when parties to the contract agree that they shall no longer be bound to the contract.
Consideration is not necessary for waiver.
(vi) Merger :- where an inferior right contract merges into a superior right contract,
the former sent discharged automatically

9. Discharge By impossibility of performance
Section 56 of ICA, an agreement to do an impossible at is void, in English law it is
known as doctrine of frustration. In Indian law it is known as impossibility of
performance.
(i) Pre-contractual impossibility:-
Impossibility existing at time of agreement and an agreement to do impossible
act is void is known as pre-contractual impossibility.
(ii) Post-contractual impossibility:-
impossibility which arises after the formation of contract become void is known
as Post-contractual impossibility. Such as :- Death, change of law, Out break of wall.

10. Discharge by lapse of time
The limitation Act 1963 lays lay’s down that contract should be perform within a
specified period called as period of limitation. If it is not performed and if no
action is taken by promisor then he is deprived of his remedy and a contract gets
discharge
Illustration:- Peter takes a loan from John and agrees to pay installments every
month of the next five years. However, he doesn’t pay even a single installment.
John calls him a few times but then gets buzy and takes no action. Three years later,
he approaches the court to help him recover his money. However, the court rejects
his suit since he has crossed the time-limit of three years to recover his debts.

11. Discharge by operation of law
A contract may be discharged independently of the wish of parties i.e. by
operation. This includes discharge.
a. Death. Where the contract is of a personal nature, the death of the promisor
discharges the contract.
b. Insolvency. A contract is discharged by the insolvency of one of the parties
to it.
c. Merger. Where an interior right contract merges into a superior right
contract, the former stands discharged automatically.
d. Unauthorised material alteration. A material alteration made in a written
document or contract by one party without the consent of the other, will make
the whole contract void.

12. Discharge by Breach of contract
Section 40 of ICA, 1950 states, when a promisor sales to perform is obligations or to
tender performance, there is a breach of contract.
Breach of Contract arise in two ways:-
(i) Actual Breach of Contract:- it occurs when a party fails to perform his obligation
upon the date fixed for performance by the contract
(ii) Anticipatory breach of Contract :- when a party before the time of
performance is due announces that he is not going to perform the contract.
Illustation:- X agrees to marry Y before the agreed date of marriage, X marry’s Z

13. • https://www.studocu.com/in/document/karnataka-state-
law-university/contract/discharge-of-contract/12593742
• https://commerceiets.com/discharge-of-
contract/#gsc.tab=0
• https://www.taxmann.com/post/blog/what-is-discharge-
of-a-contract-under-indian-contract-act-1872-featuring-
case-studies/
• https://blog.ipleaders.in/all-about-discharge-of-a-
contract/