Business Regulations

1. Discharge
of
Contract

2. DISCHARGE OF CONTRACTS
The cases in which a contract is
discharged may be classified as follows:
A. By performance or tender.
B. By mutual consent.
C. By impossibility of performance.
D. By operation of law.
E. By lapse of time
F. By breach of Contract

3. A. By performance or tender:
(a)Actual Performance
When both the parties perform their
promises.
(b) Attempted Performance or tender
Only an offer to perform the obligation
under the contract.

4. B. Discharge by mutual consent or
agreement:
The termination of contract by further
agreement or consent.
Ways to do so:
1. Novation
2. Rescission

5. 3. Alteration
4. Remission
5. Waiver
6. Merger

6. Discharge by mutual consent
or agreement
• 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.

7. Discharge by mutual consent
or agreement
• Rescission
Takes place when all or some of the terms
of the contract are cancelled.
Could be done by a)mutual consent or b)
when one party fails in the performance of
contract, the other party could rescind the
contract without fear of claim of
compensation.

8. Discharge by mutual consent
or agreement
• Alteration
Modification of one or more terms of the
contract by the mutual consent of the
parties.
• Remission
It is acceptance of lesser fulfillment of the
promise made.

9. Discharge by mutual consent
or agreement
• Waiver
When parties to the contract agree that
they shall no longer be bound to the
contract
• Merger
When inferior right accruing to a party
under contract merges into a superior right
accruing to the same party.

10. C. BY IMPOSSIBILITY OF PERFORMANCE
(a)Inherent impossibility
(i) Known to the parties
(ii) Unknown to the parties
(b) Subsequent impossibility

11. Cases of Subsequent impossibility
(i) Destruction of subject matter of contract
[Case: Taylor v. Caldwel ]
A music hall was agreed to be let out on
certain dates, but before those dates it
was destroyed by fire.
Held, that the owner was absolved from
liability to let the building as promised

12. (ii) Non-existence or non-occurrence of a
particular state of things
[Krell v. Henry]
• A contract was to hire a flat for viewing the
coronation procession of the king.
• The procession had to be cancelled on
account of king’s illness.
• In a suit for the recovery of the rent, it was
held that the contract became impossible
of performance and that the hirer need not
pay the rent

13. (iii) By the death or disablement of the
parties
(iv) Subsequent illegality
(v) Declaration of war

14. Impossibility of performance not an excuse
1. Difficulty of performance
[ Keshav Lal v. Dewan Chand]
D agreed to supply coal with certain time.
Due to Govt restrictions on the transport of
coal from collieries there was a failure of
delivery in time. But since coal was available
in the market from where D could have
purchased it. D will not be discharged on the
ground of supervening impossibility

15. 2. Commercial impossibility
Example: X promised to send certain goods
from Bombay to Antwerp in September, In
August war broke out and shipping space
was not available except at very high
rates.
Held : The increase of freight rates did not
excuse performance

16. 3. Impossibility due to failure of a third
person
4. Strikes, lockouts and civil disturbances
[Case: Jacobs v. Credit Lyonnais ]
• A agreed to supply B certain goods to be
produced in Algeria. The goods could not
be produced because of riots and civil
disturbances in that country.
• Held : There was no excuse for non-
performance of the contract

17. 5. Failure of one of the objects
[Herne Bay Steamboat Co. v. Hutton K.B.]
A agreed to let a boat to H to (i) view the
naval review at the coronation and (ii) to
• cruise round fleet.
• Owing to the king’s illness, the naval
review was cancelled, but the fleet was
assembled and the boat could have been
used to cruise round the fleet.
• Held : The contract was not discharged

18. Effects of Supervening Impossibility
(i) Contract becomes void
(ii) Compensation for the loss suffered
(iii) Restore the benefit

19. D. BY OPERATION OF LAW
1. By death
2. By insolvency
3. By merger
4. By the unauthorised alteration of terms
of a written document

20. E. By lapse of time
F. By breach
(i) Actual Breach of Contract
(ii) Anticipatory Breach of Contract

21. THANK YOU
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