DISCHARGE OF

CONTRACT

It means termination of a
contractual relationship between the
parties.
When a contract cease to exist
By discharge the rights and
obligations of the parties come to an
end.
A contract may be discharged by:
Performance
Agreement

or consent
Impossibility of performance
Lapse of time
Breach of contract

DISCHARGE BY PERFORMANCE

When parties to contract fulfill their

obligations arising under the contract within
the time and in the manner prescribed.

Actual performance

Attempted performance
Where

promisor offers to perform his obligation

but the promisee refuses.

DISCHARGE BY AGREEMENT OR CONSENT

Things may be destroyed in the same manner in

which constituted.
Contractual agreement may be discharged by
agreement which may be expressed or implied.
Novation
New

contract with same parties

A owes B Rs. 1000. he enters into an agreement with B

and gives B a mortgage of his estate for Rs. 5000 in
place of debt of Rs. 10000

Contract

rescinded for a new contract

A owes money to B under a contract. It is agreed

between A B and C that B shall henceforth accept C as
hid debtor

Rescission
When

all or some terms of the contract are cancelled

By mutual consent of the parties

Where one party fails in performance of his obligation
A and B enter into a contract that A shall deliver certain
goods to B by the 15th of this month and that B shall
pay the price on first of the next month. A does not
supply the goods. B can rescind the contract and need
not pay the price

Alteration

A enters into a contract with B for supply of 100 bales of

cotton at his godown no.1 next month. A and B can alter
the terms of the contract next month

Remission

Acceptance of a lesser fulfillment for the promise

owes B Rs. 5,000. A pays to B and B accepts,

in satisfaction of his debt, Rs. 2000 instead of
Rs. 5000. The whole debt was discharged

Merger
Inferior right merges with a superior right
P holds a property under lease. He later buys the property
and gains rights as an owner

DISCHARGE BY IMPOSSIBILITY OF
PERFORMANCE

Impossibility existing at the time of agreement

(void) Initial Impossibility/pre contractual

What is impossible does not create an obligation

Known to parties absolute impossibility

A

agrees to B to put life into a dead body.

Unknown to parties
Mutual

mistake
A sold to B certain goods supposed to be on voyage.
The goods had ceased to exist due to the perils of
the sea. Held the contract was void.

Impossibility arising subsequent to the

formation of contract Supervening
Impossibility/ post contractual.
Destruction of subject matter
C let a music hall to T for a series of concerts
for certain days. The hall was accidentally
burnt down before the date of first concert.
Held, the contract was void
Non occurrence or particular state of things
A and B contracted to marry each other.
Before the wedding day A goes mad. The
contract is void

Death or incapacity for personal service.

An

artist was supposed to perform at a

concert for certain price. Before she could do
so, she was taken seriously ill. Held, she was
discharged due to illness

Change of law
D

entered into a Contract with P on 1st March

for the supply of certain imported goods in
the month of September the same year. On
1st June of Act parliament, the import of such
goods was banned.

Outbreak of war
A

contracts to take in cargo for B at a foreign

port. As government afterwards declares a
war against the country in which the port
was situated. The contract becomes void

DISCHARGE BY OPERATION OF LAW

Independent of the wish of the parties

Death
Merger
Insolvancy
Unauthorised

alteration
Rights and liabilities being vested in the same
person.

DISCHARGE BY BREACH OF
CONTRACT

Breaking of the obligation.

When a party without a lawful excuse does

not fulfill his contractual obligation.

Breach of contract may be:

Actual
anticipatory

ACTUAL BREACH OF CONTRACT

At the time when the performance is due.

A

agrees to B to deliver 5 bags of wheat on 1 january.

He does not deliver the wheat on that day.

During the performance of the contract

Express

C contracted with a railway company to supply 3,000

tonns of railway chairs at a certain price, to be delivered
in installments. After 1,787 tons has been supplied, the
railway company asked C to deliver no more

Implied

repudiation

repudiation

P a british subject was engaged by captain of a warship

owned by the japanese government to act as a fireman.
Japanese government declared war with china so P
consequently left the ship. Held he was entitled to the wages.

ANTICIPATORY BREACH

Declaring intention of not performing the

contract before the performance is due.
By

expressly renouncing his obligation under the

contract

A undertakes to supply certain goods to B on 1 st

January. Before this date, he informs B that he is not
going to supply the goods.

By

doing some act so that the performance of his

promisee becomes impossible

A promised to assign to B, within seven years of the

date of promise, all his interest in a lease for the sum
of $140. Before the end of seven years, he assigned
his interest to another person

IMPOSSIBILITY OF PERFORMANCE
NOT AN EXCUSE

Difficulty of performance.
A

sold certain quantity of Finland Timber to B to be supplied between july and

september. Before any Timber was supplied, war broke out in the month of
august and transport was disorganised so that A could not bring any Timber.
Held difficulty in getting timber did not discharge a from his performance

Commercial impossibility
A

promised to send certain goods from Mumbai to Antwerp in September.

Before the goods were sent a war broke out and there was a sharp increase in
the shipping rates. Held the contract was not discharged

Impossibility due to performance of third person

A

a whole seller entered into a contract with B for sale of a certain type of
cloth to be produced by C , a manufacturer of that cloth. C did not
manufacture that cloth. Held A was liable.

Strikes , lock-outs and civil disturbance.

A

agreed to supply to B certain goods to be produced from Algeria. The goods

could not be produced due to riots in that country. Held there was no excuse
for non performance of the contract.