FORMATION OF CONTRACT:

Section 10 of the Indian Contracts Act, 1872

All agreements are contracts, If they

are
- made by the free consent of the
parties
- competent to contract
- for a lawful consideration and
- with a lawful object
And, are not hereby expressly
declared
to be void.

Discharge or Termination of
Contract
The formation of Contract gives rise to
rights and obligations for the contracting
parties. A Contract is a legal bond
(vinculum juris) and it binds the parties to
it.
Then, how long they continue to be, so
legally bound?
May be for - a few minutes or hours; or
- a few days or months; or
- a year or a few years; or
- unto the death of one of the parties
to it.
One day or the other, the contract must

Modes of Discharge or Termination of

Contract
1- by Performance

[Sec - 37 and 38]

2- by Impossibility of Performance

[Sec

56]

3- by Agreement-resulting in [Sec62 and 63]

4- by Operation of Law
5- by Laps of Time, and
[Law of Limitation]
6- by Breach of Contract
[Sec-39]

Modes of Discharge or Termination

of Contract.
A contract may be discharged or terminated
1- by Performance [Sec - 37 and 38]

2- by Impossibility of Performance [Sec 56]

Law will not compel anyone to perform an act
which is impossible. Be it initial or supervening.
[As a matter Public Policy]

3- by Agreement resulting in

[Sec62 and 63]

a) Novation: substitution of the existing contract by

a new contract mutually. New contract may be
between the same parties or different parties.
b) Rescission: cancellation of the existing contract (i)
mutually , or (ii) by aggrieved party, or (iii) by the
party where the consent is not free.

3- by Agreement resulting in

[Sec62 and 63]

c) Alteration: Change in the terms and conditions

of the existing contract mutually. Parties continue
to be the same.
d) Remission: Accepting lesser performance than
actually due under the contract. It includes any
extension of time of performance.
e) Waiver: Abandonment of a right which a party
is entitled to under the contract.
f) Accord and satisfaction: Accepting any other
satisfaction than the performance originally
agreed.

4.Discharge or Termination by
Operation of law

A Contract may be discharged/terminated by Law in

the following cases:
- by Death of Promisor: Where the personal
volition and skill of the promisor is the
consideration for the contract.
- by Insolvency: Upon declaration by court.

- by Merger: Rights & liabilities becoming vested

in the same person
- by Alteration: Alteration of any material part in
written contract without consent of other
party
- by Notice: within 6 months of attaining the age
of majority under Partnership Act.

5. Discharge or Termination of
Contract by Laps of Time
Every Contract mentions the time
during which it should be performed.
If no time is mentioned, it should be
performed within a reasonable
time.
What is a reasonable time depends
upon each particular case.
The laps of - time agreed, or
- reasonable time
discharges the Contract.

6. Breach of Contract.
A Contract comes to an end, when any party
to it
- refuses to perform its part of obligation
(s).
If such refusal occurs before due date of fulfillment of its promise or - performance
of its obligations
it is known as Anticipatory Breach.
If such refusal occurs
- at the time of performance; or
- during the course of performance
it is called Current Breach.

Remedies for Breach of

Contract
A Breach of Contract entitles the
aggrieved party:
- to rescind the contract and also
- to sue the defaulting party for
damages.
The aggrieved party may take other
remedies available to it under Specific
Relief Act, such as
- Specific Performance of the contract, or
- request for issue of Injunction Order
etc.,

Applicability of Law of Limitation

to Contracts.

If a contract is not performed, the aggrieved party has a

right to enforce its rights available under the contract.
Law will come to the rescue of the aggrieved party
only when it seeks legal remedy in time.
Law will not support indolent and lazy who do
not act in time.
[vigil Antibus, non dormantibus, jura]
So, the rights can be enforced at any time before
it
becomes barred by the Law of Limitation.
Therefore, an action to enforce rights available under
a contract must be taken within 3 years of
- Due date of performance, or
- Date of Breach in India.