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Meaning
How to discharge a
contract?
PERFORMANCE
1. DISCHARGE BY
PERFORMANCE
2. DISCHARGE BY AGREEMENT OR
CONSENT
3. Discharge by impossibility of
performance.
If an agreement contains an undertaking
to perform an impossibility, it is void ab
initio.
This rule is based on following legal
principles:
1.The law does not recognize what is
impossible. (lexicon cogit ad
impossibilia)
2. What is impossible does not create an
obligation. (impossibilium nulla obligato
est)
1.
2.
3.
4.
5.
1.
2.
3.
4.
5.
Difficulty of performance.
Example: A sold a 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 disorganise.
Commercial impossibility.
Impossiblility due to failure of a third person.
Example: A, a wholesaler, entered into a contract with
B for the 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 to B for
damages.
Strikes, lock-outs and civil disturbance.
Failure of one of the objects.
4. Discharge by Lapse of
Time
5. Discharge by operation of
law
A contract may be discharged independently
of the wishes of the parties i.e. operation of
law. This includes discharge:
(a). By death.
(b). By merger.
(c). By insolvency.
(d). By unauthorized alteration of the terms of a
written agreement.
(e). By rights and liabilities becoming vested in
the same person.
6. Discharge by breach of
contract
1.
2.
1.
2.
This refusal to perform may be by(a). Express repudiation (by word or act).
(b). Implied repudiation ( impossibility
created by the act of a party to the
contract).