Discharge of contract

 A contract is discharged when rights and

obligations created by it comes to an end,
i.e., contracting parties no more have any
responsibility or liability to each other.
Discharge of contract
1. By performance- actual or attempted.
2. When promised performance becomes
impossible.
3. Mutual agreement-by novation, alteration
or recession (Sec.62), remission or
waiver (Sec.63).
4. Lapse of time
5. Operation of law
6. Breach of contract
Breach of contract
 Breach of contract is failure of a party to
perform his obligations under a contract.
When one party commits a breach the
aggrieved party becomes entitled to rescind
the contract and to claim damages, if any.
 The breach of contract may be

Actual breach of contract, or

Anticipatory or constructive breach of
contract.
Actual breach of contract
 Where one party fails to perform his
contractual obligations on due date of
performance, or during the performance,
he is said to have committed a breach of
contract. If the performance is not strictly
according to the terms of the contract,
then also it is treated as breach of
contract.
Anticipatory breach of contract.
 Sec.39 ‘when a party to a contract has
refused to perform, or disabled himself
from performing, his promise in its entirety,
the promisee may put an end to the
contract, unless he has signified, by words
or conduct, his acquiescence in its
continuance.’
 Anticipatory breach of contract may be
express or implied.
Effect of anticipatory breach
 The aggrieved party may treat anticipatory
breach as actual breach.
 The aggrieved party may decide to ignore
the anticipatory breach, and wait for the
due date of performance.
 Doctrine of anticipatory breach does not
apply to promises to pay debts under
promissory notes and bonds.
Remedies for breach of contract
 The aggrieved party may
 Cancel the contract which will relieve him from
all contractual obligations. (rescission)
 Cover and receive damages.
 Demand specific performance
 demand injunction.
 Recover any consideration given to the
breaching party (restitution)
 Recover proportionate payment for the work
done. (Quantum Meruit)
Rescission (cancellation of contract)
 Both the parties are absolved from their
contractual obligations, without prejudice
to the injured party’s right to claim
damages.
 The party rescinding a voidable contract
must restore the benefits received from
the other party.
Damages
 Damages are monitory compensation for
the losses suffered or gains prevented
due to the breach.
 Kind of damages and rules
 Compensatory damages- general damages
and special damages.
 Vindictive or exemplary damages- punitive
damages. e.g.. for dishonor of cheque.
 Nominal damages
 Liquidated damages and penalty
Suit for specific performance
 The Specific Relief Act, 1877 gives the
court discretionary powers to order
specific performance instead of or in
addition to damages. The powers are
subject to Sec.14 of the Specific Relief
Act, 1877.
Suit for injunction
 Injunction is an order of the court
restraining a person from doing something
which he promised not to do. This remedy
is available where the contract contains a
negative stipulation.
Quantum meruit & Restitution
 This is a remedy supplementary to the
damages and the legal meaning of the
term is ‘payment in proportion of the work
done.
 Restitution is an act of restoring back to
the rightful owner which has been taken
away or lost.