What do you mean by discharge of contract

by • 05/06/2013 • GeneralComments (0)330

Q.4      What do you mean by discharge of contract? What are the various ways in, which a contract may be discharged? OR Explain and illustrate various modes in which a contract may be discharged.

 

Ans: DISCHARGE OF CONTRACT

Discharge of a contract means to get free from the obligation and rights created by law under a contract. When two parties enter into an agreement, one party has to do something or to perform an act for the other party. The performance of such act is obligation for the one party and is a right for the party for whom such act or thing is done. So discharge of contract means to put to an end to all the obligations and rights created by the contract.

 

MODES OF DISCHARGE

A contract may be discharged by any one of the following ways.

1. BY PERFORMANCE

When all the parties to a contract perform their part of obligations according to the way prescribed or required by law the contract is said to be discharged by performance- [Sec 37]

EXAMPLE

A agrees to sell horse B for Rs. 5000/=- Under this contract when B will pay Rs 5000/= to A and A will over the horse to B, the contract will be discharged by performance,

 

2. BY MUTUAL CONSENT

When the parties to a contract by mutual consent agree to substitute a new contract for the old one or rescind it .or alter it, the original contract need not be performed and parties are discharged from their part of obligations* This discharge may be in any one of the following ways.

 

(a)        NOVATION

When the parties to a contract substitute a new contract for the old one it is called novation. Under novation parties to the contract may be charged.

EXAMPLE

“A” owes Rs. 100/= to “B” under a contract. By mutual consent both the parties agree that i4A” will sell for Rs. 100/= to “BIt will be a new contract, which cancels the old one.

 

(b)       ALTERATION

When any condition of the contract is changed, it is called alteration of the contract.

EXAMPLE

“A” promise to pay Rs. 5000/= to “B” after 3 months. Later on “A” and “B” mutually decide and extend the period for siX month. Now “A” is discharged to pay within 3 month.

 

(c)        RESCISSION

Rescission means cancellation of the terms of the contract. When any one or all the terms of the contract are cancelled, it is called the rescission of the contract and it discharges the parties from the obligation of the original contract.

EXAMPLE

“A” promises to deliver 1000 units of his product at Rs. 10/= each to “B” at B’s shop. Later on “B” rescind the condition to deliver to goods at B’s shop agree to get the goods from As shop. Now “A” is discharged to deliver the goods to B’s shop by rescission.

 

(d)       REMISSION

Remission to means to leave wholly or a part of the performance at the contract some thing the promisee himself dispenses or remits the performance of the contract or gets satisfaction other than its performance is called remission of contract.

EXAMPLE

“A” agrees to deliver 1000 units of his product to “B’\ Later on price increase in the market and accepts only 800 units in full satisfaction of the contract. Now “A” is discharged from liability by remission.

 

(e)       BY WAIVER

Some times the promisee himself waives his right to the contract and promisor is released from his part of obligations.

EXAMPLE

“A” owes Rs. 2000 to “B”. “B” with his free consent waives. “A” will be discharged from

liability by waiver;

 

3. BY LAPSE OF TIME

A contract must be performed with in a prescribed time and manner. If it is not performed, the injured party should bring suit within the time performed by the limitation Act for breach of contract. In case of its failure to do, so the contract is discharged by lapse of time, for example a creditor is allowed to sue for non-payment of debt wit in three years. After this period he cannot use for the recovery of the debt.

 

EXAMPLE

“A” took loan from HBH. The last date of repayment of loan has expired but “B” filed no suit for 3 years. “A” is discharged from his liability.

 

4.         By Breach Of Contract

When any of the parties to a contract fails to perform its pan of obligation, it is said to be breach of the contract. In case of breach of contract, the injured party has not only the right to claim for damages but is also discharged from its parts of obligation.

 

EXAMPLE

“X” promises to pay Rs. 1000 to “Y” within 10 days and “V” promises to deliver 1000 units of his product within 20 days. But “X* fails to make payment within 10 days and T is discharged from his part of obligation due to X*s breach of contract.

 

5.         BY OPERATION OF LAW

A contract may be discharged by operation of law in any of the following ways.

 

a)         BY DEATH

When the performance of the contract depends on the personal skills of the promisor and he dies the legal representatives of the promises are discharged from obligation.

 

b)         BY UNAUTHORIZED ALTERATION

When a written contract is altered in its material part without the mutual consent, law discharges the contract.

 

(c)        BY INSOLVANCY

When any one of the contracting parties is declared insolvent by court, he is released from all his debts payable to others.

 

d)         BY MERGER

When a smaller contract is merged into lager contract (as the higher security is accepted at the place of lower security) the smaller contract is discharged by law.

 

6.         BY IMPOSSIBIITY

When the performance of the contract is impossible, the contract is said to be void and parties are discharged from the part of obligation.

 

EXAMPLE

“A” promises to pay Rs. 1000/= if “B” put alive a dead body. As the performance is impossible, so the parties discharges from liability without of the contract.

 

7.         CONTRACT

When any contract is declared by law void, the parties such contracts are discharged form performance. For example case of wagering contracts and contracts in restraint of trade marriage The parties are discharge without performance of the contract.

 

8.         VOIDABLE CONTRACT

When the person at whose option contract is void able rescinds the performance, the other party is discharged from obligation. Net respects the http://www.writemypaper4me.org/ intellectual property of others?

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