Discharge of contracts
It means termination of a contract/give permission to
leave. A contract is said to be discharged when the
rights/obligations created come to an end .A contract may
be discharged in the following ways.
[Link] performance.-means fulfilling of their respective legal
obligations created under the contract by both the promisor
and promisee . Performance by all the parties of the
respective [Link] is the normal and natural mode of
discharge or termination of a contract.-eg. A promise to
deliver 100 bags of rice to B and B promises to pay Rs.1 lakh
on [Link] contract is said to be performed when A
delivers 100 bags of rice to B and B pays Rs.1 lakh to A.
Performance may be actual performance or attempted
performance—Attempted performance is an offer to
perform or tender.A tender is not an actual performance
but an attempt to perform his part of obligation.
[Link] by agreement—may be express consent
/implied consent—If the parties to a contract agree to
substitute a new contract in the place of the original
contract/to rescind or alter, the original need not be
performed. The substitution of a new contract is called
“Novation”. Novation creates a new contract in the
place of the original contract.
.
Novation may occur in two [Link] parties
substituted for the old one. [Link] may
substitute new contract for the old
3 .By impossibility of performance---Performance
may become impossible---due to destruction of
the subject matter,
Non existence of a state of thing,
Death or incapacity of the party for personal service
or change of law or object of the contract
rendered illegal.
•[Link] by lapse of time. Every contract must be
performed within a time frame--time limit vary from
contract to contract—The Limitation Act provides
periods of limitation—eg. X borrows Rs.5000 from
Y through a promisory [Link] X does not pay the
amount Y must file suit to recover the amount
within three years.
•[Link] by operation of law.-When personal
skill of the party is involved, contract will be
discharged [Link] the death of the party. [Link]
Eg. X agrees to paint a picture for [Link] to
the agreement X dies. Now the contract of X with Y
is discharged because of the death of the
promisor.
(b).By insolvency—if a person is adjudicated
insolvant by a competent court, all his rights and
liabilities are vested with the official receiver and
the insolvent is discharged from all his rights and
liabilities arising from his earlier contracts.
6 .Discharge by breach of contract—means failure of a
party to perform his obligation under a contract -when
the promisor fails to discharge his part of contract , he
has committed a breach of .If contract is unilateral, the
only remedy to the other party is to claim relief against
the promisor.
If contract is bilateral, the party who is not in breach
is not only entitled to claim relief for breach but also
exonerated from liability to perform his part of
contract
.
Breach of contract is of two [Link].
(a).Actual breach of contract and
(b).Anticipatory breach of contract.
Who can demand performance.?
Naturally it is only the promisee who can
demand performance of the promise under a
contract.
The general rule is that a person cannot acquire
rights under a contract to which he is not a party.
([Link] [Link] of Madras.).A third
party cannot demand performance of the contract
even if it was made for his benefits.
In case of death of the promisee, his legal
representatives are entitled to enforce
performance of the contract against the promisor.
By whom contracts must be performed ?
1. By the promisor himself--- contracts involving
personal skills,taste or credit eg. A contract to paint a
picture, a contract of agency or service,the promisor
must himself perform the contract.
2. By the promisor or his agent– ( sale of goods or a
contract to lend a sum of money, the promisor or his
agent may perform the contract. ).
[Link] the legal representatives--- in the case of death of
the promisor, before performance,the liability falls
on his legal representatives (if not involving personal
skills— eg-paint a picture.).
Eg,A promises to deliver goods to B on a certain day
on payment of Rs.1000. A dies before that day. A’s
representatives are bound to deliver the goods to B
and B is bound to pay the Rs.1000 to A’s
representatives.
4. Performance by a third person—
Sec.41 lays down that if a promisee accepts
performance of the promise from a third person, he
cannot afterwards enforce it against the promisor.
Thus where a promisee accepted lesser amount
from a third party in full satisfaction of his claim,it was
held that he cannot enforce the promise against the
promisor. ( Lala Kapurchand [Link] Nawab Azamjnh )
BREACH OF CONTRACT.
Breach means failure of a party to perform
his obligation under a contract.( sec.39 ).
• A breach of contract by the promisor may
take place when [Link] promisor refuses to
perform his obligation or [Link] fails to perform
or [Link] conduct/action it becomes impossible
of performance.
• Promisee—The promisee is given an option.
• [Link] the contract as broken & claim damages for the whole
agreement.
• [Link] the contract alive, accept performance if made by the
other party & claim damages for the part not performed.—
• There are two types of breaches.—[Link] breach & 2.
Anticipatory breach.
• Actual breach---when the performance becomes due & one
party fails or refuses to perform his obligation actual breach
takes place..eg.X agrees to supply Y 10 bags of sugar on 1st of
[Link] performance is due on 1st of [Link] 1st March,
• He fails to supply sugar.,this is actual breach.
• [Link] breach---When a party to a contract refuses to
perform his obligation before the due date of performance, it
is called anticipatory breach of contract.
• Eg.A agrees to supply 5 bags of sugar to B on 5th
Nov.2020 .But before this date ,he informs B that he is not
going to supply the sugar. This is anticipatory breach by
express repudiation. In that case treat the contract as broken
and claim damages.
• Anticipatory Breach may take place in two ways.
(a).Expressly by words spoken or written----Here a party to
the contract communicates to the other party before the
due date of performance, his intention not perform
the contract.
(b).Implied by the conduct of one of the parties.---here a
party by his own voluntary act disables himself from
performing the contract.-eg. (1).A agree to marry B
but before the agreed date of marriage ,she marries C
2.A person contracts to sell a particular horse to another
on 1st June and before that date he sells the horse to
some body else.
In both the above cases there occurs an anticipatory
breach of contract brought about by the conduct of
one of the parties.
Effects of an anticipatory breach—when there is an
anticipatory breach of contract the promisee is
excused from performance or from further
performance. It also gives an option to the promsee
(aggrieved party),whereby he may either treat the
contract as rescinded & sue the other party for
damages without waiting until the due date of
performance
Remedies for breach of contract—
[Link] of contract ( cancellation ).it is the revocation of
[Link] a contract is broken by one party,the other
party may sue to treat the contract rescinded and refuse
further performance.
[Link] for specific performance—if the aggrieved party is not
satisfied by mere damages and expects the contract to be
perfomed as per agreement,he may insists specific
performance and the court may grant equitable remedy
like specific performance of the contract.
[Link] for injunction—An order of the court restraining or
preventing a person from doing a particular act.
4. Suit upon “Quantum Merit” means as much as
[Link] a person has done some works under a
contract and the party repudiates the contract, then the
party who has performed the work can claim
remuneration for the work he has already done
(“doctrine of quantum merit”)
[Link] for damages—monitory compensation payable by
the defaulting party to the injured party in the event of
breach of contract.
