DISCHARGE OF CONTRACTAbdul TawabAsif Masood

Abdul Wahab BashirFarast Anees

Hamza SaeedAbdul Saboor

MODES OF DISCHARGE OF CONTRACTMeans termination of the contractual relation

between the parties to a contract.Modes of discharge:

PerformanceAgreementSubsequent impossibilityLapse of timeOperation of lawBreach of contract

Discharge by performance

Discharge by performanceNatural modeWhen parties to a contact perform their

promisesPerformance may be:

Actual performance Tender

Actual performanceWhen parties fulfil the obligation according to

the terms and conditions of the contract.Tender

Also known as offer of performance or attempted performance

Parties offer to perform the contract but the other party does not accept it.

Essential to a valid contractIt must be unconditional.Made at proper time and proper place.Made by person who is able to perform the

promise.Made to the promisee or his agent.In case of money tender, exact amount should

be tendered.

Discharge by agreement

Can be discharge in following ways:NovationAlterationRescissionRemissionWaiver

NovationMeans replacement of existing contract by a

new one.May be between same or new parties.

AlterationWhen one or more terms of the contract are

changed.Rescission

Cancellation of contract by mutual consent.

RemissionAcceptance of lesser fulfilment of a promise

that was made.Waiver

Intentional abandonment of a right which a person is entailed to under a contract.

Discharge by subsequent impossibility

Initial impossiblyAn agreement to perform an impossible act is

viod ab-initio.E.g. discover treasure by magic.

Subsequent impossibilityA contract capable to be performed after

formation becomes impossible, or unlawful and as a result void.

Factors that make contract voidDestruction of subject matter

Contract destroyed without the fault of the promisor or promisee.

Failure of purposeFormation of contract depends upon happening

of a certain event and if event does not happen, the contract discharged.

Death or personal incapacityContract depends upon existence of a

particular person, the contact discharged on the illness, incapacity or death of that person.

Change of lawContract which are lawful when made, become

unlawful due to change in law.Declaration of war

Contract entered into within enemy during war is void ab-inito.

Discharge by lapse of time

Contract discharge by lapse of timeThe limitation act 1908

In case of breach of contract, legal action should be taken within a specific period.

Discharge by operation of law

Contract terminates by operation of law in following ways:InsolvencyMergerMaterial alternation

InsolvencyCourt declares a person as insolvent.

MergerMerger takes place when an inferior rights

available to a party merges into a superior right available to the same party another contract.

Material alterationChange in material term of the contract

without the consent of other party.

DISCHARGE BY BREACH OF CONTRACT

The failure of party to perform his obligation.Breach of contract may be:

Actual breachAnticipatory breach

Actual breachOccur when party fails to perform the contract when performance is due.

On due date of performance Party fails to perform on due date of contract.

During the course of performance Party perform a part of contract but refuse to

perform remaining part.

Anticipatory breachOccur when party declares his intention not to perform the contract before the due date of performance.

Express breach Party communicate to other party not to perform

the contract.Implied breach

A party does an act which makes the performance of contract impossible.

Effect of anticipatory breachThe promisee is excused from performance.He may treat the contract as rescinded and

sue the other party for damages.He may ignore the conduct of promiser and

wait for time of performance and then sue the promisor.