Presented To:Mr. Asghar Ali

Presented By:

Wajid Ali 3335

Discharge of contract

“A contract is said to be discharged when the rights and obligation created by it come to end.”

The contract act 1872 provides various ways in which a contract may be discharge or terminated.

Modes of discharge of contract

1- Discharge by Performance:

A contract can be discharged by performance in any of

the following ways:

(a) By Actual Performance:

A contract is said to be discharged by actual performance

when the parties to the contract perform their promises in

accordance with the terms of the contract.

(b) By Attempted Performance or Tender:

A contract is said to be discharged by attempted

performance when the promisor has made an offer of

performance to the promisee but it has not been accepted

by the promisee.

2- By agreement:

A contract can also be discharged by the fresh agreement

between the parties.

Following are different ways to discharge a contract by

agreement.

(I) Novation:

When the parties to the contract agree to substitute a new

contract for a contract, that is called Novation.

Kinds of Novation:(a) A Novation involving the change of parties.(b) A Novation involving substitution of a new contract in the place of old contract.

(ii) Rescission:

When all or some of the terms of contract are cancelled the

contract is said to be rescind.

Rescission may occur.

(a) By mutual consent of the parties.

(b) When a party fails to perform his contractual obligation,

the other party may rescind the contract.

(iii) Alteration:

When one or more of the contract is altered by actual

consent of the parties, the contract is said to be altered.

(iv) Release of waiver:

Waiver means the intentional abandonment of a right, which

a person is entitled to under a contract.

(v) Remission:

Remission of performance means that a promise can

discharge the promisor also without a new agreement but not

only without consideration. Creditors may accept lesser

amount than what is due in discharge of the whole debt.

(vi) Merger:

It takes place when an inferior right accruing under a contract

merger into a superior right accruing to the same party or

some other contract

3- Discharge by Operation of Law:

A contract may be discharged by operation of law in the

following cases:

(a) By Death of the Promisor:

A contract involving the personal skill or ability of the promisor

Is discharged on the death of the promisor.

(b) By Insolvency:

When a person is declared insolvent, he is discharged from

his liability up to the date of his insolvency.

(c) By Unauthorized Material Alteration:

If any party makes any material alteration in the terms of the

Contract without the approval of the other party, the contract

comes to an end.

4- By Breach of Contract:

A contract may be discharged by breach if one of the parties to

a contract break the promise, the injured party has not only a

right damages but it is also discharge from performing his part

of the contract.

(i) Actual breach:

It occurs when a party fails to perform a contract, where

performance is due.

(ii) Anticipatory breach:

An anticipatory breach contract occurs before the time fixed for

performance has arrived. It may happed in two ways.

(iii) Express breach:

In express breach a party to contract communicates to

the other party, his intention not be perform the contract

on his part.

(iv) Implied breach:

In implied breach party to the contract does not act.

Which makes the performance of the contract impossible.

5- Discharge by Impossibility of Performance:

The effects of impossibility of the performance of a contract

may be discussed under the following two heads:

(a) Effects of Initial Impossibility

(b) Effects of Subsequent Impossibility

(c) Declaration of War:

The pending contracts at the time of declaration of war are

either suspended or declared as void.

(d) Change of Law:

The contract is discharged if the performance of the contract

becomes impossible or unlawful due to change in law after

the formation of the contract.

6- Discharge by Lapse of Time :

A contract is discharged if it is not performed or enforced

within a specified period, called period of limitation. The

Limitation Act, 1963 has prescribed the different periods for

different contracts. The contractual parties cannot exercise

their rights after the expiry of period of limitation.

“Conclusion”“To conclusion it can be said that, when the rights and

obligations arising out of a contract are extinguished the

contract is said to be discharged. The contractual tie may be

loosend and contract may be terminated under different

modes under contract act.”

REMEDIES FOR BREACH OF CONTRACT

In case of Breach of Contract the aggrieved party has the following remedies :

1. Suit for specific performance

2. Suit for injunction

3. Suit for damages for the loss sustained

4. Quantum Meruit

1- Suit for Specific Performance: In this case , the Court directs the party committing the breach of Contract to perform the promise according to the terms of Contract. Specific Performance of the Contract can be granted under Specific Relief Act 1877.

Specific Performance can be granted only when damages are an inadequate remedy or when the Court can supervise the execution of Contract, or when the Contract is Certain , Fair and Just.

Specific Performance cannot be enforced of the Contracts of Personal Service .

2- Suit for Injunction:An injunction is an order of the Court directing a person to do or to refrain from doing some act, which is subject matter , Court can on a suit restrain a party by an order of injunction from Committing the breach. The power of Court is discretionary and can be granted for a temporary or anindefinite period.

3- Suit for damages for the loss sustained: In case of a breach of Contract , injured party can

claim damages for the loss caused by the breach of

Contract.

Damages are given by the way of restitution and as

a monetary compensation to the injured party.

The aggrieved party can recover the actual loss

caused to him by the breach of Contract. And not

any unusual damages.

4- Quantum Meruit :

“Quantum Meruit means as much as he has

earned.” Where one person has expressly or impliedly requested

another to render him a service without specifying any

remuneration but the circumstances of the request imply

that the Service is to be paid for there is implied promise to

pay quantum Meruit that is so much as the party doing the

service deserves .

Types of Damages

1. Compensatory Damages :

These damages are calculated to actually compensate or

make up the loss suffered by the party.

2- Nominal Damages: Damages which naturally arise in the usual course of

things from the breach are called nominal damages.

It is in the discretion of the Court whether to allow or

refuse damages. Damages should however be actually

suffered .

3- Exemplary Damages:

Losses which arise due to remote or indirect consequences

are not allowed. Exemplary damages are granted for Injured

feelings, mental pain , suffering etc.

For e.g. : Breach of Contract of Marriage, Banker reg\fusing

to honor the Cheque of his Client having sufficient funds

etc .

4- Special Damages:

These arise on account of unusual circumstances. Special

damages can be recovered only if Stipulated in the Contract.

Parties to the Contract must know of the damages likely to

result from the Breach. Special damages are granted when

the parties know at the time of making the Contract that the

Special loss or damage would result or is likely to result from

the Breach of Contract.

Thank You