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 time5. Operation of law6. 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 beActual breach of contract, orAnticipatory 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 1. Cancel the contract which will relieve him from

all contractual obligations. (rescission)2. Cover and receive damages.3. Demand specific performance4. demand injunction. 5. Recover any consideration given to the

breaching party (restitution)6. 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.