Discharge of Contract

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The term discharge means coming out. So by considering it, we can say that quitting from a contract is known as the discharge of the contract. That means two or more parties set a contract by forming certain rules and regulations with the acceptance of both parties of a contract. If any of the parties do not obey rules and regulations, then the contract will be in the condition of discharge. We will discuss more the meaning of discharge of contract and the methods of discharge of the contract.

Discharge of Contract Meaning

The discharge of contract is defined as the termination of a contract or an agreement made by two parties with the fails in performing the obligations mentioned at the time of creating an agreement with the acceptance of both parties like free of consent. Hence the obligations may be contractual or legal or operational or even by the performance itself. So it is important to understand the methods of discharge of a contract.

Methods of Discharge of Contract

The discharge of a contract may occur in various circumstances. 

They are as listed below - 

1. Discharge of Contract by Performance:- The discharge of contract occurs when both parties are refused to perform the obligations can be referred to as discharge by performance.

2. Discharge of Contract by Agreement:- If either of the person in the contract is not willing to continue the contract till you date then it is converted to the other party whether they may accept or not, the discharge of the contract by the agreement will happen. But it occurs in various situations. They are- 

  • Novation:- Either specify the substitution of either new contract in the place of the original contract or new members in the place of world one whether it may be a single person or both the parties it is known as novation, which is a part of the discharge of contract by substitution of agreement.

  • Rescission:- Here both the parties agreed to modify certain rules and regulations in the contract with mutual understanding. It may lead to the cancellation of all the rules or may cancel partially.

  • Alteration:- It is another case where the terms of the contract will be modified either entirely or partially with the consent of both parties. But the parties won't change, and they can enjoy new benefits either they may less or more than the old contract.

  • Waiver:- Waiver refers to the abandonment of right. If any of the parties abundance their rights from the contract, which affects the other party, then it leads to the discharge of the contract by substitute agreement.

3. Discharge of Contract by Lapse of Time:- According to the limitation act 1963, it is specified that if the contract is unable to perform within the specified period, it may affect the other party and leads to the cancellation of the entire contract. Then it is treated as a discharge of contract by Lapse of time.

4. Discharge of Contract by the Impossibility of Performance:- Here the discharge of contract occurs with no interruption of either of the parties. Even though everything is good at the point of pain, certain undetermined and unexpected issues may happen, which reduces the possibility of performing a contract. It includes a recession in the market, natural disasters, lack of valid purpose, unfortunate incidents, etc. In the Indian contract act, section 59 clearly explains that if any of the reasons may lead to the impossibility of performance, then it is advisable to breach the contract.

5. Discharge of Contract by Accord and Satisfaction:- Accord is an executor contract that helps to perform the existing duties at present to avoid the discharge of a contract. On the other hand, based on the performance of accord, the satisfaction of a contract will be considered and doesn't want to void the entire contract.

6. Discharge of Contract by Breach of Contract:- Breach of contract refers to the termination of the original contract due to the failure of performing obligations by either of the parties which discourage and affects the other party. It relates to void or terminates the original contract completely. These breach of contracts may be either anticipatory or actual.

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Hence the discharge of the contract of a company means the termination of an agreement in the middle and it can occur in various cases. These can be explained using some of the methods of discharge of the contract.

FAQ (Frequently Asked Questions)

1. What are There Types of Breach of Contracts?


Anticipatory Breach:- the phenomenon of anticipatory breach involves the violating obligations done at the time of contract from one person to another. If a person agreed to deliver certain tangible goods to the other person on your specific time period then he refused to perform his duty and supplied to another party without considering the contract. This is called an anticipatory breach.

Actual Breach:- actual breach of contract is a case that refers to the failure of the seller to perform his contractual obligations at the specified time. If the seller was unable to deliver goods at the given time then it is called the actual breach of contract.

2. Explain the Discharge of Contract by the Operation of Law?

Ans. If a contract is to be issued by operation of law, it means a change in daily activities leads to the breach of contract. It is majorly observed in corporations. We have three different reasons to discharge the contract by the operation of law. 

They are by alteration of a written document which fails to perform the obligations in the specific time, by merging the company happens when a big company equals or take over the existing company and due to insolvency means the lack of financial Capital leads to the bankruptcy which results in a discharge of a contract.

3. Describe the Breach of Contract by Condition and by Warranty?

Ans. When the discharge of a contract occurs due to an actual breach, it has two subsidiary cases, namely breach by condition, breach by warranty. Then one of the parties is in injured condition; he fails to follow the contractual obligations, then it is referred to as a breach of contract by the condition.

Compared to the bridge by condition, breach by warranty is a minor thing used to terminate the contract in terms of non-material things and their damages if anyone fails to continue the contract perfectly.