IQRA

CHAPTER 3
NATIONAL DISCHARGE OF CONTRACT

UNIVERSITY
Business & Labor Law
TABLE OF CONTENTS

1) Discharge by Performance:.......................................................................................................................................2
a) Actual Performance: ..............................................................................................................................................2
b) Attempted Performance: ......................................................................................................................................2
2) Breach of contract: ................................................................................................................................................... 3
a) Actual Breach .........................................................................................................................................................3
i) On Due Date of Performance: ............................................................................................................................3
ii) During Course of Performance: .........................................................................................................................3
b) Anticipatory Breach ...............................................................................................................................................3
i) Express Breach: ................................................................................................................................................... 4
ii) Implied Breach: .................................................................................................................................................. 4

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 DISCHARGE OF CONTRACT
Discharge of contract means termination if the contractual relationship between the parties to a
contract. A contract is said to be terminated when rights and obligations of the parties comes to an end.
A contract may be discharged in any of the following:

1) Discharge by Performance

2) Agreement

3) Subsequent Impossibility

4) Lapse of time

5) Operation of law

6) Breach of contract

1) DISCHARGE BY PERFORMANCE:
Performance is the natural mode of discharge of contact. When the parties to a contract perform their
promises, the contract is discharged. There are two types of discharge by performance.

a) Actual Performance

b) Attempted Performance

A) ACTUAL PERFORMANCE:
When both parties to a contract fulfill the obligations according to the terms and conditions of the
contract, it is called actual performance of the contract and the contract comes to an end.

Example:

Caterpillar agrees to sell his generators to government organization for Rs: 400,000 per generator. Caterpillar
delivers the generators to government organization and government organization makes the payment. This is
actual performance of contract and the contract come to an end after completion of agreement.

B) ATTEMPTED PERFORMANCE:
It is also known as offer of performance. When one of the parties to the contract offers to perform the
contract and the other party does not accept it, is called a tender.

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Example:

Nestle agrees to sell their products to hyper mall. Hyper mall does not accept their offer due to high prices. This is
offer of performance.

2) BREACH OF CONTRACT:
The breach of contract means failure of a party to perform his obligations it is breach of contract. There
are two types of breach of contract

a) Actual Breach

b) Anticipatory Breach

A) ACTUAL BREACH
This occurs when a party fails to perform the contract when the performance is due. It can occur in the
following two ways:

i) On due date of performance

ii) During course of performance

I) ON DUE DATE OF PERFORMANCE:

If a party fails to perform the contract on the due date, it is an actual breach of contract. If time is not
the essence of contract, the guilty party may later perform the contract after paying compensation for
delayed performance.

Example:
st
K&Ns agrees to deliver 700 bags of chicken (boneless chicken) to pizza hut on 1 November, 2015. K&Ns does not
deliver the chicken on that day. This is an actual breach of contract.

II) DURING COURSE OF PERFORMANCE:

If a party has performed a part of the contact but refuses to perform the remaining part of the contract
due to some reason it is an actual breach of contract.

B) ANTICIPATORY BREACH
Anticipatory breach of contract occurs when a party declares his intention not to perform the contract
before due date of performance. It happen in the following ways:

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i) Express Breach

ii) Implied Breach

I) EXPRESS BREACH:
A party to contract communicates to the other party, his intention not to perform the contract before
due date of performance.

Example:

Nestle agrees to supply milk cream to Jans bakers on 1st Nov. On 31 Oct Nestle informs Jans bakers that due to
some reasons they will not supply milk cream. This is express breach of contract.

II) IMPLIED BREACH:

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

Example:

Abbott company promise to sell their products to a distributor of K.P.K before that day Abbott company sell their
product to the distributor of K.S.A this is implied breach of contract.