DISCHARGE

OF CONTRACT
BY : SHYAMAL
.R.PANDEY
MBAPH018004
• DISCHARGE OF CONTRACT
• BY PERFORMANCE (SECTION 37)
• BY REFUSING TENDER OF PERFORMANCE (SECTION 38)
• BY BREACH OF CONTRACT (SECTION 39)
• BY ACCORD OF SATISFACTION (SECTION 63)
• BY PROMISE FAILING TO OFFER FACILITIES OF PERFORMANCE
(SECTION 67)
• BY IMPOSSIBILITY OF PERFORMANCE (SECTION 52)
• BY AGREEMENT (SECTION 62-64)
• BY LAPSE OF TIME
• DISCHARGE OF PERFORMANCE ( section 37) :
if the both party have performed what they
have agreed to do ,the contract is discharge
• BY DEATH (SECTION 37): WHEN THE CONTRACT
IS PERSONAL IN CHARACTER ,death of a promisor
discharge the contract
• BY REFUSING THE TENDER OF PERFORMANCE
(SECTION 38)

IF THE PARTIES OFFER TO PERFORM AND THE

OFFER HAS NOT BEEN ACCEPTED BY THE OTHER
PARTY
• BY BREACH OF CONTRACT (SECTION 39):
• WHEN THE PARTY TO A CONTRACT HAS REFUSED
TO PERFORM OR DISABLED HIMSELF FROM
PERFORMING HIS PROMISE
• BY ACCORD AND SATISFACTION (SECTION 63) :
When the party agree to do something other than
that what is bound to do by the contract and
when he has discharge the obilgation the
contract is said to be discharge by accord and
satisfaction
EXAMPLE: A owes B Rs. 1,000. B agree to accept Rs
750 in full satisfaction .The agreement to pay Rs
.750 is an accord and the actual Payment is the
satisfaction
UNILATERAL DISCHARGE
Unilateral discharge takes place where
only one party has rights
to surrender.
Where one party has entirely performed
his part of
the agreement, he is no longer under
obligations but has rights to compel the
performance of the agreement by the
other party
• ANTICIPATORY BREACH OF CONTRACT
Anticipatory breach of contract could be made
by promisor,
• either by refusing to perform the contract, or
disabling himself from performing the
contract in its entirety, before the due date of
performance has arrived.
• When the refusal to perform the contract in
its entirety is not there, it is not to be
considered to be a case of anticipatory breach
within the meaning of section 39.
 DISCHARGE BY AGREEMENT
• NOVATION
• ALTERATION
• RESCISSION
• REMISSION
• WAIVER

made by YASHI THAKUR MBAPH018007

• NOVATION (section 62) :
1) When a new contract is substituted for an existing
contract , either between the same parties or different .
2) It cannot be compulsory , it can only be with mutual
consent of all parties .
• ALTERATION (section 62) :
when one or more terms of the contract are
changed
• RESCISSION (section 62) :
cancellation of contract by mutual consent

made by YASHI THAKUR MBAPH018007

• REMISSION (section 63):
acceptance of lesser fulfilment of a promise that
was made
• WAIVER :
international abandonment of a right which a
person is entailed to under a contract
(abandonment or giving up of a right – may be
written or unwritten)

made by YASHI THAKUR MBAPH018007

 Discharge of a Contract by Lapse of Time

• If the promisor fails to perform and the promisee fails

to take action within this specified period, then the
promisee cannot seek remedy through law. It
discharges the contract due to the lapse of time.

• Example: Peter takes a loan from John and agrees to

pay installments every month for the next five years.
However, he does not pay even a single installment.
John calls him a few times but then gets busy and takes
no action. Three years later, he approaches the court to
help him recover his money. However, the court rejects
his suit since he has crossed the time-limit of three
years to recover his debts.

made by YASHI THAKUR MBAPH018007

 Discharge by the Impossibility of Performance

• If it is impossible for any of the parties of the contract to perform their

obligations, then the impossibility of performance leads to a discharge
of the contract.

• If the impossibility exists from the start, then it is initial impossibility .

However, the impossibility might also arise later due to :
1) An unforeseen change in the law
2) Destruction of the subject-matter essential to the performance
3) The non-existence or non-occurrence of a particular state of things
which was considered a given for the performance of the contract.

• Subsequent impossibility : A contract capable to be performed after

formation become impossible or unlawful and as a result void.

made by YASHI THAKUR MBAPH018007

• Example: Peter enters into a contract with
John to marry his sister Olivia within one year.
However, Peter meets with an accident and
becomes insane. The impossibility of
performance leads to a discharge of the
contract

made by YASHI THAKUR MBAPH018007

 Discharge by operation of Law

• Contract terminates by operation of law in

following ways :
1) insolvency
2) merger

made by YASHI THAKUR MBAPH018007

• Insolvency :
court declares a person as insolvent

• Merger :
merger of superior right into an inferior right

made by YASHI THAKUR MBAPH018007