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DISCHARGE OF CONTRACTS
The cases in which a contract is discharged may be classified as follows: A. By performance or tender. B. By mutual consent. C. By impossibility of performance. D. By operation of law. E. By lapse of time F. By breach of Contract
A. By performance or tender:
When the contract is performed by both the parties and there notthing remains to do, then it is called discharge by performance Performance of contract is very common way of discharge. It may be Actual Performance When both the parties perform their promises. Attempted Performance or tender Only an offer to perform the obligation under the contract.
The termination of contract by further agreement or consent. Ways to do so: 1.Novation 2.Rescission 3. 4. 5. 6. Alteration Remission Waiver Merger
When a new contract is substituted for an existing one between the same parties When a new contract is substituted for an existing one between one of the parties and a third party. Novation should take place before the expiry of the time of the performance of the contract.
Takes place when all or some of the terms of the contract are cancelled. Could be done by a)mutual consent or b) when one party fails in the performance of contract, the other party could rescind the contract without fear of claim of compensation.
Modification of one or more terms of the contract by the mutual consent of the parties.
Remission means acceptance of lesser sum than what is contracted or lesser fulfilment of the promise.
Restitution
The party rescinding a voidable contract shall, restore the benefit ,so far as may be ,to the part if he has received under the contract from him.
Merger
Merger of two or more rights into one contract . When an existing inferior right of party merges into a newly acquired superior right by the same party , it is a merger of rights.
C. BY IMPOSSIBILITY OF PERFORMANCE
(a)
Inherent impossibility Known to the parties Unknown to the parties Subsequent impossibility
(b)
When the subject matter of the contract is destroyed death or incapacity of the parties change of law outbreak of war.
D. BY OPERATION OF LAW
1. By death 2. By insolvency 3. By merger 4. Rights and liablities becoming vested in the same person. 5. material alteration 6. loss of evidence of contract
E. By lapse of time
According to law of limitation Act 1963, a contract should be performed with in a specified period That period is called period of limitation If it is not performed and no action is taken by the promiseee with in the period of limitation ,he can not take legal action in the court .
F. By breach
Where the promisor neither performs his contract nor tender his performances or where the performances is defective , ther eis a breach of contract.
It occurs when a party to the contract does bnot fulfil his contractual obligation or makes it impossible.
Breach of contract may be
WHEN A CONTRACT IS BROKEN, THE INJURED PARTY, HAS ONE OR MORE OF THE FOLLOWING REMEDIES:
WHAT IS A REMEDY
1. RECISSION
When a contract is broken by one party, the other party may sue to treat the contract as rescinded and refuse further performance. In such a case, he is absolved of all his obligations under the contract. E.g: A promises B to supply 10 Bags of cement on a certain day. B agrees to pay the price after the receipt of the goods. A does not supply the goods. B is discharged from liability to pay the price.
Where
; or
Where
the contract is unlawful for causes not apparent on its face and the defendant is more to blame than the plaintiff.
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2. DAMAGES
Damages are the monetary compensation allowed to the injured party by the court for the loss of injury suffered by him by the breach of a contract.
(RESTITUTIO IN INTEGRUM)
CASE:HADLEY VS BAXENDALE
Xs mill was stopped by the breakdown of a shaft. He delivered the shaft to Y, a common carrier, to be taken to a manufacturer to copy it and make a new one. X did not make known to Y that delay would result in loss of profits.
By some neglect on the part of Y the delivery of the shaft was delayed in transit beyond a reasonable time.
Held, Y was not liable for loss of profits during the period of delay as the circumstances communicated to Y did not show that a delay in the delivery of the shaft would entail loss of profits to the mill.
E.g.: A contracts to sell and deliver 50 quintals of Farm wheat to B at Rs.475 per quintal, the price to be paid at the time of delivery. The price of Wheat rises to Rs. 500 per quintal and A refuses to sell the Wheat. B can claim damages at the rate of Rs.25 per quintal.
In
a contract for the sale of goods, the measure of damages on the breach of a contract is the difference between the contract price and the market price of such goods on the date of the breach.
If,
however, the thing contracted for is not available in the market, the price of the nearest and best available substitute may be taken into account for calculating damages.
Where
the subject matter of a contract is goods specially made to order and which are not marketable, the price of the goods is the measure of the damages.
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Damages other than those arising from the breach of the contract may be recovered if such damages may reasonably be supposed to have been in the contemplation of the both of the parties as the probable result of the breach of the contract. Such damages are known as Special Damages, which cannot be claimed as the matter of right.
Dishonor of a cheque by banker wrongfully when he possesses sufficient funds to the credit of the customer, the Court may award exemplary damages.
NOMINAL DAMAGES
Where the injured party has not in fact suffered any loss by reason of the breach of a contract, the damages recoverable by him are nominal. CASE : BRACE VS CALDER A firm consisting of four partners employed B for a period of two years. After six months two partners retired, the business being carried on by the other two. B declined to be employed under the continuing partners. Held, he was only entitled to nominal damages as he had suffered no loss.
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Damages can be recovered for physical inconvenience and discomfort. The general rule in this connection is that MEASURE OF DAMAGES IS NOT AFFECT BY THE MOTIVE OR THE MANNER OF THE BREACH
A was wrongfully dismissed in a harsh and humiliating manner by G from his employment. Held, (a) A could recover a sum representing his wages for the period of notice and the commission which he would have earned during that period; but (b) He could not recover anything for his injured feelings or for the loss sustained from the fact that his dismissal made it more difficult for him to obtain employment.
DIFFICULTY OF ASSESSMENT
Although damages which are incapable of assessment cannot be recovered, the fact that they are difficult to assess with certainty or precision does not prevent the aggrieved party from recovering them. The court must do its best to estimate the loss and a contingency may be taken into account. CASE : contd.,
Cost of decree
The aggrieved party is entitled, in addition to damages, to get the cost of getting the decree for damages. The cost of suit for damages is in the discretion of the court.
If a sum is named in a contract as the amount to be paid in case of its breach, or if the contract contains any other stipulation by way of a penalty for failure to perform the obligations, the aggrieved party is entitled to received from the party who has broken the contract, a reasonable compensation not exceeding the amount so named. E.g: A contracts with B to pay B Rs.1,000 if he fails to pay B Rs.500 on a given day. B is entitled to recover form A such compensation not exceeding Rs.1000 as the court considers to be reasonable.
damages represents a sum, fixed or ascertained by the parties in the contract, which is a fair and genuine pre-estimate of the probable loss that might ensue as a result of the breach, if it takes place.
A
penalty is a sum named in the contract at the time of its formation, which is disproportionate to the damage likely to accrue as a result of the breach. It is fixed up with a view to secure the performance of the contract.
3. QUANTUM MERUIT
It
means AS MUCH AS EARNED A right to sue on a quantum meruit arises where a contract, partly performed by one party, has become discharged by the breach of the contract by the other party. The right is founded not on the original contract which is discharged or is void but on an implied promise by the other party to pay for what has been done.
4. SPECIFIC PERFORMANCE
In certain cases, damages are not an adequate remedy. The court may, in such cases, direct the party in breach to carry out his promise according to the terms of the contract. This is a direct by the court for Specific Performance of the contract at the suit of the party not in breach.
(A)When the act agreed to be done is such that compensation in money for its nonperformance is not an adequate relief. (B) When there exists no standard for ascertaining the actual damage caused by the non-performance of the act agreed to be done. (C) When it is probable that the compensation in money cannot be got for the non-performance of the act agreed to be done.
Damages are an adequate remedy The contract is not certain, or is inequitable to either party The contract is in its nature revocable The contract is made by trustees in breach of their trust
5. INJUNCTION
Where a party is in breach of a negative term of a contract, the court may , by issuing an order, restrain him form doing what he promised not to do. Such an order of the court is known as an Injunction. Case:LUMLEY VS WAGNER W agreed to sing at Ls theatre, and during a certain period to sing nowhere else. Afterwards W made contract with Z to sing at another theatre and refused to perform the contract with L. Held, W could be restrained by injunction form singing for Z.