Discharge is the process whereby the primary objectives and
obligations under a contract, which is validly formed, come to an end. A
contract may be discharged either by an Act of the parties or by an operation
of law in the different base set out below:
i)
Discharge
by performance:- It takes place when the parties to the
contract fulfil then -obligations arising under the contract within the time
and in the manner prescribed. Discharge by performance may be (1) actual
performance or (2) attempted performance. Actual performance is said to have
taken place, when each of the parties has done what he had agreed to do under
the agreement. When the promisor offers to perform his obligation, but the
promisee refuses to accept the performance, it amounts to attempted performance
or tender.
ii)
Discharge
by mutual agreement:- Section 62 of the Indian Contract Act
provides if the parties to a contract agree to substitute a new contract for
it, or to refund or remit or alter it, the original contract need not be
performed. The principal of Novation, Rescission, Alteration and Remission are
already discussed in para 4.12.
iii)
Discharge
by impossibility of performance:- The impossibility may
exist from the very start. In that case, it would be impossibility ab initio.
Alternatively, it may supervene. Supervening impossibility may take place owing
to: (a) an unforeseen change in law, (b) the destruction of the subject-matter
essential to that performance; (c) the non-existence or non-occurrence of
particular state of things, which was naturally contemplated for performing the
contract, as a result of some personal incapacity like dangerous malady; (e)
the declaration of a war (Section 56)
iv)
Discharge
by lapse of time:- A contract should be performed within a
specified period as prescribed by the Limitation Act, 1963. If it is not performed
and if not action is taken by the promising within the specified period of
limitation, he is deprived of remedy at law. For example, if a creditor does
not file a suit against the buyer for recovery of the price within three years,
the debt becomes time-barred and hence irrecoverable.
v)
Discharge
by operation of law:- A contract may be discharged by
operation of law which includes by death of the promisor, by insolvency etc.
vi) Discharge
by breach of contract:- Breach of contract may be actual
breach of contract or anticipatory breach of contract. If one party defaults in
performing his part of the contract on the due date, he is said to have
committed breach thereof. When on the other hand, a person repudiates a
contract before the stipulated time for its performance has arrived, he is
deemed to have committed anticipatory breach. If one of the parties to a
contract breaks the promise the party injured thereby, has not only a right of
action for damages but he is also discharged from performing his part of the
contract (Section 64)
vii)
A promise may dispense with or remit the
performance of the promise made to him or 'I may accept any satisfaction he
thinks fit. In the first case, the contract will be discharged by remission and
in the second by accord and satisfaction (Section 63).
viii)
When a promise neglects or refuses to
afford the promisor reasonable facilities for the performance of the promise,
the promisor is excused by such neglect or refusal (Section 67).
Courtesy:- Legal Point Foundation
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