Tuesday, 9 August 2011

What do you mean by discharge of contract and explain that in which circumstances a contract is terminated?

Termination or Discharge of Contract :-
When we say that contract has been discharged or terminated, it means that rights and and liabilities created by law under contract has been finished.


1. Discharge By Performance :-
When all the duties required in the contract are performed by all the parties, the contract comes to an end. It is called discharge by performance.

Example :- Mr. Nick agree to sell a piece of land to Mr. Ram for Rs. One lac. Mr. Nick delivers the plot and Mr. Ram makes the payment.

2. Discharge By Breach of Contract :-
When one party violates the conditions of lawful contract it is called breach of contract. When there is a breach by one party the other party gets a right not to perform his obligations it may also take action against the other party who has failed to perform.

Example :- "A" agrees to deliver one cycle to "B" on Sunday. He does not deliver the cycle on Sunday. There is breach of contract.

3. Contract Declared Void :-
If any contract is declared void by law then the parties involved to such contract are discharged from the liabilities.

4. Discharge By Lapse of Time :-
Contract also discharges by lapse of time. Sometimes contract is not performed within prescribed period. In that case injured party should bring suit within three years as mentioned in the limitation act for the recovery of debt.

5. Discharge Due to Impossibility :-
If the performance of contract is not possible then contract is void and contracting parties are discharged from their obligations.

Example :- Suppose Mr. Carry and Miss. Niky contract to marry each other, on 10th March, 2011. Miss Niky dies before the 10th March. The contract becomes void because now marriage is impossible.

6. Discharge By Insolvency :-
If court declares insolvent to any person, he gets free from debts payable to others.

Example :- Mr. Heris promises to sell his factory to Mr. Frank for Rs. 70 lac. Before the performance of the contract Mr. Heris is declared insolvent by court. The contract is discharged.

7. Discharge By Alteration :-
When the alteration is made in the written contract without mutual consent it becomes unauthorized. Such type of alteration discharges the contract by law.

8. Discharge By Merger :-
When you merge the smaller contract in the larger contract it is called merger. The smaller contract is discharged by law automatically.

Example :- When ad-hock doctor is made permanent doctor the contract of ad-hock doctor-ship is discharged by merger.

9. Discharge By Consent :-
A contract may be terminated with the mutual consent of the contracting parties.

10. Discharge By Remission :-
Remission means pardoning of offense or cancelling of the whole or any part of some obligation.

Example :- In the case of life sentence remission is provided to prisoner for his good behavior in prisoner.

11. Discharge By Waiver :-
It means to relinquish the claim or right. Sometimes promisee himself surrenders his rights to the contract and releases the promisor from his obligations.

Example :- Mr. Maddy promises to make a shirt for Mr. Salu and Mr. Salu afterward forbids him to do so. Mr. Maddy agrees. The contract is discharged by waiver.

12. Discharge By Novation :-
If the parties substitute a new contract it is called novation. In this case contract may be discharged by such as an alteration in its condition as substitutes a new contract, for the old one.

13. Discharge By Recession :-
It means remedy for inducing a contract which is rejected one or all the terms of the contract are cancelled. It discharges to parties from obligations of the original contract.

Example :- Mr. Richard promises to deliver a house to Mr. Singh on Friday. Before the Friday both agree that the contract will not be performed. The parties have cancelled the contract.


Joel Mathew Kuttikandathil 19 March 2014 at 02:55  

Thank You, It helped. Clutter free. Did not have to refer elsewhere.

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