DI

SCHARGEOFACONTRACT
Dischargeofacont ractmeanstheter
minat
ionofri
ght
sandobl
i
gat
ionsar
isi
ngoutofa
contract.Acont
ractmaybedischar
gedi
nthefol
lowi
ngways:

1.ByPer
for
mance-act
ual
orat
tempt
ed

2.Bymut
ual
consentoragr
eement

3.Bysubsequentorsuper
veni
ngi
mpossi
bil
i
tyori
l
legal
i
ty

4.Byl
apseoft
ime

5.Byoper
ati
onofl
aw

6.Bybr
eachofcont
ract

I DI
SCHARGEBYPERFORMANCE(
sec37)

Per
for
manceofacont
ractist
heprinci
palandmostusualmodeofdi
schar
geofacont
ract
.
Per
for
mancemaybe:i
.Actual
;ori
i
.At t
emptedper
for
mance

i
. ActualPerfor
mance means when t
he par
ti
es hav
eful
fi
ll
ed t
hei
robl
i
gat
ions
ar
isingoutofthecont
ract
.

i
i
. Att
empt edperfor
manceortender
:Whent hepromisoroffer
sto per
form hi
s
obl
igat
ion,butheisunabl
etodosobecausethepromiseedoesnotacceptt
he
per
formance.

I
I DI
SCHARGEBYMUTUALCONSENT

Justasacont racti
screat
edbyanagr eement,itmayal
sobedi schargedbyanother
agreementamongthesamepar
ti
es.Thi
sagreementmayt
akedi
ff
erentfor
mswhichare:

i
. Novation:Novat
iont akespl
acewhent hepart
iestoacontr
actagr
eetosubsti
tute
anewcont r
actforanexi st
ingone,eit
herbetweenthesameparti
esorbetween
new parti
es.Nov at
ionmustt akeplacebefor
et heexpi
ryofperf
ormanceoft he
ori
ginalcontr
act
.

I
fthepar
ti
esar
enotchangedt
hensomev
ari
ati
onsshoul
dbemadei
nthenewcont
ract
.

i
i
. Alt
erat
ion:Al
ter
ati
onmeanschangi
ngmat er
ialt
ermsoft hecontract
.Theold
contr
actisdi
schargedandpar
ti
esareboundbyt henew cont
ract
.eg.Dateor
amounttobepaidetc

i
i
i. Recessi
on:Recessionmeanscancellati
on.Recessi
ontakesplacewhenal lor
someoft heter
msoft hecontractar
ecancell
ed.Acontr
actmaybedi schar
ged,
befor
ethedateofper f
ormance,byagreementbetweenthepar
tiest
ot heef
fect
thati
tshal
lnolongerbi
ndthem.

i
v. Remi
ssi
on:
Remi
ssi
onmeansaccept
ingl
essersum t
hanwhatwascont
ract
edf
or
 oral
esserf
ulf
il
mentoft
hepr
omi
semade.

I
II BYSEBSEQUENTORSUPERVENI
NGI
MPOSSI
BILI
TYORI
LLEGALI
TY

Thel
awdoesnotcompel
any
bodyt
odoi
mpossi
blet
hings.
Sect
ion56par
a1,
stat
est
hat
,‘
anagr
eementt
odoanacti
mpossi
blei
nit
sel
fisv
oid.
’
I
mpossi
bil
i
tymaybeoft
hef
oll
owi
ngt
ypes:

A.I
mpossi
bil
i
tyexi
sti
ngatt
het
imeoft
hecont
ract

 I
mpossi
bil
i
tyknownt
othepar
ti
es:
Insuchcasest
heagr
eementi
sab-
ini
ti
o.

 I
mpossibi
li
tyunknowntothepar
ti
es:Whenboththeparti
esarei
gnor
antoft
he
i
mpossibi
l
itywhil
emakingacontr
act
,thecont
ractbecomesvoi
dduetomutual
mist
akeofamat er
ial
fact
.

B.Super
veni
ngi
mpossi
bil
i
ty:

Section56par
a2, decl
ares,
‘Acontr
acttodoanactwhich,af
terthecontr
actismade,
becomesi mpossi
ble,or,byreasonofsomeev entwhi
chthepr omisorcouldhav
e
prevent,
unl
awful,
becomesv oi
dwhent heactbecomesimpossibleorunl
awful.
’

Casescov
eredunderSuper
veni
ngI
mpossi
bil
i
ty:

- Destr
ucti
onofthesubj
ectmat
terbef
oret
heper
for
manceoft
hecont
ract
.(Tay
lor
vs.Cal
dwell
,1863)

- Non-
exist
enceornon-
concur
renceofcont
empl
atedst
ateoft
hings.(
Krel
lVs.
Henr
y,1903)

- DischargebyDeat
horincapaci
tyofthepart
y:Wher
etheper
formanceofapart
y
dependsupont heski
llorquali
fi
cat
ionofaperson,t
hecontr
actisdi
schar
ged
upont hedeat
horil
l
ness,ori
ncapaci
tyoft
hepart
y.

- ChangeofLaw:Wheret
hesubjectmatterofthecontractbecomesil
legalduet
o
anychangei
nlaw,
thecont
racti
sdischargedasitbecomesunl awf
ul.

- Outbreakofwar:Allcontr
actsenter
edintowit
hanal i
enenemyduri
ngwarare
i
ll
egalandv oi
dab-ini
ti
o.Contract
senteredi
ntobefor
etheoutbr
eakofwarmay
beei t
hersuspendedf orthatdurat
ion.(Basant
iBastral
ayavs.Ri
verSt
ream
Navigati
on,
1987)

I
V BYLAPSEOFTI
ME

Acont ractshouldbeperfor
medwi t
hint
het i
mef i
xedandifnot i
mei sf i
xedthenwi t
hina
reasonabletime.Ifthecontractisnotperfor
med,t heaggr
ievedpartyshouldt akelegal
acti
onf orbreachofcontr
actwithi
naspecif
iedtime(peri
odofli
mitat
ion).Aft
ertheexpir
yof
thi
sper iodoflimit
ati
on,t
heaggr i
evedpart
ycannottakeanylegalactionagainsttheparty
notperformingthecontr
act.
eg.Forsimpl
econtract
stheperi
odofli
mi t
ationis3years.
V BYOPERATI
ONOFLAW

Acont
ractt
ermi
nat
esbyoper
ati
onofl
awi
nthef
oll
owi
ngcases:

- Deat
h:Wher
econtract
sareper
sonali
nnat
ure,
thedeat
hoft
hepr
omi
sorl
eadst
o
t
hetermi
nat
ionofcontr
act
.

- I
nsol
vency
:Ani
nsol
venti
srel
easedf
rom per
for
minghi
spar
toft
hecont
ract
.

- Byunauthor
izedalt
erat
ion:Amater
ialal
ter
ati
onmadebyonepar
tywi
thoutt
he
consentoft
heother,
wil
l maket
hewholecontr
actv
oid.

VI BYBREACHOFCONTRACT

Secti
on39statesthat,
‘Breachofcontr
actmeansref
usal
ofperfor
mancebyaparty
.’Wherea
part
ytoacont racthasrefusedtoperfor
m,ordi
sabledi
tsel
ffr
om per
for
mingit
spromi sei
n
i
tsentir
ety
,theot herpar t
y(aggr
iev
edpar t
y)mayputtoanendt othecontr
actunlesshe
waivedhi
srightsbywor ds.

Br
eachmaybeei
ther
:

a.Act
ual
Breach

b.Ant
ici
pat
oryBr
each

ActualBreach:Act
ualBr
eachtakespl
acewhent hepart
yrefusestoperf
ormthecont
racton
theduedat eofthecont
ract
.Thepart
ynotindefaul
tisenti
tledt
oelecttot
reatt
hecontract
asdischargedandtosuethepart
yatfaul
tfordamagescaused.

Ant
ici
pator
yBreach:Ant
ici
pat
oryBr
eachofacont
ractt
akespl
acebef
oret
heduedat
eof
act
ualperf
ormance.I
tmaybeoftwoty
pes:

- Express:Whenthepr omi
sori
nfor
mst
hepr
omi
set
hathewi
l
lnotbeabl
eto
perf
ormt hecont
ract
.

- I
mpl
ied:When t
he pr
omi
sordoes an actwhi
ch r
ender
sthe per
for
mance
i
mpossi
ble.

Ef
fect
sofAnt
ici
pat
oryBr
each:

- Thepr omi
semayt
reatt
heanti
cipat
orybreachasanact
ualbreachandsuethe
promise f
oranyl
oss ordamage incur
red,wit
houtwait
ing fort
he dat
e of
perf
ormance.

- Thepr omi
semaykeept hecontractopenandwai tti
l
lthedateofperf
ormance
forthebenef
itofboththepart
ies.Thereaf
teravailt
helegalremedi
esforthe
breachoft
hecontr
actagai
nstt
hedef aul
ti
ngpart
y.