Discharge of Contract

• It means termination of the contractual relationship

between the parties

• When a contract is discharged, all the rights and

liabilities of the contracting parties are extinguished
and their relationship comes to an end
 Various modes of discharge
1. By performance of contract
2. By agreement
3. By lapse of time
4. By operation of law
5. By impossibility of performance
6. By commiting breach of contract
 1. By performance of contract

• When persons who have undertaken the obligations

within the time and in the manner prescribed, the
contract will be properly discharged.
• Sec 37 performance is classified into two
a) Actual performance
b) Attempted performance or tender
 2. By agreement

• As contract emerges from an agreement of both

parties, it may also be terminated by another
agreement or consent of both parties
a) By Novation
b) By Altreration
c) By Recession
d) By Remisssion
e) By Waiver
f) By Merger
 3.By lapse of time

• Every contract must be performed within

specified period and it is called the period of
limitation
 4.By operation of law

A contract may be discharged by operation of law

a) By death
b) By insolvency
 5.By impossibility of performance
Impossibility may exist either
a) At the time of contract
– When both the parties are aware of impossibility it is
void ab initio
– When both the parties are not aware of impossibility,
it is void when such an impossibility is discovered.
b) Subsequent to contract
– Impossibility which arises subsequent to formation of
contract
– Doctrine of the Supervening impossibility
• Supervening impossibility is an excuse for the
non-performance of contract in the following
cases
1. Destruction of subject matter
2. Death or personal incapacity of the promisor
3. Contract becoming subsequently illegal
4. Non occurrence or nonexistence of particular
state of things

Taylor Vs Caldwell
V. L. Narasu Vs P. S.Iyer
 6. By committing breach of contract

1. Actual breach of contract

1. At the time when performance is due
2. During performance
2. Anticipatory breach of contract
When a party to contract refuses to perform his
obligation before the due date of performance, it
is called anticipatory breach of contract
 Frustration

• Premature termination of the contract owing to

change of circumstances which are entirely beyond
the control of parties
• Sec 56
• According to Sec 56
– An agreement to do an act which is impossible is void

– When the performance of contract becomes subsequently

impossible or illegal, the contract becomes void

– Where one person has promised to do something which

he knew at the time of that it is impossible or illegal

– When a contract becomes void, any person who has

received an advantage under it must restore or make
compensation for it to the person from whom he received
the said advantage