DISCHARGE

OF
CONTRACT

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  MEANING: contract is terminated. It involved a situation
whereby the parties to the contract is no longer oblige to perform
the contract.
 CASE: BOLTON V MAHADEVA
the plaintiff promised to install heaters in the defendant house.
The plaintiff installed the heater but then the heater was not
working. The defendant did not pay the plaintiff. The contract has
been discharged on the part of the plaintiff because he is
supposed to install heaters which works and not broken heaters.
 Contract may be discharged by any one of these following ways:

By Performance

By consent or
By Breach agreement
between parties

By Impossibility
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 DISCHARGED BY PERFORMANCE

 Both parties have to carry out their obligations

 Section 38(1) Contract Act 1950- parties to a contract must be prepared to perform
his obligation at the “time” and “place” at which he has undertaken to do.
 It means that the contract must be strictly performed in accordance with the terms
of the contract unless the parties have agreed otherwise.
 If both parties have carried out their obligations. A contract is bought to an end i.e.
they will be discharged from further obligations.
 Performance may be from a third party and not necessarily from the promisor –
section 42
 Section 56 regulates the position when time is of the essence of a contract
 The performance of any promise may be made in any manner, or at any time,
which the promisee prescribes or sanctions – section 51
 The effect of both sections 51 and 56 a promise must be performed at the time
agreed by the parties

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 DISCHARGED BY CONSENT
 GENERAL RULE: contract that is created by consent
can be extinguished by consent. Express or implied.
The consent of all parties to the contract is
necessary.
 Section 63: if the parries to a contract agree to
substitute a new contract (novation) for it, or rescind
or alter it, the original contract need not be
performed.
 Section 64: deals with remission of performance. The
promise may dispense with or remit, wholly or in part,
the performance of the promise made to him. Payment
of smaller sum in full satisfaction of a larger sum is
binding on the promise.
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 DISCHARGED BY IMPOSSIBILITY
OF PERFORMANCE/ FRUSTRATION
 SECTION 57-agreement to do impossible act is void.
 Two situation of impossibility of performance.
i. SECTION 57(1) impossibility of performance at the
time a contract is made. Illustration (a) – A agrees with
B to discover treasure magic. The agreement is void.
ii. SECTION 57(2) provides that performance which is
becomes impossible, or unlawful by reason of some
event that could not be prevented. (doctrine of
frustration.
 CASE:RAMLI BIN ZAKARIA V GOV.OF MALAYSIA
court held that a self induced frustration does not
discharged a party of his contractual obligations. It
should be proven that the events have substantially
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NAGUIB BIN performance
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Impossibility of performance will affect the contract to be
frustrated. Frustration occurs due to the following
circumstances.

Destruction of the subject matter of the contract.

• TAYLOR V CADWELL- A music hall hired by the defendant from the

plaintiff for a series of concert was burnt down before the date of
the contract. HELD: the contract was discharged due to frustration.

The supervening events defeat the whole

purpose of object of the contract
• KRELL V HENRY – a room was hired for the purpose of watching the
coronation procession. However, the coronation procession was
cancelled. HELD: the defendant could be excused from paying a rent
for the room as the contractor was frustrated.

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 Supervening illegality discharged a contract affected by it

• A contract may become frustrated if it later becomes illegal.

LEE KIN V CHAN SUAN ENG- a lease for 5 years was held to
be frustrated by the enactment of a new law prescribing annual
renewal.

Death or permanent incapacity

• Where the party has taken a personal obligation. Personal

qualifications and skills are the basis of the contract.

Declaration of War.
• all contract with enemy aliens will be frustrated.

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 Discharged by breach
 Section 40- where one party fails to perform his obligations or
to tender performance, there is a breach of the contract. Such
breach entitles the party who is not in breach to repudiate or
continue with the contract and claim damages.
 CASE: CHOW YIN LOU V VISUVALINGAM PILLAY
the plaintiff provides a less number of workers compared to
what he was supposed to do under the contract.
Due to this, the defendant stopped payment.
Plaintiff then proceed to sue the defendant
for damages claiming that he had been
prevented by the defendant’s default from completing the
contract. HELD: the act of the plaintiff in employing less number
of workers constitutes
breach of contract which renders
the contract repudiated.
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 REMEDIES FOR BREACH
OF CONTRACT
DAMAGES

RECIS SPESIFIC
PERFORMANC
SION E

QUATUM INJUC
MERUIT TION
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 DAMAGE Meaning: remedies available in terms
of money consideration.
S
Measure of damages recoverable is set out in section 74 Contract Act
or in common law by the judgment of ALDERSON B in HADLEY V
BAXENDALE, the rule is that the injured party is entitled to :

If claims special damages, the party

 Damages arising naturally must show that when they entered into the
from the breach. contract, the other party knew that
special loss is likely to result from the
breach.
Such compensation is not to be given for any remote or indirect loss or
damages. CASE: THAM CHEOW TOH V ASSOSIATED METAL
SMELTERs-In this case the appellant had agreed to sell metal melting
furnace to the respondent and giving an undertaking that melting furnace
would have a temperature of not lower that 26000ºF. However, when the
melting furnace is delivered ,it did not fulfill the specification. The
respondent sues for breach of condition and claim for the loss of profit.
HELD: the A knew of the requirement to deliver a furnace capable of
producing specified temperature. Therefore, the A should be liable for
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the loss,.
 Section 75 provides if the amount of damages is stated in the
contract for breach of contract, the amount recoverable by the
plaintiff cannot exceed the sum stated.

A party who suffered loss as a result of breach of contract is

obliged to take reasonable steps to mitigate(reduce) the loss.
CASE: KABATASAN TIMBER EXTRACTION CO> V CHING
FAH SIN the court held that it was a duty if the respondent
to take reasonable steps to mitigate the damages caused by
the appellant when he failed to deliver logs to the mill but left
them some 50 feet away. There was no need for the
respondent to have gone to the expenses and trouble of buying
from elsewhere when the logs were lying a few hundred feet
away and all that was required was additional expenses for
hauling them up to the sawmill. The damages awarded to the
respondent for failing to mitigate were reduced accordingly.

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 SPESIFIC Granted when the court compel the
PERFORMANCE defaulting party to perform his contract.
This remedy is given at the discretion of
the court.

Section 21 (1) (2) SRA –specific performance will be granted where

damages are not an adequate remedy.

Section 21(2) SRA provides for the situation whereby court should
not grant Specific Performance :
i. When they would give unfair advantage over the defendant
ii. Where the performance of the contract would involve some
hardship on the defendant which he did not foresee and non-
performance will cause hardship to the plaintiff.

Section 18(3) SRA gives power to the court to

award compensation in addition to specific
performance if specific performance is not
sufficient to satisfy the justice of the case.

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 INJUNCTIO Injunction is an act to restrain someone
from doing something or requiring
N someone to perform a specific act.
Granted in the discretion of the court.
-Also -Also
TE
PERPE
TUAL
know know
Mn as
interi
n as
perm
Pm or anent
interl . It
Oocuto can

Rry
injunc
only
be
Otion.
It is
grant
ed
Rgrant after
ed at a full

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discr and
 QUATU It means ‘as much as he had earned’.
M On breach of contract the party
MERUIT injured maybe entitled to claim for
work done and services performed.

As for the contract rescinded due to voidable

nature of the contract, section 65 CA operates.
According to section 65,’when a person at whose
option a contract is voidable rescinds it, the other
party thereto need not perform any promise
therein contained in which he is promisor. The
RESCISSIO
party rescinding a voidable contract shall, if he
N has received any benefit there under from any
party to such contract, restore the benefit, so far
as may be, to the person from whom it was
received’.

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