Contract Act, 1872 - Discharge Of A Contract/Breach Of Contract
A valid contract creates a legal obligation on both the parties and this obligation continues untill the contract has been actually performed or otherwise discharged. A performance of a contract is one of the various ways to discharge of contract. Performance is the most natural, desired and usual mode of discharging an obligation of a contract. Following are various methods of Discharge of Contract.
Performance means when the parties actually perform the act they have promised in the contract. Performance of a contract is of two types.
Actual performance: When a party to a contract does, what he has promied to do and nothing remains to be done by the party promise is said to have been actually performed
Attempted Performance: When the performance becomes due, the promisor tenders or tries to perform what he has promised but the promisee refuses to accept the performance. This is known as 'attempted performance' also known as tender to a performance.
BY AGREEMENT OR MUTUAL CONSENT AMONG THE PARTIES
When parties to a contract mutully agree to bring a contract to an end without performance made. This agreement can be made in two ways.
• Expressed consent: When parties to a contract agree to discharge a contract by mutual consent and such consent is provided by use of words from both parties.
• Implied consent: Implied consent when consent is provided by the actions or conduct of the parties. Implied consent can be in following manner.
Novation takes place when
• A new contract is substituted for a new one by the same parties
• When a contract between two parties is rescinded in consideration of a new contract entered into on the same terms between one of the parties and third parties.
Novation can take place only before expiry of the time of performance of the original contract else it will be considered as to breach of contract.
For example X owes money to Y under a contract. It is agreed between X Y Z that B shall henceforth accept Z as his debtor instead of X. The old debt of X to Y will come to an end and new debt from Y to Z will come into existence.
Rescission of a contact takes place when all or some of the terms of the contract are cancelled. It may occur
By mutual consent of the parties
Where one party fails in the performance of his obligation the other party may rescind and may claim for compensation.
Alteration takes place when both the parties mutually agree to alter one or more terms to the contract. In such case old contract is discharged.
Remission means acceptance of lesser amount then contract for in discharge of whole of the contract for example cash discount
This is mutual abandonment of contract by both parties who mutually agree that neither one is bound to the contract any longer. Consideration is not necessary for waiver
Merger takes place when inferior right of a party merger with superior right of the same party for example a person buys the leased property held by him.
BY IMPOSSIBILITY OF PERFORMANCE
When a contract becomes impossible to be performed after formation of contract or the contract was impossible to be performed when the contract was made but the fact was not known to the parties.
• Known to parties
• Not known to parties
• Supervening impossibility
BY LAPSE OF TIME
When time to demand performance is lapsed as provided by the Limitation Act.
BY BREACH OF CONTRACT
• Actual breach
When a parties declares inability to perform the contract the time of performance
• Anticipated breach
When party declares inability to perform in advance.
These online MCQ Mock tests and MCQ questions includes all main concepts of the chapter performance of contract in CSEET Subject Legal Aptitude and Logical Reasoning. Students preparing for CSEET should study online notes for CSEET and then practice chapter wise online test series for CSEET for the best result.