DISCHARGE OF A CONTRACT BY OPERATION OF LAW & BREACH OF CONTRACT

 

DISCHARGE OF A CONTRACT BY OPERATION OF LAW & BREACH OF CONTRACT  

Discharge of a contract means termination of the contractual relations between the parties to the contract. The contract may be discharged in the following six modes: - 

 

1. Discharge by Operation of Law

2. Discharge by Breach of Contract  

3. Discharge by Performance

4. Discharge by Mutual Agreement

5. Discharge by Impossibility of Performance

6. Discharge by Lapse of Time

 

 

Various modes of Discharging of a Contract

Discharge of a contract means termination of the contractual relations between the parties to a contract. A contract is said to be discharged when the rights and obligations of the parties under the contract come to an end. Modes of discharge of contract.

 

1. Discharge by Operation of Law 
A contract may be discharged by operation of law in the following cases: 

(a) By Death of the Promisor A contract involving the personal skill or ability of the promisor is discharged on the death of the promisor. 

(b) By Insolvency When a person is declared insolvent, he is discharged from his liability up to the date of his insolvency. 
(c) By Unauthorised Material Alteration If any party makes any material alteration in the terms of the contract without the approval of the other party, the contract comes to an end.

(d) Merger: Where an inferior right contract merges into a superior right contract, the former stands discharged automatically.

Illustrations:

(a) Where a man holding property under a contract of tenancy buys the property, his rights as a tenant are merged into the rights of ownership and the contract of tenancy stands discharged by operation of law. (b) Where a part-time lecturer is made full time lecturer, the contract of part-time lecturer ship is discharged by merger.

2. Discharge by Breach of Contract 
A contract is said to be discharged by breach of contract if any party to the contract refuses or fails to perform his part of the contract or by his act makes it impossible to perform his obligation under the contract. A breach of contract may occur in the following two ways: 

(a) Anticipatory Breach of Contract - Anticipatory breach of contract occurs when party declares his intention of not performing the contract before the performance is due. 

(b) Actual Breach of Contract -  Actual breach of contract occurs in the follow-ing two ways: 

(i) On Due Date of Performance: If any party to a contract refuses or fails to perform his part of the contract at the time fixed for performance, it is called an actual breach of contract on due date of performance. 

(ii) During the course of performance