In this article we are providing you Modes of Discharge of contract under Indian Contract Act 1872 which will help you to understand the various mode of Discharge of contract
Introduction
When parties to contract come into a contract they made obligations on each other. when the obligations on parties come to an end discharge of the contract happens. In this article, we are going to explain various ways of discharge of the contract.
Modes of Discharge of contract
1] Discharge by Performance
2] Discharge by Mutual Agreement
3] Discharge by the Impossibility of Performance
4] Discharge of Contract by Lapse of Time
5] Discharge of Contract by Operation of Law
6] Discharge by Breach of Contract
7] Discharge of Contract by Remission
8] Discharge by Non-Provisioning of Facilities
9] Discharge of Contract due to the Merger of Rights
1) Discharge by Performance
Discharged of the contract by performance happens when the parties of the contract fulfill the obligations which are mentioned in the contract within the stipulated time.
Illustration- Suraj agrees to sell his mobile to Gopal on the condition that Gopal will give a bicycle to Suraj. As soon as Gopal gave his bicycle to Suraj. Suraj gave his mobile to Gopal.
The above illustration is the best example of the discharge of the contract by performance. As it is showing that at the time both parties fulfill their obligations within the stipulated time the discharge of the contract by performance is happens.
Discharge by the performance of a contract can occur by –
1) Actual performance
2) Attempted performance
2] Discharge by Mutual Agreement
In this all parties to contract agree mutually to replace the contract with a new.
If all parties to a contract mutually agree to replace the contract with a new one or annul or remit or alter it, then it leads to a discharge of the original contract due to a mutual agreement.
3] Discharge by the Impossibility of Performance
Initial Impossibility – an agreement which is impossible to do is void-ab-initia.
Subsequent Impossibility – Due to some unavoidable circumstances, a contract becomes impossible or unlawful and these types of contract cannot be binding.
4] Discharge of a Contract by Lapse of Time
The limitation Act 1962 prescribed the specific period for the performance of the contract. contract must be performed within the period of limitation but if the contract is not performed in time. it may affect the other party and cancelled the contract.
5] Discharge of a Contract by Operation of Law
Contract can be discharged by the operation of law.
6] Discharge by Breach of Contract
In this type of discharge one party fail to perform the contract and it affects the other party. Actual Breach and Anticipatory Breach are two kinds of discharge by breach of contract,
Under the Indian Contract Act, 1872, contracts can be discharged through various modes:
- Performance: When parties fulfill their contractual obligations as per the terms and conditions agreed upon.
- Agreement: Mutual consent between parties to terminate the contract.
- Operation of Law: Contracts may be discharged due to impossibility, illegality, or breach of contract.
- Lapse of Time: If a contract has a specific time frame and it expires without performance, it is discharged.
- Breach: When one party fails to perform as per the contract, the other party may consider it discharged and claim damages.
- Mutual Rescission: Both parties agree to cancel the contract.
- Novation: Replacing one party or altering contract terms with mutual consent.
- By Revocation: Offeror can revoke an offer before acceptance.
- Death or Insanity: If a party becomes incapable of fulfilling the contract due to death or insanity, it is discharged.
- Merger: When a lesser contract merges into a larger one, it is discharged.
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