Discharge of Contract

Indian Contract Act, 1872

TANMOY MUKHERJEE INSTITUTE OF JURIDICAL SCIENCE

Dr. Tanmoy Mukherjee

Advocate

 

Discharge of Contract-

Tanmoy Mukherjee

Advocate

Discharge of contract refers to the cessation of enforceability of contractual obligation. After discharge, neither party can demand performance, though rights already accrued may survive.

1) Discharge by performance-

Sec. 37 & Sec. 38 deal with performance of contract.

a. Actual performance

Reference Cases-

b) Attempted performance-

Offer to perform obligations but refused by the promisee.

Reference Cases-

Statup v/s Macdoland

2. Discharge by mutual agreement-

Sections 62 and 63 of relevant legislation deal with discharge by mutual agreement.

a) Novation-

Types-

Reference Cases-

Lata construction v/s Dr. Ramesh chandna AIR 2000 SC

b) Rescission-

Reference Cases-

Union of India v/s Kishari Lal Guptal AIR 1959 SC.

c) Alteration-

Reference Cases-

Ganga Bai v/s Bijoy Kumar AIR 1974 SC

d) Remission (sec. 63)-

Illustration-

Accepting Rupees 80,000/- instead of Rs 1, 00,000/-

Reference Case:

Kapur Chand Godha v/s Nawab Himayat Ali khan AIR 1963 SC

e) Waiver-

Reference case:

Waman Shrinivas Kini v/s Ratilal Bhagwan Das AIR 1959 SC

3. Discharge by impossibility of performance (Doctrine of Frustration)-

a) Initial impossibility-

→Subject matter does not exist at the time of agreement.

→Agreement void ab initio.

Refrence Case:

Sheikh Bros Ltd. v/s Ochsner (1957)

b) Supervening impossibility-

The impossibility occurs after the formation of the Contract.

Grounds-

→Destruction of Subject matter

→Change of law

→Death

→Incapacity

→war

→civil disturbance

→Non-occurrence of fundamental event.

Reference Case-

Taylar v/s Cladwell (1863)

→Foundation of doctrine of frustration.

Sattya Brata Ghosh v/s Mugneram Bangur (1954)

Exceptions-

Reference case-

 i) Alopi v/s union of Indian AIR 1960 SC

 ii) Energy watchdog v/s CERC (2017)

 4. Discharge by lapse of time-

Reference Case-

Bombay Dyeing v/s state of Bombay

5. Discharge by operation of law-

Reference case-

State bank of Saurashtra v/s Chittarangan Rangnath Roja (1980).

6. Discharge by breach of contract: (Sec. 39)

Reference Case-

Frost v/s Knight (1872)

7. Discharge by contingent event-

→ Dependent on uncertain future event

→ If event becomes impossible contract becomes void.