Discharge of contract: It implies termination of contractual obligations. This is because when the parties originally entered into the contract, the rights and duties in terms of contractual obligations were set up. Consequently when those rights and duties are put out then the contract is said to have been discharged. Once a contract stands discharged, parties to it are no more liable even though the obligations under the contract remain incomplete.
It following circumstances contract is discharged.
- Discharge by performance:When the parties to a contract fulfil the obligations arising under the contract within the time and manner prescribed, then the contract discharged by performance.
- Discharge of Contract by Substituted Agreement: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.
- Discharge by lapse of time: If the promisor fails to perform and the promisee fails to take action within this specified period, then the latter cannot seek remedy through law. It discharges the contract due to the lapse of time.
- Discharge by operation of law:A contract can be discharged by operation of law which includes insolvency or death of the promisor.
- Discharge by Impossibility of Performance:If it is impossible for any of the parties to the contract to perform their obligations, then the impossibility of performance leads to a discharge of the contract. If the impossibility exists from the start, then it is impossibility ab-initio.
- Discharge by Accord and Satisfaction:
- Discharge by breach:If a party to a contract fails to perform his obligation according to the time and place specified, then he is said to have committed a breach of contract.
Also, if a party repudiates a contract before the agreed time of performance of a contract, then he is said to have committed an anticipatory breach of contract.