Discharge of Contract

What is the Discharge of the Contract?

The discharge of a contract takes place when none of the party to contract is left liable under it and the objective or responsibilities of the contract have been completed. Discharge of contract can also be called termination of the contractual relationship between the parties to the contract and also the rights and obligations of the parties which are created at the time the contract is made also comes to an end.

When does a contract get terminated or discharged?

According to the Indian Contract Act, a contract can be discharged by the parties by giving lawful reasons like recession, ending the contract by giving a prior notice, or on completion. Such termination might also take place by the mutual consent of the parties.

What are the modes by which a contract can be discharged?

A contract can be discharged in the following ways:

• Discharge by Performance
• Discharge by Agreement or Consent
• Discharge by Impossibility of Performance
• Discharge by Lapse of Time
• Discharge by Operation of Law
• Discharge by Breach of a Contract

What is discharge by operation of law?

A contract might gets discharged by the operation of law which includes death of the promisor, insolvency etc. Here, in case if certain conditions exists, the contract is discharged.

What are the exceptions where the contract will not be discharged?

The exceptions where the contract will not be discharged are as follows:

• When the contract becomes difficult to perform
• Commercial Hardship
• Strikes, lock-outs, civil disturbances and riots
• Self induced incapacity
• Performance relied upon third party

Note: The information provided is sourced from various websites and collected data; if discrepancies are identified, kindly reach out to us through comments for prompt correction.

Indian Contract Act, 1872 is a central law that validates the Contracts or Agreements between various parties. The act regulates and oversees all the business in case of any dealings or an agreement. The Indian Contract Act, 1872 defines the term Contract under Section 2(h) as “An agreement enforceable by law”. Hence, a contract is anything that is an agreement and enforceable by the law of the land.

The Discharge of a Contract takes place when none of the parties to the contract is left liable under it, and the objective or responsibilities of the contract have been completed. Discharge of contract can also be called Termination of the Contractual Relationship between the parties to the contract and also the rights and obligations of the parties which are created at the time the contract is made come to an end. There are several ways by which a contract can be terminated; i.e., either positively, via performance, or negatively, through breach.

Geeky Takeaways:

• A contract creates certain obligations for the parties involved.
• Discharge of a Contract happens when these obligations terminate.
• It means terminating the contractual relationship between the parties who entered into the contract.
• Hence, when the rights, obligations, and duties of the parties come to an end, it is termed as a Discharge of a Contract.