Exceptional Cases when a Contract is not Discharged

The Indian Contract Act 1872, has specified some exceptions to the case when a contract is not discharged, such as:

1. Difficult to Perform: In cases, where a situation arises that makes the promise agreed in the contract difficult to be performed, and the situation makes the promise challenging to be fulfilled, the contract will not be discharged.

2. Commercial Hardship: Any sort of commercial hardships make the contract unprofitable and also make it difficult to undergo the performance. However, it does not discharge a contract.

3. Strikes: Strikes, lock-outs, civil disturbances, and riots do not discharge the contract unless there is a clause in the contract specifying that in such event, the contract will be terminated unless the contract contains a clause providing that the contract shall not be performed or that the time of performance will be extended.

4. Self-Induced Incapacity: A contract is not discharged due to the self-induced incapacity of the parties to a contract. When the impossibility is due to the fault of any of the parties to the contract, the doctrine does not apply. For example, Arun booked a car on hire by Zoomcar; however, Zoomcar had to renew the car’s registration, which they failed to do. In this case, Zoomcar cannot avoid the contract since the registration has not been renewed due to their actions.

5. Performance Relied upon Third Party: In a contract where performance is relied upon by a third party and in a case when a third party makes a default, the contract will not be discharged due to the failure or default by the third party. For example, Arun contracts with Rishabh handicrafts to supply 50 handcrafted items. Rishab delegated this order to a third party who shall manufacture the handicrafts, and Rishab markets them. The third party makes a default in manufacturing. This won’t discharge Rishab from the contract.

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.