1. WHEN A CONTRACT COULD BE DISCHARGED?

DISCUSS

When an agreement, which was binding on the parties to it, ceases to bind them, the contact is
said to be discharged. A contract may be discharged in the following ways:
1. By Performance of the contract ;
2. By breach of the contract ;
3. By impossibility of performance ;
4. By Agreement.

DISCHARGE BY PERFORMANCE
Under a contract each party is bound to perform his part of the obligation. After the parties have
made due performance of the contract, their liability under the contract comes to an end. In such
a case the contract is said to be discharged by performance.

DISCHARGE BY BREACH OF CONTRACT
When a party having a duty to perform a contract fails to do that, or does an act whereby the
performance of the contract by him becomes impossible, or he refuses to perform the contract,
there is said to be a breach of contract on his part. On the breach of contract by one party, the
other party is discharged from his obligation to perform his part of the obligation, and he also
gets a right to sue the party making the breach of contract for damages for the loss occasioned
to him due to the breach of contract. The breach of contract may be either actual, i.e., non-
performance of the contract on the due date of performance, or anticipatory, i.e., before the due
date of performance has come. For example, A is to supply certain goods to B on 1st January.
On 1st January A does not supply the goods. He has made actual breach of contract. On the
other hand, if A informs B on 1st December that he will not perform the contract on 1st January
next, A has made anticipatory breach of contract.

a. Anticipatory Breach Of Contract
It means the repudiation of a contract by one party to it before the due date of its performance
has arrived. Section 39, which contains law relating to anticipatory breach of contract is as
follows: When a party to a contract has refused to perform, or disabled himself from
performing, his promise in its entirety, the promisee may put an end to the contract, unless he
has signified, by words or conduct, his acquiescence in its continuance. Anticipatory breach of
contract could be made by promisor, either by refusing to perform the contract, or disabling
himself from performing the contract in its entirety, before the due date of performance has
arrived. When the refusal to perform the contract in its entirety is not there, it is not to be
considered to be a case of anticipatory breach within the meaning of section 39.
b. Effect Of Anticipatory Breach Of Contract
When the promisor has made anticipatory breach of contract, the promisee may put an end to
the contract, unless he has signified by words or conduct his acquiescence in its continuance. It
means that on the breach of contract by one party, the other party has two alternatives open to
him, viz.,
(i) He may rescind the contract immediately, i.e., he may treat the contract as an end, and may
bring an action for the breach of contract without waiting for the appointed date of the
performance of the contract,
(ii) He may not put an end to the contract but treat it as still subsisting and alive and wait for the
performance of the contract on the appointed date.

DISCHARGE BY IMPOSSIBILITY OF PERFORMANCE
Both under the English and Indian law a contract the performance of which is impossible the
same is void for that reason. Section 56, which deals with this question, mentions two kinds of
impossibility. Firstly, impossibility existing at the time of the making of the contract. Secondly, a
contract which is possible ofperformance and lawful when made, but the same becomes
impossible or unlawful thereafter due to some supervening event.


DISCHARGE BY AGREEMENT
There is nothing preventing parties to a contractual relationship to vary or discharge the
agreement, and can do so in the following ways:
Mutual discharge: is where both parties agree to release one another from what was
agreed upon before either party has performed any of the acts promised.
Release by one party: is where one party has completed their contractual promise, and
agrees to release the other party from further performance of the contract.
Novation: putting a new contract in place of the old one and can be done between the
original contracting parties or different parties.
Merger of lesser agreement into a greater agreement: is where parties to a simple
contract enter into a formal contract or deed, and the simple contract has been merged
by the formal contract which has become enforceable. Merger may also operate in such
a way where the obligations under the agreement will have the effect of discharge.
Discharge by accord and satisfaction: arises where one party is in breach of the
contractual agreement and the other party agrees to release the party who is in breach
by requiring performance of another promise, which would then mean that the previous
agreement has been discharged by accord (the new promise) and satisfaction
(performance).
Waiver of a contract: is where the strict performance of the contract is no longer
required, even though strict performance of the contractual agreement can still be
claimed by one of the parties.

DISCHARGE OF A CONTRACT BY FRUSTRATION
There may instances where performance of the contract is impossible and it isnt the fault of any
of the parties that there are no provisions dealing with a circumstance arisen, therefore, allowing
the parties to be released from further performance of the contract.
Frustration as a concept can be difficult to define and the test of frustration was stated by Lord
Radcliffe inDavis Contractors Ltd v Fareham Urban District Council [1956] AC 696, and
approved by the High Court of Australia in Codelfa Construction Pty Ltd v State Rail Authority of
New South Wales (1982) 149 CLR 336.
Lord Radcliffe in reference to the test of frustration stated:
frustration occurs whenever the law recognises that without default of either party a
contractual obligation has become incapable of being performed because the circumstances in
which performance is called for would render it a thing radically different from that which was
undertaken by the contractit was not this that I promised to do.
His Lordship further observed the importance in regards to unexpected events in terms of
frustration by stating: There must be as well such a change in the significance of the obligation
that the thing undertaken would, if performed, be a different thing from that contracted for.
Alternatively, there are three limitations to the doctrine of frustration:
the frustrating event was not caused by either party to the contract;
the frustrating event must not be one where it was reasonably foreseeable or
contemplated by either party;
the occurrence of the frustrating event was not caused by the party who is seeking to
rely on frustration.
Under the common law, a contract which is frustrated automatically comes to an end, however,
any liabilities prior to the frustrating event may still be enforceable but in terms of future
obligations (termination in futuro), the parties will be discharged.