B.law.pptx about how a contract is discharged

 COMMUNICATION OF OFFER AND ACCEPTANCE
 According to sec.3 of Indian Contract Act, “that the communication of
proposal, the acceptance of proposal, and the revocation of proposal
and acceptance respectively are deemed to be made by any act or
omission of the party proposing, accepting or revoking by which he
intends to communicate such proposal, acceptance or revocation or
which has the effect of communicating it”.
 Thus communication of offer and acceptance is necessary for forming a
contract.
 The communication of an offer is complete as soon as it comes to the
knowledge of the offeree.

 Communication of acceptance is complete –
1. as against the proposer, when it is put in a course of transmission to him as
to be out of the power of the acceptor
2. as against the acceptor, when it comes to the knowledge of the proposer.
For example, A proposes by a letter to sell a Car to B at a specified amount
and B accepts A’s proposal by letter sent by post.
Here the communication of acceptance is complete as against A when the
letter is posted and as against B when the letter is received by A.

An Offer may be revoked at any time before the
communication of its acceptance is complete as against
the proposer, but not afterwards. So an offer can be
revoked at any time
 before the letter of acceptance has been posted by the
accepter.
An Acceptance may be revoked at any time before the
communication of the acceptance is complete as against
acceptor, but not afterwards.

 A contract creates certain obligations on one or all parties
involved.
 The discharge of a contract happens when these obligations
come to an end. There are many ways in which a contract is
discharged.

I. Discharge by Performance
II. Discharge by Mutual Agreement
III. Discharge by the Impossibility of Performance
IV. Discharge of a Contract by Lapse of Time
V. Discharge of a Contract by Operation of Law
VI. Discharge by Breach of Contract
VII. Discharge of a Contract by Remission
VIII. Discharge by Non-Provisioning of Facilities
IX. Discharge of a Contract due to the Merger of Rights

1] 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 is discharged by performance.
Example: Peter agrees to sell his cycle to John for an amount of Rs 10,000 to be paid by John on the
delivery of the cycle. As soon as it is delivered, John pays the promised amount.
Since both the parties to the contract fulfil their obligation arising under the contract, then it is
discharged by performance. Now, discharge by the performance of a contract can be by:
Actual performance
Attempted performance
As shown in the example above, actual performance is when all the parties to a contract do what they
had agreed for under the contract. On the other hand, it is possible that when the promisor attempts to
perform his promise, the promisee refuses to accept it. In such cases, it is called attempted performance
or tender.

 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.
 Example: Peter owes Rs 100,000 to John and agrees to repay
it within one year. They document the debt under a contract.
Subsequently, he loses his job and requests John to accept Rs
75,000 as a final settlement of the loan. John agrees and
they make a contract to that effect. This discharges the
original contract due to mutual consent.
2] Discharge by Mutual Agreement

 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. However, the impossibility might also arise later due
to:
 An unforeseen change in the law
 Destruction of the subject-matter essential to the
performance

 The non-existence or non-occurrence of a particular state of
things which was considered a given for the performance of
the contract
 A declaration of war
Example: Peter enters into a contract with John to marry his
sister Olivia within one year. However, Peter meets with an
accident and becomes insane. The impossibility of performance
leads to a discharge of the contract.

The Limitation Act, 1963 prescribes a specified period for
performance of a contract. 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.
Example: Peter takes a loan from John and agrees to pay
instalments every month for the next five years. However, he
does not pay even a single instalment. John calls him a few
times but then gets busy and takes no action. Three years
later, he approaches the court to help him recover his money.
However, the court rejects his suit since he has crossed the

A contract can be discharged by operation of law which
includes insolvency or death of the promisor.

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.
In both cases, the breach discharges the contract. In the case
of:

In both cases, the breach discharges the contract. In the case
of:
 an actual breach, the promisee retains his right of action for
damages.
 an anticipatory breach of contract, the promisee cannot file
a suit for damages. It also discharges the promisor from
performing his part of the contract.

A promisee can waive or remit the performance of promise of a
contract, wholly or in part. He can also extend the time agreed
for the performance of the same.
In example 3 above, Peter only repays a part of the money he
owes to John. However, John agrees to accept it as a final
settlement of the debt. John’s act of remission discharges the
contract.

In many contracts, the promisee agrees to offer reasonable
facilities to the promisor for the performance of the contract.
If the promisee fails to do so, then the promisor is discharged
of all liabilities arising due to non-performance of the contract.
Example: Peter agrees to fix John’s garage floor provided he
keeps his car out for at least 6 hours. Peter approaches him a
few times but John is reluctant to get his car out. John fails to
provide reasonable facilities to Peter (an empty floor). This
discharges him of all obligations arising under the contract.

In some situations, it is possible that inferior and superior right
coincides in the same person. In such cases, both the rights
combine leading to a discharge of the contract governing the
inferior rights.
Example: Peter rents John’s apartment for two years. One year
into the contract, he offers to buy the property from John,
who agrees. The enter a sale contract and Peter becomes the
owner of the apartment. Here Peter has two rights; one
accorded by the lease agreement making him the renter and
second by the sale agreement making him the owner. The
former being an inferior right merges with the superior one and

Q: Peter agrees to sell his laptop to John for
an amount of Rs 15,000. He also promises to
deliver it within 2 days. The next day, when
Peter approached John with his laptop, John
refuses to accept it without any valid reason.
Is the contract discharged?

A: Yes, in the above case the contract is
discharged. The contract is discharged since
Peter attempted the performance of his
promise.

B.law.pptx about how a contract is discharged

B.law.pptx about how a contract is discharged

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B.law.pptx about how a contract is discharged