Discharge of contract(5)

Discharge of contract 

A contract is discharged when rights and obligations created by it comes to an end, i.e., contracting parties no more have any responsibility or liability to each other.

Discharge of contract 1. 2. 3.

4. 5. 6.

By performance- actual or attempted. When promised performance becomes impossible. Mutual agreement-by novation, alteration or recession (Sec.62), remission or  waiver (Sec.63). Lapse of time Operation of law Breach of contract

Breach of contract Breach of contract is failure of a party to perform his obligations under a contract. When one party commits a breach the aggrieved party becomes entitled to rescind the contract and to claim damages, if any.  The breach of contract may be Actual breach of contract, or  Anticipatory or constructive breach of  contract. 

Actual breach of contract 

Where one party fails to perform his contractual obligations on due date of  performance, or during the performance, he is said to have committed a breach of  contract. If the performance is not strictly according to the terms of the contract, then also it is treated as breach of  contract.

Anticipatory Anticipatory breach of contract. 

Sec.39 ‘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.’

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Anticipatory breach of contract may be express or implied.

Effect of anticipatory breach The aggrieved party may treat anticipatory breach as actual breach.  The aggrieved party may decide to ignore the anticipatory breach, and wait for the due date of performance.  Doctrine of anticipatory breach does not apply to promises to pay debts under  promissory notes and bonds. 

Remedies for breach of contract  

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The aggrieved party may Cancel the contract which will relieve him from all contractual obligations. (rescission ( rescission)) Cover and receive damages. damages. Demand specific performance demand injunction. Recover any consideration given to the breaching party (restitution (restitution)) Recover proportionate payment for the work done. (Quantum (Quantum Meruit) Meruit)

Rescission

(cancellation of contract)

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Both the parties are absolved from their  contractual obligations, without prejudice to the injured party’s right to claim damages.

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The party rescinding a voidable contract must restore the benefits received from the other party.

Damages 

Damages are monitory compensation for  the losses suffered or gains prevented due to the breach.

Kind of damages and rules 

Compensatory damages- general damages and special damages.

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Vindictive or exemplary damages- punitive damages. e.g.. for dishonor of cheque.

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Nominal damages

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Liquidated damages and penalty

Suit for specific performance 

The Specific Relief Act, 1877 gives the court discretionary powers to order  specific performance instead of or in addition to damages. The powers are subject to Sec.14 of the Specific Relief  Act, 1877.

Suit for injunction 

Injunction is an order of the court restraining a person from doing something which he promised not to do. This remedy is available where the contract contains a negative stipulation.

Quantum meruit & Restitution 

This is a remedy supplementary to the damages and the legal meaning of the term is ‘payment in proportion of the work done.

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Restitution is an act of restoring back to the rightful owner which has been taken away or lost.