Discharge of Contract In a contract, the parties have to fulfil their contractual obligations. When such obligations come to an end, the contract is said to be discharged. In other words, discharge of contract means ‘termination of contractual relationship between the parties’.In short, contract is said to be discharged , when it ceases to operate/ exist.
Modes of DischargeFollowing are the different modes , by which a contract may be discharged:1.By performance of Contractual Obligation2.By impossibility of Performance (Doctrine of Frustration)3.By Subsequent Agreement (Doctrine of Novation)4.By Breach of Contract5.By Lapse of time6.By Operation of Law
Discharge by performance of contractual Obligations:A contract is said to be discharged , if the parties had fulfilled their respective obligations under the contract.
ExampleA offers to sell his house to B for Rs. 50,000/-and B accepts the same. Later B paid the amount in full and A handed over the house to B . Here the parties have fulfilled their obligations. The contract is said to be discharged by performance
Discharge by Impossibility of Performance(The Doctrine of Frustration )(Section 56)One of the essential elements of a contract is Possibility of performance . If the performance of a contract is impossible it is void. In other words, impossibility of performance renders the contract void.
Thus Section 56 of the Indian Contract Act lays down the provisions relating to the impossibility of performance, which runs as follows:“An agreement to do an act impossible in itself is void”
Contract to do act afterwards becoming impossible or unlawful:A contract to do an act which, after the contract is made, becomes impossible , or, by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful.
Compensation for loss through non performance of act known to be impossible or unlawfulWhere one person has promised to do something which he knew, or, with reasonable diligence , might have known and which the promisee did not know to be impossible or unlawful ,such promisor must make compensation to such promisee for any loss which such promisee sustains through the non-performance of the promise.
Illustrations A agrees with B to discover treasure by magic . The agreement is void. A and B contract to marry each other. Before the time fixed for the marriage , A goes mad. The contract becomes void.
In English Law , impossibility of performance is known as Doctrine of Frustration . It is based on the two maxims namely:Lex non cogit and impossibilia. It means Law does not recognise, what is impossible. Impossibilum mulla obligation est. It means what is impossible does not create an obligation.
The doctrine of Frustration : Origin and development In England , before 1863, a subsequent impossibility of performance was not a defence.It was laid down in:Paradine v Jane In this case Paradine sued for rent due from his tenant Jane.The defendant