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✅ Indian Contract Act 1872 Full Series ✅

   • Indian Contract Act 1872  

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00:00 Introduction
00:39 Meaning of Discharge of Contract
01:11 Modes or Methods of Discharge of Contract

👉 Meaning of Discharge of Contract

The term discharge of contract means the termination of the contractual relationship between the parties. Once a contract is discharged, the parties are no longer bound to perform their obligations under it.

In simple words:

Discharge of contract = Contract comes to an end + obligations are finished.

👉 Modes of Discharge of Contract

1.) Discharge by Performance (Sections 37–39)
2.) Discharge by Mutual Agreement (Section 62)
3.) Discharge by Lapse of Time
4.) Discharge by Operation of Law
5.) Discharge by Impossibility of Performance (Section 56)
6.) Discharge by Breach of Contract (Sections 39, 73–75)

1.) Discharge by Performance (Sections 37–39)

A contract is discharged by performance when the parties to the contract fulfil their obligations completely in the manner and within the time agreed upon. Once the promises performed as per the terms, nothing remains, the contract automatically comes to an end.

🔹Example: A agrees to build a house for B for ₹10 lakh. A builds the house as agreed and B makes full payment. The contract is discharged by performance.

2.) Discharge by Mutual Agreement (Section 62)

A contract may be discharged if the parties agree mutually to:
Novation → Substituting a new contract for the old one.
Alteration → Changing the terms of the existing contract with mutual consent.
Rescission → Cancelling the contract by mutual agreement.
Remission → Promisee accepts lesser performance or waives rights.

🔹Example: A owes B ₹50,000. B tells A, “If you pay me ₹30,000, I will treat the debt as fully settled. A pays ₹30,000. This is a type of Remission

3.) Discharge by Lapse of Time

If a contract is not performed within the prescribed period of limitation, it becomes unenforceable and is discharged.

🔹Example: A creditor has the right to recover a loan from B. If the creditor does not file a suit for recovery within 3 years, he loses the legal remedy. The contract is treated as discharged due to lapse of time.

4.) Discharge by Operation of Law

A contract may be automatically discharged by the operation of law in the following cases:
Death of a party (in contracts of personal skill or service).
Insolvency of a party (debtor is released from liability).
Merger of rights (when an inferior right merges into a superior right).

🔹Example: A tenant buys the property he was renting. His rights as tenant merge with his ownership rights. This is a example of Merger of rights

5.) Discharge by Impossibility of Performance (Section 56)
A contract is said to be discharged by impossibility when it becomes impossible to perform. Impossibility may occur in two forms:

1.) Initial Impossibility – When a contract is impossible from the very beginning and the parties are unaware of it.
🔹Example: A contracts to discover treasure by magic. Such a contract is void from the start.

2.) Supervening impossibility → Becomes impossible later due to events like war, natural calamity, or change in law.
🔹Example: A contracts to deliver goods from abroad, but the government imposes an export ban. The contract becomes void.

6.) Discharge by Breach of Contract (Sections 39, 73–75)

When one party fails, refuses, or disables themselves from performing their part of the contract, the other party can treat the contract as discharged.
Breach may be:
Actual breach → At the time of performance.
Anticipatory breach → Before the due date, one party declares they will not perform.

🔹Example: A agrees to supply 100 bags of rice to B on 1st June. On 25th May, A informs B he will not deliver. This is anticipatory breach, and the contract is discharged.