Termination of Contract by alicejenny


Termination of

 When  the rights and obligations
 arising out of a contract are
 extinguished, the contract is said to
 be discharged or terminated.
A contract may be terminated in
   any of the following ways

   By Performance
   Mutual consent or agreement
   Subsequent or supervening
   By lapse of time
   By operation of Law
   By breach of contract
 Discharge by performance

 When a contract is duly performed
 by both the parties, the contract
 comes to a happy ending and
 nothing more remains. The contract
 in such a case is discharged or
 terminated by due performance.
Discharge by mutual consent or
 As a contract is created by means of
  an agreement, it may also be
  discharged by another agreement
  between the same parties. It may
  take the following forms
 Novation

 Alteration

 Rescission

 Remission
 Novation occurs when a new contract
 is substituted for an existing
 contract. It may be between the
 same parties or between different
 parties. Novation can not be
 compulsory. It can only be done the
 mutual consent.

A is indebt to B and B to C. By
 mutual agreement B’s debt to C and
 B’s loan to A are cancelled and C
 accepts A as his debtor. There is
 novation involving change of parties.
  Alteration of a contract means change in
  one or more of the material terms of a
  contract. If a material alteration in a
  written contract is done by mutual
  consent, the original contract is
  discharged by alteration and the new
  contract in its altered form takes its place.
          It is relevant to state that a
  material alteration made in a written
  contract by one party without the consent
  of the other, will make the whole contract
    A contract may be discharged before
    the date of performance, by
    agreement between the parties to
    the effect that it shall no longer bind
    them. Such an agreement amounts
    to ‘rescission’ or conciliation of
    contract. An agreement of rescission
    releases the parties from their
    obligations arising out of contract.
A promise to deliver certain goods to
 B on a certain date. Before the date
 of performance, A and B mutually
 agreed that the contract will not be
 performed. The contract stands
 discharged by rescission.
 Remission  may be defined ‘as the
 acceptance of a lesser sum than
 what was contracted for or a lesser
 fulfillment of the promise made.’
 Section-63 of the Act deals with
 remission of performance and lays
 down that a promise may remit or
 give up wholly or in part, the
 performance of the promise made to
 him and a promise to do so is
 binding even though there is no
 consideration for it.
 Ifthe promise agrees to accept Taka
  2000/ in full satisfaction of a claim of
  Taka 5000/, the promise is
  enforceable and the promisee can
  not in future bring a suit for the
  recovery of Taka 5000/.
    Termination by impossibility of
   There is no question of discharge of a
    contract which is entered into to perform
    something that is obviously impossible.
    Section-56 of the Act provides that an
    agreement to do an act impossible in itself
    is void. But when a contract which was
    capable of being performed at the time it
    was made, subsequently becomes
    impossible to perform is treated as void.
    This is known as supervening
       Impossibility of performance..
 In other words where an event which
 could not reasonably have been in
 the contemplation of the parties
 when the contract was made,
 renders performance impossible or
 unlawful, the contract becomes void
 and stands discharged. This is known
 as frustration of the contract brought
 about by supervening impossibility.
 It is also known as the doctrine of
 supervening impossibility.
This supervening impossibility
may occur in the following ways

 Destruction  of the subject matter
 Failure of ultimate purpose

 Death or personal incapacity of
  the promisor
 Change of Law

 Outbreak of war
    Discharge by Operation of Law
 A contract terminates by operation of Law
  in the following cases
 Death :
       Where a contract is of personal
  nature, the death of the promisor
  discharges the contract. In other contracts
  the rights and liabilities of the deceased
  person pass on to the legal representative
  of the deceased person.
 Insolvency:
        A contract is discharged by the
  insolvency of one of the parties to the
Discharge by breach of contract
 Ifa party commits breach of
  contract, then the contract will be
  terminated. Breach brings an end to
  the obligations created by a contract
  on the part of each of the parties.
  Breach of contract may be of two
 Anticipatory breach

 Actual breach
    breach of contract (Con’t)
  An Anticipatory breach of contract
  is a breach of contract occurring
  before the time fixed for
  performance has arrived.
    Actual breach occurs when a
  party fails to perform his obligation
  upon the date fixed for performance
  by the contract. For example where
  on the appointed day the seller does
  not deliver the goods.

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