Contracts are agreements that are entered into by two or more parties. When parties enter into a contract, they are bound by the terms of the contract, and they have certain rights and obligations. However, there are situations where the parties may wish to terminate the contract. This termination is referred to as „discharge of the contract.“ In this article, we will explore the various modes of discharge of a contract in detail.
1. By performance
The primary mode of discharging a contract is by performance. This means that the parties fulfill their obligations under the contract and meet the terms of the agreement. When the obligations under the contract are completely fulfilled, the contract is considered discharged. For example, if a company agrees to sell a product to a customer, and the customer pays for the product, and the company delivers the product, the contract is discharged.
2. By agreement
Another mode of discharge of a contract is by an agreement between the parties. The parties may agree to terminate the contract by mutual consent. This agreement can be in writing or verbal. For example, if a company and a customer agree to cancel a contract, and they both agree to the terms of cancellation, the contract is discharged.
3. By breach
A contract can be discharged by a breach by one of the parties. A breach occurs when a party fails to fulfill its obligation under the contract. When a breach occurs, the other party may choose to terminate the contract. For example, if a company agrees to provide services to a customer but fails to provide those services, the customer may choose to terminate the contract.
4. By frustration
A contract can also be discharged by frustration. Frustration occurs when events outside the control of the parties make it impossible to fulfill the contract`s obligations. For example, if a company agrees to build a house for a customer, but the house burns down before the company can complete construction, the contract may be discharged.
5. By operation of law
Contracts can also be discharged by operation of law. This occurs when a change in the law makes the contract illegal or impossible to perform. For example, if a company agrees to sell a product that is later banned by the government, the contract may be discharged.
In conclusion, there are various modes of discharge of a contract, including performance, agreement, breach, frustration, and operation of law. It is important for parties to understand the different modes of discharge to ensure that they are fulfilling their obligations and to protect themselves from any potential legal issues.