Discharge of Contract Lecture # 6 Discharge of Contract Lecture # 6

Discharge of Contract Discharge means termination, end, or cancellation of contractual relations between the parties When the rights and duties of the contracting parties come to an end

Discharge By Performanc e By Agreement By Lapse of Time Subsequent Impossibility Operation of Law Breach of Contract

Breach of Contract is ones party failure, without a legal excuse, to perform its promise under a contract When a promisor does not fulfill his/her promise in accordance with the terms of the contract Failure of performance is not because of lapse of time, subsequent impossibility or by operation of law, then it is discharge by breach of contract

Breach of Contract Breach of Contract may rise in two ways: 1. Anticipatory: when a party refuses it before the time fixed for performance has arrived or when a party by his own act disables himself from performing the contract In such case the aggrieved party can: Sue at the time of repudiation Wait till the time of performance and then sue

Breach of Contract 2. Actual Breach: Failure at the due date or mean time of contract performance Actual breach occurs by: Failure to perform as promised Making it impossible for the other party to perform E.g. A made a contract with an agency to clean a carpet fro you on coming Sunday. On Sunday, A leaves earlier without making proper arrangements for the agency and thus making it impossible for the agency to perform its role

Remedies for the Breach of Contract Remedies are the course of actions available to an aggrieved party for the enforcement of rights under a contract The available options are: Suit for rescission Suit for damages Suit for quantum meriut Suit for injunction Suit for specific performance

Suit for Rescission Rescission is the right no to perform obligations If one party breaches, the other party is released from obligations The aggrieved party can sue the guilty party for rescission of contract

Suit for Damages Damages mean the monetary compensation allowed to aggrieved party for the loss suffered The different types of damages are: Ordinary Damages Special Damages Exemplary Damages Liquidated Damages Nominal Damages

Ordinary Damages Also called general damages Assessed on the basis of actual loss Which naturally arise in the usual course of things from such breach Measured on the basis of difference between the contract price and market price at the date of the breach

Special Damages Arise under some special circumstances May arise due to indirect loss in contract breach Parties must be aware of the loss The special circumstances must be communicated to the promisor

Exemplary Damages These damages are awarded to punish the guilty party Have no place in law of contract It depends on the court decision/consent These are compensation for emotional distress E.g. Breach of contract to marry Dishonoring Cheque

Liquidated Damages When parties to a contract fix an amount of damages for the breach of contract at the time of formation of contract

Nominal Damages These damages are awarded neither for compensation nor for punishment In case of no loss, court may award nominal damages with its own discretion

Suit Upon Quantum Meriut Quantum Meriut means as much as earned These are the payments in proportion to the work done or reasonable value of work done A right to sue on a quantum meriut arises where a contract partly performed by one party has become discharged by the breach of other party

Suit for Injunction It means demanding a courts stay order Injunction means an order of a court which prohibits a person to do a particular act

Suit for Specific Performance Specific Performance is the actual carrying out of the contract by a party Suits besides the damages Where damages are not an adequate remedy The court may direct the party in breach to carryout his promise according to the terms of the contract