Advantages And Disadvantages Of Discharge Of A Contract

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TASK 2 2.1 Introduction The main objective of entering into a contract is generally to see it through to completion. In a simplified example, in the case of a construction contract between an employer and a contractor, the employer gets his project constructed and the contractor gets his payment. However, not every contract will achieve its goal. It is not uncommon for a contractual relationship to terminate in the course of its performance, without achieving its objective. In this task, we had a scenario which our training appraisal is due shortly. Furthermore, our supervisor had told us the he will be testing our knowledge on the discharge of contract. He explained that the contract can be discharged in several …show more content…

Under the law of contract, termination of contract comes under the topic of discharge of contract. Generally, a contract can be discharged by four main methods: by performance, by agreement, by frustration, and by breach of contract. It was suggested that a well drafted contract should include a clause that clearly defines the method and procedure for its termination in certain circumstances. 2.2 Discharge of a contract Discharge of a contract relates to the circumstances in which the contract is brought to an end. Where a contract is discharged, each party is freed from their continuing obligations under the contract. A contract may be discharged in one of the following ways: • Discharge by Performance • Discharge by Breach • Discharge by Agreement • Discharge by …show more content…

If both parties have continuing obligations then generally the consideration will be simply each of them giving up their rights under the contract. The only time consideration becomes an issue is where one party has fully performed their part of the contract when the other has not. The non-performing party must then provide consideration to make the agreement binding. Also if the agreement is made by deed there is no requirement to provide consideration. There is in effect a contract to end a contract. According to Section 64 of the Contract Act 1950 (Act 136), which states that, “Every promise may dispense with or without remit, wholly or in part, the performance of the promise made to him, or may extend the time for such performance, or may accept instead of it any satisfaction which he thinks fit”. As an illustration of the situation, B promises to paint a picture for C. But then, C forbids B to do so afterwards. Thus B is no longer bound to perform the promise. As it is the agreement of the parties which binds them, so by their further agreement or consnt the contract may be terminated. The rule of law in this regard is as follows, Eodem modo quo quid constituitur, eodem modo destruitur which means things may be destroyed in the same manner in which it is constituted. Types of discharge by agreement: 1. Novation 2. Rescission 3. Alteration 4.

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