Discharge of contract
| Discharge of contract |
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The discharge of a contract means that the obligations of the contract come to an end. When discharge occurs, all duties which arose under the contract are terminated. In other words, a contract is discharged when the rights and obligations created by it comes to an end. The main difference between discharge and termination of a contract is the conditions under which a contractual relationship ends[1].
Discharge by performance
Discharge by performance takes place when the parties to the contract their obligations arising under the contract within the time and in the manner prescribed. In such case the parties are discharged and the contract comes to an end. Non-performance of the required duties and obligation by either or both parties leads to the termination of a contract. If a singer comes to the concert and performs, then the singer and organizer discharge the contract after the performance. If the singer does not come and does not want to perform, the organizer may terminate the contract. Performance of a contract is the most usual mode of its discharge[2].
Discharge by agreement
Discharge by agreement or consent means that both parties to a contract may agree to terminate the contract under certain conditions which are defined in the contract. Parties may agree to discharge the contract as soon as some obligations are met or under circumstances which are not favorable to either party. If some frustrating conditions, for examle government regulations affect the agreement, both parties may agree to terminate the contract. The main rule of law is that the thing may be destroyed in the same manner in which it is constituted. It means that the obligation of the contract may be discharged by an agreement which may be expressed or implied.
Discharge by operation of law
A contract may be discharged by operation of law which takes place:
- by death: if contracts involves some personal skill or ability of the promisor, the contract is discharged/terminated due to death of the promisor,
- by insolvency: when a person is considered insolvent, then this person is discharged from all liabilities iwhich ncurred prior to his/her adjudication.
Discharge by breach of contract
Discharge by breach of contract takes place when one party to the contract fails to discharge his/her obligations under the contract or does something that contradicts the contract. Breach of contract may also take place if one party makes it impossible for the other to discharge his/her obligation and duties as per the contract. Parties may terminate a contract if a court finds that the breach is material and caused damages and loss to the affected party[3].
Footnotes
References
- Barty S.; Carnell P, 2010, What Constitutes Reasonable Notice to Terminate a Contract?, Credit Control, Vol. 31 Issue 2, p13-15.
- Carter J.W., Courtney W., Tolhurst G., 2018, Two Models for Discharge of a Contract by Repudiation, Cambridge Law Journal, vol. 77(1), p. 97–123
- Jones L., 2015, Introduction to Business Law Third Edition, Oxford University Press
Author: Sylwia Kotysz
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