Modes of Discharge of Contract are provided in the Contract Act. Discharge of a contract means the end of the contract. The term discharge means coming out, so the discharge of a contract means coming out from the contract.
Various Modes of Sischarge of Contract1. Discharge of contract by performance2. Discharge by mutual agreement3. Discharge of contract by impossibility of performance4. Discharge of contract by operation of law5. Discharge by lapse of time6. Discharge by breach of contract
1. Discharge of Contract by PerformanceDischarge of contract by performance means when the contracting parties perform their contractual obligations within the stipulated time, then the contract is discharged by performance.
2. Discharge by Mutual AgreementDischarge by agreement has been provided under section 62 of the Indian Contract Act, 1872. The section says that "Effect of novation, rescission, and alteration of the contract if the parties to a contract agree to substitute a new contract for it or to rescind it or alter it, the original contract need not be performed."
7 types of discharge by agreement have been provided under this section. These are;1. Novation2. Rescission3. Alteration4. Remission5. Waiver6. Merger7. Accord and Satisfaction
3. Discharge of Contract by Impossibility of PerformanceThe contract comes to an end when there is an impossibility for the contracting parties to perform the obligations agreed upon in the contract. This is also known as discharge by frustration. Therefore, the impossibility to perform the contractual obligations by the parties leads to the discharge of a contract by the impossibility of performance.
4. Discharge of Contract by Operation of LawDischarge of contract by operation of law. A contract can be discharged by the operation of law that includes the death of the contracting party or insolvent party, or the original contract merges into a new contract, or there is an alteration in the original contract.
5. Discharge by Lapse of TimeWhen the contract is to be performed within the stipulated time as agreed by the contracting parties during the formation of the contract. And, if one of the parties could not perform the contractual obligations within the prescribed time then the contract is discharged. This is known as the discharge of a contract by the lapse of time.
6. Discharge by Breach of ContractDischarge by breach of contract means termination of the original contract or the contract comes to an end because of the failure the performance of the contractual obligations in the contract. This breach of contract may be an actual or anticipatory breach of contract.