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Once a contract had been formed both parties will be obliged to uphold
what they have promised to do under the contract. The contract shall
come to an end, which is known as discharge of contract. Upon
discharged of contract both parties will be released from further obligation
arising from the contract.
Thus, when a contract is discharged, it is actually terminated. Once a
contract is discharged the contracting parties are free from further
obligations under the contract.
There are four ways to discharge a contract:
1. by performance of the contract;
2. by consent or mutual agreement between the parties to the
contract;
3. by impossibility of performance / frustration;
4. by breach of contract by one of the parties.
DISCHARGE BY PERFORMANCE
If only one of the parties has performed his part under the
contract, he alone will be discharged from the contract. The
other party is still bound to the contract until he performs his
promise under the contract.
c) Performance By Whom?
If it is the intention of the parties that the contract should be
performed by the promisor himself then it must be performed
by him personally. Refer Section 41 of the Contracts Act
1950 (illustration b)
However, in some situations , a promisor may employ a
competent person to perform the contract , but the promisor
will be personally liable under the contract Refer Section 41
of the Contracts Act 1950 (illustration a)
d) Performance By Third party
DISCHARGE BY AGREEMENT
Both parties can terminate a contract by mutual agreement if both
of them consented that they need not perform the contract.
Agreement not to go on with the contract can be express or implied.
This agreement can be made during the contract or after the
contract has been made. For example the parties can make an
agreement that if certain events occur the contract between them
will be discharged.
Section 63 of the Contracts Act
If the parties to a contract agree to substitute a new contract for it,
or to rescind or alter it, the original contract need not be performed.
However, the consent must be secured from all parties. If any of the
parties does not agree with the substitution / alteration / rescission
of the original contract, then the contract is not discharged - Refer
to illustration c of Section 63 of the Contracts Act 1950
DISCHARGE BY FRUSTRATION
A contract is said to be frustrated, a special case to discharge a contract,
after the formation it is impossible or unlawful to perform the contract.
2.
TAYLOR V CALDWELL
1.
(Destruction of the subject matter of the contract)
KRELL V HENRY
2.
(Supervening events defeat the whole purpose of the contract)
LEE KIN V CHAN SUAN ENG
3.
(Supervening illegality discharges a contract There is a change in
law which makes the contract becomes unlawful if it is performed )
4.
DISCHARGE BY BREACH
Section 40 of the Contracts Act
When a party to a contract has refused to perform, or disabled him from
performing, his promise in its entirely; the promisee may put an end to
the contract unless he has signified, by words or conduct, his
acquiescence in its continuance.
The party who is not in breach of contract has 2 options;
1.
2.
REMEDIES
When there is a breach of contract , the injured party may claim one or
more of these remedies :
1. Rescission of Contract
2. Damages
3, Specific Performance
4.Injunction
RESCISSION OF THE CONTRACT
DAMAGES
Categories of Damages
Under the Common law , damage smay be classified into 3 categories :1. Substantial damages
It is monetary compensation to put the plaintiff in the position he would
have enjoyed ,had the contract been performed.
2.Nominal damages
Consists of a small token awarded when the Plaintiff has proved the
breach of a contractual right but suffered no actual loss.
3. Exemplary damages
Consists of a sum awarded which is a far greater than the actual
monetary loss suffered by the Plaintiff .
They are awarded only in exceptional circumstances : example in a case
of breach of promise to marry or a banker wrongfully dishonours a
traders cheque .
SPECIFIC PERFORMANCE
VS
ALBRECHT
Types of Injunction
Temporary Injunction
Perpetual Injunction
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