Performance/ Discharge and

Classification of
Contracts or Agreements
PUTTU GURU PRASAD
INC GUNTUR
 Discharge of Contract

Discharge of contract

By Impossibility of
By performance By agreement By Breach
performance
 Discharge of Contracts : How?
• By performance
Performance of contingent contracts – Condition
needs to be fulfilled in order to ask for the performance
of the contracts
(E.g. In case the ship is lost I will pay the loss,
To pay for the missing dog)
Condition precedent – a condition, which is
collateral to the performance of contract.
The rule of performance is first satisfy and ask for
performance.
If the event becomes impossible then the
contract becomes void
 Impossibility of Performance
• An agreement to do impossible things is by itself a void
agreement
E.g. – To get a magic treasure
• But if a subsequent impossibility arises?
Ans- Even in this situation the contract becomes void
(E.g. When the singer becomes ill as not to sing, and in case of marriage, if
the party turns mad)
(Where import and export of goods and services are prohibited
by the government and transactions that occur between the parties of
these States are void)
 Doctrine of Frustration
Doctrine of frustration-
• Destruction of subject matter
• Change in the circumstances
• Non-occurrence of the contemplated event
• Death or incapacity
• Government or Legislative intervention
• Intervention by war
• Application of lease agreement
E. g. Coronation of the procession cancelled- the
contract becomes frustrated because of non happening
of event.
The Consequences of application of this doctrine is- The dissolution
of contract happens automatically
 Discharge by Agreement
• Novation- Change of parties, substitution
of agreement with a new one
• Remission of performance- e.g. Tells to paint the
picture but later says no.

• Waiver, Extension of time etc

• Accord and satisfaction, Abandonment
• Material Alteration
 Based on Enforceability
• Valid- All essentials being fufilled
• Voidable- Few contracts where the aggrieved
party can ask it to be declared either as void as
valid
• Void and Void abinitio- Unsound, Minor etc
• Unenforceable- Cannot be enforced
( Social contracts, Domestic Contracts)

• Illegal-Either because of consideration or by

object
 Method of Formation
• Formal and simple
Method

Formal Implied

Method

Standard form Contingent

Expressed Implied Quasi
contracts contracts
 Extent of Performance /
Obligation Based on Performance

Extent of Obligation to
performance Perform

Executed Executory Unilateral Bilateral

 Performance
• Duty to perform
• Offer to perform/ Tender to perform
Unless and until the performance has been excused
under any Act or provision of law
Therefore there must be
• Actual performance ( when both the parties have
completed their perforce of the contract)
• It ends the contract
• In case of death to be sued by the legal representative
• It has to be performed by the promisor or his legal
representatives or any competent party authorized to
perform ( legal reps liability is only to the extent of the
property which they inherit)
• Even a third party can perform if authorised
b) Attempt or offer or tender to perform
Doctrine of vicarious performance also exists
 Effect of Incomplete Performance
By a Party
When do we say that there was a breach of
contract?
Promisor may be in breach of the performance-
• When he refuses to perform
• He renders himself disabled to perform his
obligation
• He fails to perform
• By his conduct or action or words it becomes
an impossible performance
 Effect of Prevention of Performance
What do you understand by prevention of
performance?
A performance is said to be prevented:
• When an offer is made unconditionally
• It must be made in proper time and place
• Under reasonable circumstances and
opportunity
• Able to do and perform the whole of what is
bound to do
• If offer is made to the promisor to have
reasonable opportunity of seeing it.
Doctrine of Substantial Performance
• When substantially performed the party has a
right to claim either for
• The court says that it is substantial performance
if actual performance does not fall short of
required performance
• If the cost of the remedy is not as great to be
compared with the cost of price
There is no discharge from paying for the price

But the party can take the defence of set off or

counter claim
Time as an Essence of Contract
• During the performance, time will be given
priority
• Parties may agree that time is the essence of
contract
• It has to be performed within the stipulated time
• If specified -it gives an opportunity to avoid the
contract
• It completely depends on the intention of the
parties- Hadley V. Baxendale
Privity of Contract and Consideration
• India-- Promise to pay-- Must be by the person who
contracts or any other person- Still followed

• But English law- consideration must move from the party

to the contract only
• Dutton V Poole – Consideration moved from the father
(Valid) But later after 200 yrs the law changed in
Tweddle V Atkinson- Where it was held that
consideration must move from the parties to the contract
only otherwise it cannot be enforced even if it was made
for their benefit
Case-Dunlop Pneumatic Tyre Co V. Selfridge & Co
( Undisclosed principal- If no Consideration moved from
the defendant therefore the contract was not enforceable
 Privity of Contract
Stranger cannot sue
Though criticized,… the Rule of Privity of Contract is
followed in England
In India- The same is the position based on the
decision in Tweddle v Atkinson----
But there are many exceptions to this rule
e) Benefiaries under trust or charge or other arrangement
can sue
f) Marriage settlement, partition or other family
arrangements
g) Acknowledgement or estoppel- Promissory estoppel
( exception applicable under consideration)
i) Covenants running with the land ( past consideration –
Past act at the request a good consideration)
 Privity of Contract- Exceptions
• Past Services (Position in India) –
Without any request or promise and if there is
a subsequent promise to pay for the same-
If X has drowned and Y saves him, and X promises to
pay – in India it is a good consideration
e) Past Service at Request- Upton Rural district
Council case.
Forbearance to sue also becomes a valid
consideration
Compromise on a pending suit is a good
consideration