Under Which Of The Following Situations Will A Contract Be Discharged By Law?
- Marvin Harvey
Key Takeaway – The obligations to perform under a contract cannot be dismissed lightly, but a person’s duty to perform a contract duty may be discharged if it becomes impossible or very difficult to do it. This includes impossibility, common-law impracticability, commercial impracticability under the UCC, and frustration of purpose.
Under what circumstances is a contract discharge?
The discharge of the contract takes place when the obligations of the contract between the parties of the contract come to an end. This also ends the legal validity of the contract. The discharge of the contract is also referred to as the termination of the contract.
Which one of the following is discharge of contract by operation of law?
Grounds for discharge of contract –
Actual performance or attempted performance might be used to terminate a contract. When each of the contracting parties has completed what they pledged to do under the contract, it is said that actual performance has occurred. When a promisor promises to perform under a contract but the promisee refuses to accept it, it is considered a discharge by attempted performance.
Discharge by mutual agreement
The contractual parties may agree to terminate the existing contract in one of the following ways:-
Rescission occurs when a contract is declared null and invalid, meaning it is no longer legally binding. The courts have the power to release non-liable parties from their contractual duties and, when practicable, will endeavour to put them back in the position they were in before to the contract’s signing.
When one or more of the contract’s provisions are amended, the contract is said to be altered. If all parties agree to a major change in a written contract, the old contract is discharged by the change and a new contract is formed in its stead.
The newly added party becomes accountable with the establishment and enforcement of the new contract, and the party that is so substituted is relieved of its duties under the previous contract. This signifies novation.
Accepting a lesser quantity or degree of performance than what was contracted for in full fulfilment of the contract is referred to as remission. There is no need for discussion or a fresh agreement for such a release or guarantee.
Waiver is defined as ‘abandoning’ one’s rights. The contract is dismissed when one of the parties abandons or waives his rights. Here, both the parties mutually agree that they shall no longer be bound by the contract. It’s essentially a release from contractual responsibilities for the parties involved.
A contract can also be discharged by a merger, which occurs when an inferior right arising from a contract merges with a superior right ensuing to the same party. The prior rental agreement is no longer valid.
Discharge by breach
The contract is said to be discharged by breach when a contractual party refuses or fails to perform, hinders themselves from performing, or makes the execution of the contract impossible due to their actions. An actual or anticipatory breach can be used to terminate a contract.
Discharge by lapse of time
When a contract stipulates that it must be completed within a certain amount of time, failing to do so leads to the contract being discharged due to the passage of time.
Discharge by supervening impossibility
A contract that was legitimate at the time of creation may later become impossible or unlawful to fulfill, and the contract will be dismissed as a result. In any of the following situations, a contract becomes void due to supervening impossibility:-
- Destruction of subject matter.
- Change of law.
- Non-concurrence of circumstances.
- Death or incapacity for personal services.
- The outbreak of war.
- Failure of the ultimate purpose of the contract.
- Discharge by operation of law
In the case of any of the following, a contract will be discharged by operation of law:
- Death or incapacity of the promisor in case of personal services.
- Rights and liabilities vest with the same person,
- Unauthorised material alteration.
- Loss of sole evidence of the contract.
What is the most common way for contracts to discharge?
The most common way to discharge one’s contractual duties is by breach of contract.
What is meant by discharge of contract Mcq?
Discharge of contract means termination of the contractual relationship between the parties. A contract is said to be discharged when it ceases to operate, i.e., when the rights and obligations created by it come to an end. Page 3.
In which of the ways can a contract be discharged by operation of law Mcq?
Discharge of Contract – Multiple Choice Questions
A contract can be discharged by: a. Mutual agreement and performanceb. Lapse of time and operation of lawc. Breach of contract d. All of these
A contract may come to an end on account of mutual agreement and performance, lapse of time and operation of law and breach of contract. Hence, option (d) is the correct answer.
If a new contract is substituted in place of an existing contract it is called a. Alterationb. Rescissionc. Novation d. Waiver
Novation occurs when a new contract is substituted for an existing one between the same parties. Hence, option (c) is the correct answer.
The original contract need not be performed if there is a. Alteration of contractb. Rescission of contractc. Novation d. All of these
In alteration of contract, one or more terms of the original contract changes with mutual consent of the parties. In Rescission of contract, all or some of the terms of the contract are cancelled. In case of novation, a new contract is substituted for an existing one between the same parties.
When an inferior right accruing to a party in a contract merges into a superior right accruing to the same party, then: a. The contract conferring the superior right is dischargedb. The contract conferring the inferior right is dischargedc. None of the contracts are discharged d. Both contracts are discharged
When an inferior right accruing to a party in a contract merges into a superior right accruing to the same party, then the contract conferring the inferior right is discharged. Hence option (b) is the correct answer.
A lets out a theatre to B for a series of drama for certain days. The theatre was completely destroyed by fire before the scheduled dates. In the case: a. The contract is discharged by impossibility of performanceb. The contract is void ab initioc. The contract is voidable at the option of B d. The contract remains valid and must be performed
If at the time of making the contract, both the parties are ignorant of the impossibility, then the contract is discharged by impossibility of performance. In this case, at the time of formation of contract A and B both did not know about the fire. So, the contract is discharged by impossibility of performance. Hence, option (a) is the correct answer.
P, a resident of USA agrees to export leather bags to Q, a resident of Afghanistan. Meanwhile before the order can be executed, war broke out between USA and Afghanistan.
a. P must execute the contractb. The agreement becomes voidable at the instance of Q.c. The agreement becomes void due to Supervening impossibility d. All of these. Where the impossibility arises subsequent to the formation of a contract, the act becomes impossible or unlawful to perform, it is called as supervening impossibility and the contract becomes void (sec.56).
P hired a godown from D for a period of 12 months @Rs.1,000 per month and paid the full amount (Rs.12,000) of rent to D in advance. After four months, the godown was destroyed by fire.a. P can claim refund of Rs.12,000 from Db. P cannot claim for any refund from Dc. P can claim refund of Rs.8,000 from D d. None of the above.
Where the impossibility arises subsequent to the formation of a contract and the act becomes impossible or unlawful to perform, it is called as supervening impossibility and the contract becomes void (sec.56). In the given problem, P can claim refund of Rs.8,000 from D as the accident takes place after 4 months of the contract.
- Hence, option (c) is the correct answer.8.
- X agreed on 1st April, to let a bus to Y for a picnic tour on 30th April.
- X took an advance of Rs.1,000.
- But on 15th April, the police requisitioned the bus for Election Duty.
- On 18th April, X rescinded the contract.a.
- Y can claim damages from Xb.
- Y can claim refund of Rs.1,000 advance paidc.
Both (a) & (b)d. None of the above. Where the impossibility arises subsequent to the formation of a contract, the act becomes impossible or unlawful to perform, it is called as supervening impossibility and the contract becomes void (sec.56). Any person receiving benefit out of such contract must restore the benefit to the respective person (Sec.65).
So, Y can claim refund of Rs.1,000 advance paid after rescission of the contract made by X. Hence, option (b) is the correct answer.9. A lent a room to B in front of the Sports Stadium for watching a cricket tournament for Rs.1,500. B paid Rs.1,000 as advance. But subsequently the tournament was cancelled.
B filed a suit for the recovery of the amount he had paid. Can B recover the amount from A.a. B can recover Rs.1,000 only from Ab. B can recover Rs.1,000 and compensation from Ac. B can recover Rs.1,000 already paid and further Rs 500 as committed, from Ad.
B cannot recover Rs.1,000 from A.Where the impossibility arises subsequent to the formation of a contract, the act becomes impossible or unlawful to perform, it is called as supervening impossibility and the contract becomes void (sec.56). Any person receiving benefit out of such contract must restore the benefit to the respective person (Sec.65).
So, in the given case, B can recover only Rs.1,000 from A. Hence, option (a) is the correct answer.10. A contracted to supply B some goods of a specified mill. The Mills did not supply to A so A did not supply to B. B filed suit for non delivery of goods.
- A pleaded impossibility on ground of non-supply by mills.a.
- A can rescind the contractb.
- B is entitled to compensation from A, for non performancec.
- B is not entitled to compensation from A d.
- None of the above.
- As the mills did not supply goods to A, A could not deliver goods to B.
- But he could have supplied by buying the goods from market.
A contract is not discharged due to difficulty of performance. So, B is entitled to compensation from A, for non performance. Hence, option (b) is the correct answer.
A contracts with B to build a house for Rs.10,00,000, within 12 months. Owing to unexpected shortage of skilled labour and Cement, the contract took 24 months to complete and cost escalated to about Rs.12,50,000. A contended that the contract had been frustrated and that he was entitled for the cost actually incurred.
a. A is entitled to receive Rs.10,00,000 from B as per contractb. A is entitled to receive Rs.12,50,000 from B as per actual costc. A is not entitled to get his dues from B as he could not perform within contracted timed. None of the above. Contract is not discharged merely because its performance has become more difficult, more expensive or less profitable than estimated at the time of entering into contract.
So, A is entitled to receive Rs.10,00,000 from B as per contract. Hence, option (a) is the correct answer.12. A agreed to deliver a certain amount of goods to B within a stipulated time, but failed due to the strike of his company workers and was delayed beyond the date agreed.a. B can claim damages for non performanceb.
A can plead for supervening impossibilityc. The contract stands cancelled due to striked. None of the above. In the given problem, contract is not void due to the strike of company workers. But the contract is terminated due to non-performance within time.
So, B can claim damages for non performance. Hence, option (a) is the correct answer.13. E contracts to marry F. Before the agreed date of marriage, E marries K. F is entitled to sue E for: a. Anticipatory Breach in an express mannerb. Actual Breach in an express mannerc. Anticipatory Breach in an implied mannerd.
Actual Breach in an implied manner When a party, before the performance is due, does some act so that the performance becomes impossible then it is called as Anticipatory Breach of Contract by Implied Repudiation. So, when E marries K avoiding the contract to marry F, then F is entitled to sue E for Anticipatory Breach in an implied manner.
- Hence, option (c) is the correct answer.14.
- A promised to sell his house to B after 1 year.
- But within three months, A sold the house to C.
- The contract is not performed due to : a.
- Actual Breach of Contract d.
- Anticipatory Breach of Contract.
- When a party, before the performance is due, expresses in advance his intention of not performing the contract or does an act so that the performance becomes impossible, then it is called as Anticipatory Breach of Contract.
So, in the given case, the contract is not performed due to Anticipatory Breach of Contract. Hence, option (d) is the correct answer.
N chartered M’s ship and agreed to load it with a cargo in Orissa within 50 days. N was unable to supply the cargo but M continued to demand it. Meanwhile war broke out, rendering the performance impossible. In such a case:
a. M can sue for damagesb. Contract must be performedc. The Contract is discharged and M cannot sue for damage d. None of the above While the contract is alive, if an event (say, a supervening impossibility) happens which discharges the contract legally, the promisee loses his right to sue for damage.
What are three ways that contracts may be discharged by operation of law?
Key Takeaway – Contracts can be discharged by performance: complete performance discharges both sides; material breach discharges the breaching party, who has a right to claim damages; substantial performance obligates the promisee to pay something for the benefit conferred but is a breach.
What are three ways that a contract can be discharged by operation of law?
A contract may be discharged or cancelled by: Performance (see Discharge by performance). Breach (see Discharge by breach). Agreement (see Discharge by agreement).
In which of the following cases will the contract not be discharged?
Strikes, lock-outs, and civil disturbances: Events like strikes, lockouts, or public unrest do not discharge a contract unless the parties explicitly consented to such terms at the time the contract was signed.
What are two ways a contract can be terminated or discharged?
This article is written by Ritika Sharma pursuing B.Com LLB (Hons.) from University Institute of Legal Studies, Panjab University. This article explains different ways of termination of a contract, remedies available in case of its termination along with the impact of COVID-19 pandemic on the contractual performance. A contract can be terminated by either of the parties or both by consent or agreement. There are multifarious ways in which a contract comes to an end such as on its completion, impossibility of performance (frustration), breach, termination by prior agreement, rescission, novation of contract or force majeure.
- Offer- The first essential is that an offer or proposal should be communicated. Section 2(a) of the Indian Contract Act,1872 states that, “when one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinence, he is said to make a proposal”,
- Acceptance- For a valid agreement, acceptance of the offer is must. Section 2(b) of the Indian Contract Act, 1872 states that, “when the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal, when accepted, becomes a promise.”
- Consideration- Section 2(d) of the Indian Contract Act, 1872 states that, “when, at the desire of the promisor or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing something, such act or abstinence or promise is called a consideration for the promise”.
- Capacity to contract- Section 11 of the Indian Contract Act, 1872 lays down the categories of persons who are competent to contract. It states that the parties should be of the age of majority i.e, eighteen years of age, of sound mind and should not be disqualified from entering into a contract under any law.
- Free consent- The parties should enter into a contract with free consent. Section 14 of the Indian Contract Act, 1872 defines free consent as the consent which is given without coercion, undue influence, fraud, misrepresentation and mistake.
- Lawful object- According to Section 23 of the Indian Contract Act, 1972, the object and consideration should be lawful and if these are unlawful then the agreement is considered void.
- Not expressly void- The contract should not be expressly declared void. Section 2(g) of the Indian Contract Act, 1872 states, “an agreement not enforceable by law is said to be void”, Void agreements include agreement in restraint of marriage, legal proceedings, uncertain agreements, etc.
It implies ending a contract between the parties which can be done in several ways. The ways could be legitimate or illegitimate for which there are remedies to compensate the aggrieved party.
What is meant by discharge of a contract examples?
Discharge – When a contract ends because all of the parties to the agreement have performed or completed all of their contractually stipulated duties and obligations as negotiated, it is usually said that the contract has been discharged. This is clearly the ideal course of action, as it means that the contract has been performed in full and is merely ending because the agreed upon activities have been performed as required.
What is created by operation of law?
Operation of law – Wikipedia Legal term of art
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The phrase ” by operation of law ” is a legal term that indicates that a right or liability has been created for a party, irrespective of the intent of that party, because it is dictated by existing legal principles. For example, if a person dies without a, their are determined by operation of law.
Similarly, if a person marries or has a child after their will has been written, the law writes this or into the will if no provision for this situation was specifically included., in which title to land passes because non-owners have occupied it for a certain period of time, is another important right that vests by operation of law.
Events that occur by operation of law do so because have determined over time that the rights thus created or transferred represent what the intent of the party would have been, had they thought about the situation in advance; or because the results fulfilled the settled expectations of parties with respect to their property; or because legal instruments of provide for these transfers to occur automatically on certain named contingencies.
- Rights that arise by operation of law often arise by design of certain contingencies set forth in a legal instrument.
- If a is created in a tract of land, and the person by whose life the estate is measured dies, title to the property reverts to the original grantor – or, possibly, to the grantor’s legal heirs – by operation of law.
Nothing needs to be put in writing to affirm that this will happen. with rights of survivorship create a similar situation. Joint tenants with rights of survivorship deeds are always taken in equal shares, and when one joint tenant dies, the other tenants equally acquire title by virtue of the terms of the itself, by operation of law.
- Rights or liabilities created by operation of law can also be created involuntarily, because a contingency occurs for which a party has failed to plan (e.g.
- Failure to write a will); or because a specific condition exists for a set period of time (e.g.
- Adverse possession of property or creation of an ; failure of a court to rule on a within a certain period automatically defeating the motion; failure of a party to act on a filed within a certain time causing of the case); or because an existing legal relationship is invalidated, but the parties to that relationship still require a mechanism to distribute their rights (e.g.
under the, where a for which both parties have performed partially is voided, the court will create a new contract based on the performance that has actually been rendered and containing reasonable terms to accommodate the expectations of the parties).
Can contracts be terminated by operation of law?
Contracts can be terminated in a number of ways, including a termination by either party or through operation of law. Such examples of when the contract might be terminated include the following: If the person making or receiving the offer dies or becomes incapacitated.