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Q1. (a) Explain the various forms of discharge by mutual agreement.

(b)
What are the remedies available to an aggrieved party for breach of
contract?
Answer:
(a)

Discharge of a contract means termination of the contractual relations


between the parties to a contract. A contract is said to be discharged when
the rights and obligations of the parties under the contract come to an end.
Modes of discharge of contract:
By performance or tender
By mutual consent
By subsequent impossibility
By operation of law
By breach
Discharge by Mutual Agreement
Since a contract is created by mutual agreement, it can also be discharged by
mutual agreement. A contract can be discharged by mutual agreement in any
of the following ways:
i.)

ii.)
iii.)

iv.)

v.)

(b)

Novation [Section 62] - Novation means the substitution of a new


contract for the original contract. Such a new contract may be
either between the same parties or between different parties. The
consideration for the new contract is the discharge of the original
contract.
Rescission [Section 62] - Rescission means cancellation of the
contract by any party or all the parties to a contract.
Alteration [Section 62] - Alteration means a change in the terms of
a contract with mutual consent of the parties. Alteration discharges
the original contract and creates a new contract. However, parties
to the new contract must not change.
Remission [Section 63] - Remission means acceptance by the
promisee of a lesser fulfillment of the promise made. According to
Section 63, Every promisee may dispense with or remit, wholly or
in part, the performance of the promise made to him, or may
extend the time for such performance, or may accept instead of it
any satisfaction which he thinks fit.
Waiver - Waiver means intentional relinquishment of a right under
the con-tract. Thus, it amounts to releasing a person of certain legal
obligation under a contract.

Breach of Contract: - Breach means violation of law. The breach of contract


means to break the contract or not to act upon the contract. When any party
fails to perform its duties in a lawful contract it is called breach of contract.
The injured party has a right to take action against the party who has failed
to perform his part of contract.
REMEDIES or RIGHTS OF AGGRIEVED PARTY

On the breach of contract following remedies are available to an injured party.


i.)

Claim for Damages


If contract is broken, the injured party has a remedy to claim for damages
and losses suffered by him. Injured party is entitled to receive
compensation of loss from the party who has broken the contract. The aim
of this remedy is to provide the injured party the same benefits which it
would receive in case of the performance of contract.
Following are important types of damages:
Special Damage: - Under a special circumstance special damage
takes place from breach of contract. Example: If the machinery of any
factory arrives late and due to this reason one party suffers a loss or
profits it is called special damage.
General Damage: - If injured party suffers a loss due to nonperformance of the contract it is called general damage. The injured
party can recover from the guilty party the ordinary damages suffered
by him. Example: Mr. Robin contracts to pay 3 lac to Mr. Peter on 1st
April. Mr. Robin does not pay the money on that day. Mr. Peter is unable
to pay her debts and suffer a loss. Mr. Robin is liable to pay Mr. Peter
principal amount and also interest on it.
Exemplary Damages: These damages are awarded in order to punish
the guilty party for the breach of contract and not to compensate the
loss of the injured party.
These damages are awarded in dishonor of cheque and case of breach
of contract to marry.
Nominal Damages: When the injured party suffers no loss the
contract may award him nominal damages to recognize his right.

ii.)

Suit for Injunction


Injunction means the order of the court. It may be used to prevent any
wrongful act. In case of contract it is used to prevent that act which is
involved in breach of contract. Example: Suppose Mr. Yuvraj a film
producer contracts with Miss. Neha to sign in his movies for ten years and
not to sign in any other film. After one year she contacts with other film
producer Mr. Sethy during the period of contract. The court may issue
injunction on a suit by Mr. Yuvraj to restrain Miss. Neha from signing in film
of Mr. Sethy.

iii.)

Specific Performance
A degree of specific performance is an order of the court. It is usually
granted in those contracts related to house, land and plot. In some cases
compensation to pay. So court may issue the degree of specific
performance and can compel to defaulter party the performance of
contract. Example: Mr. Tipu agrees to sell his house to Mr. Amir, who
agrees to purchase. But due to some reasons Mr. Tipu commits breach. At
the suit of Mr. Amir court may ask Mr. Tipu to carry out the contract.

iv.)

Recession of the Contract


For the breach of contract it is an equitable remedy. When one party of the
contract commits breach and other party may rescued the contract that

he may get free from all its obligations for the performance of contract.
Due to such recession and non-performance injured party is entitled to get
compensation for the damages and loss. Example: Mr. Sanjay pledges the
defence savings certificates to Mr. Panday and get loan. But Mr. Sanjay
does not return the loan. Mr. Panday may file a suit for recession of the
contract responsibility to return the defence savings certificates on
payment.
v.)

Quantum Merit
It means So much as deserves" we can explain it by the following
example:
Example: Suppose Mr. Ali entered into contract with Mr. Shawn that they
will construct one room jointly. Mr. Ali will construct the wall while Mr.
Shawn will build the roof. Now Mr. Ali completes his job but Mr. Shawn fails
to build the roof of the room. Now in this case Mr. Ali is entitled to receive
the award according to his work done by him. This claim of Mr. Ali will be
called a claim of "Quantum Merit." The court will award to Mr. Ali keeping
in view the work or services performed by him.