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smu assignments answer of mb0051 Q1. “Discharge refers to the termination of contractual relationship between the parties”. Explain the statement along with different modes of discharging a contract.

Discharge refers to the termination of contractual relationship between the parties. The contract ceases to operate, i.e., when the rights and obligations under the contract ends.

According to Sections 73-75 of the Contracts Act, a contract may be discharged in several modes.

1 Performance or tender
The obvious mode of discharge of a contract is by performance, where the parties have done whatever was contemplated under the contract. Thus, where A contracts to sell his/her car to B
for Rs. 1,85,000, as soon as the car is delivered to B and B pays the agreed price for it, the contract comes to an end by performance. The tender or offer of performance has the same effect as performance. If a promisor tenders performance of his/her promise but the other party refuses to accept it, the promisor stands discharged of his/her obligations.
2 Mutual consent
Section 62 of the Act states that if the parties to a contract agree to substitute a new contract for the old or rescind or alter the terms, the original contract is discharged. A contract may be terminated by mutual consent in any of the six ways, viz., novation, rescission, alteration and remission, waiver and merger. Novation means substitution of a new contract for the original one.
3 Impossibility of performance
A contract may be discharged because of impossibility of performance.
There are two types of impossibility:
· One that is inherent in the transaction (i.e., the contract)
· One that may emerge later by the change of certain circumstances material to the contract.
4 Operation of law
Discharge by operation of law may take place in three ways:
      i.        By death of the promisor in cases involving personal skill or ability
     ii.        By insolvency, where an order of discharge is passed by an insolvency court and the insolvent stands discharged of all debts incurred previous to his adjudication.
By merger

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