Discharge of a contract
A contract legally binds parties involved and they are obliged to perform their part of the agreement. When the obligations of the contract have been carried out, the contract is then discharged. Discharge of a contract Is the termination of contractual obligations when the rights and duties of contractual obligations that were set up previously are put out. discharge of a contract renders the party to the contract not liable anymore even if the obligations that were set under the contractual terms are not yet complete. A contract can be discharged in various circumstances. This includes discharge by performance, discharge by agreement, discharge by repudiation or breach, and discharge by frustration.
Discharge by performance occurs when parties in the contract have carried out their obligations as per the contractual terms since one party who performs his obligation will set up a constructive condition that will trigger performance by the party. This makes the party who has performed as per the contractual terms to receive performance by the other party. If the other party fails to perform his obligations, the injured party may seek damages from the party who failed to perform.
Discharge by agreement occurs in a situation whereby the contract is abandoned and the terms obligationby an agreement by both parties. This happens because a contract exists when there is an agreement between the parties and therefore it has to be discharged by agreement form the parties. A waiver occurs in a situation whereby both parties have not performed their contractual obligations and then they agree to excuse the performance of the obligations from both of them.
Discharge by repudiation or breach occurs when one party does not perform the contract as per the terms of the agreement. It can also occur when the performance of the contract is deemed as defective in that it does not conform with the contractual obligations. The aggravated party as per the breach has the right to terminate the contract. the non-breaching party will have agreed with the option or not.
Discharge by frustration occurs in a situation whereby an event that is beyond the control of the contractual parties occur after a contract has been initiated. The situation does not occur as a result of the actions of the parties in the contract and thus it renders the performance of the contract impossible. The contract is then destroyed and can also be made different from the original contract that had been initiate. There are various circumstance can result in frustration of the contract. These include incapacity, death, illness of the parties, non-occurrence of a crucial event to the contract, destruction of the contracts subject matter, interference by the government, and change in laws that affect the contract.
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