DISCHARGE OF CONTRACT MEANING

The discharge of a contract is defined as the termination of a contract or an agreement made by two parties with the failure to perform the obligations mentioned at the time of creating an agreement with the acceptance of both parties free of consent. Hence the obligations may be contractual or legal or operational or even by the performance itself.

When a contract has been signed the duties, rights, and obligations are written in detail in the contract. Sometimes the circumstances are such that the contract is not fulfilled as per the letter and the contract then stands discharged. Once it happens, the obligations remain incomplete, and the parties are no longer liable. Discharge of a contract is referred to a contract that has been cancelled or terminated because of some reason or other. When the sides have performed their duties as per written in the agreement, it can also be called a discharge of the contract. In this case, it is known as the discharge of a contract that is fully performed.

• Discharge of Performance can be of 2 types:

Actual Performance: When parties to the contract perform what they have mentioned in the contract, it is called actual performance.

Attempted Performance: Attempted Promise is when a party to the contract attempts to perform his promise but the other party refuses to accept it.

When the contract is formed by agreement, it may also be discharged or terminated through agreement, subject to the conditions of the contract. The agreement to extinguish or terminate the contract itself becomes a binding contract if supported by consideration or made under seal. The following are three main types of discharges:

• Bilateral Discharge: The contract will be mutually discharged where the parties agree to release one another from any further obligations existing from the original contract. The contract is discharged despite the parties failing to fully or partially discharge all their obligations.
• Accord and Satisfaction: Accord and satisfaction occur when one party accords the release of another party, who is in breach of the original agreement, from its obligations in return for the satisfaction of the performance of another obligation.
• Unilateral Discharge: Unilateral Discharge occurs when one party has completed its part of the bargain and agrees to release the other party from its outstanding obligations under the contract. The agreement is only binding if supported by consideration or made under seal.

QUASI CONTRACT

A quasi-contract is a retroactive arrangement between two parties who have no previous obligations to one another. It is created by a judge to correct a circumstance in which one party acquires something at the expense of the other. The contract aims to prevent one party from unfairly benefiting from the situation at the other party’s expense. These arrangements may be imposed when goods or services are accepted, though not requested, by a party. The acceptance then creates an expectation of payment. The word ‘Quasi’ means pseudo. Hence, a Quasi-contract is a pseudo-contract. When we talk about a valid contract we expect it to have certain elements like offer and acceptance, consideration, the capacity to contract, and free will. But there are other types of contracts as well.

Sections 68 – 72 of the Indian Contract Act, of 1872 detail five circumstances under which a quasi-contract exists. Remember, there is no real contract between the parties and the law imposes the contractual liability due to the peculiar circumstances.

Section 68 – Necessaries Supplied to Persons Incapable of Contracting: A person incapable of entering into a contract like a lunatic or a minor. If a person supplies necessaries suited to the condition in life of such a person, then he can get reimbursement from the property of the incapable person.

Section 69 – Payment by an Interested Person: If a person pays the money on someone else’s behalf which the other person is bound by law to pay, then he is entitled to reimbursement by the other person.

Section 70 – Obligation of Person enjoying the benefits of a Non-Gratuitous Act: A person lawfully doing something or delivering something to someone without the intention of doing so gratuitously and the other person enjoying the benefits of the act done or goods delivered. In such a case, the other person is liable to pay compensation to the former for the act, or goods received. This compensation can be in money or the other person can, if possible, restore the thing done or delivered.

Section 71 – Responsibility of Finder of Goods: If a person finds goods that belong to someone else and takes them into his custody, then he has to adhere to the following responsibilities:

Section 72 – Money paid by Mistake or Under Coercion: If a person receives money or goods by mistake or under coercion, then he is liable to repay or return it.