Mode of discharge of contract under Indian Contract Act

Mode of discharge of contract under Indian Contract Act

After formation of contract, the next step is the fulfillment of the object of the contract which has in mind in the parties of contract. Performance is not only way in which a contract is discharged.
A contract can be discharged in the following ways-
  1. By performance S.31 to 67.
  2. By impossibility of performance S.56.-- Frustration
  3. By Agreement S.62 to 67.
  4. By breach.
S.31 Defines Contingent contract- A contract is a contract to do or not to do something, if some event, collateral to such contract, does or does not happen.
Conditional Contract- it is a sort of conditional contract and the condition is of uncertain nature. A contract which is subject to a certain or an absolute type of condition cannot be regarded as a contingent contract.

  • A contracts to pay B Rs 10,000 if B's house in burnt. This is a contingent contract.
  • A contract to pay a sum of money on the expiry of time or on the death of a person is not a contingent contract.
Reason of second contract is not a contingent contract is events are of certain nature. The time or person will defiantly expire and the money will become payable. Therefore all type of insurance contract is a contingent contract.
Contingency to be collateral to contract
The section emphasizes that the contingency contemplated by the contract must be collateral to the contract. It means that a contract has already arisen or subsisting contract is there, but its performance cannot be demanded unless the contemplated event happens or does not happen.
Such contract has to be distinguished from a proposal which does not result in a contract unless the conditions first fulfilled.
  • A offer to pay a sum of money on the discovery of a missing dog is not a contract. It becomes a contract only when the dog is searched out and then it is no more contingent.
  • A contract to pay a sum of money on a lost of ship is a contingent contract. A contract is already there and is not to arise on loss, but the performance can be demanded only on the loss of the ship.

Contingency depending upon the will of a person
A contract is no more contingent when the happening or non happening of the contingency depend upon on the will of the party.
  • A contract to give a sum of money on the marriage of B, it is not a contingent contract, because the marriage depend on the will of B.
In Secretary of State for India v/s A J Arathoon- Madras High Court held that-
The contingency was not fulfilled and therefore there is no question of any action for breach of contract.
The position would be different where the good have already been supplied and the only thing that the contract says is that buyer shall pay when he is in a position to pay. This is not a contingent contract. The liability to pay has already arisen.
Contingency to be condition precedent
Generally the condition which is collateral to the performance of a contract is a conditional precedent, that is, it has to be satisfied first and then performance can be demanded.
  • A applied for a share in a company subject to be his appointment in the company, in Khawaza Bux v/s Mirza Mohd Isamil- court held that – share could not be allotted him without first making his appointment in the company.
Section 32- enforcement of contracts contingent on an event happening-
This section laid down two principles-
  1. Contract cannot be enforced unless the uncertain event happen-
  2. If the uncertain event become impossible the contract become void.
  • A makes a contract with B to sale a horse at a specific price, if C, to whom the horse has been offered , refuses to buy him. The contract cannot be enforced unless C refused to buy the horse.
  • A contracts to B a sum of money when B marries C. C dies without being married to B. the contract becomes void.
The same principles laid down in Anjali Das v/s Bidyut Sarkar by the court.
Section 34- Event linked with human conduct-
Section 34 defines that when the event for which parties are waiting is linked with the future conduct of a person, where the contract is enforceable when a certain person act in a certain way, and he acted in other way and by his conduct the event become impossible.
Illustration- A agrees to pay a sum of money to B, if B marriage to C. C married D. the Marriage of B to C now become impossible.
In Frost v/s Knight – A promised to marry with B on the death of his father. While the father of B's still alive. A married with C. court held that it had become impossible that A marry with B and the contract become void.
Section 35- Contract become void, which are happening of specified event within fixed time.
If a specified certain event does not happen within a fixed time, may be enforced by law when the time fixed has expired and such event has not happen, or before the time fixed has expired.
  • A promises to pay B a sum of money if a certain ships returns within a year. The contract may be enforced if the ship returns within the year, and becomes void if the ship burned within the year.

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