Based on the Contracts Act 1950, there are four ways to discharge a contract. The methods are performance, agreement, breach and frustration.
The general rule of performance defines that the performance must be strictly in accordance with the terms of the contract unless the parties have agreed otherwise. A promisor must be prepared to carry out his obligation at the time and place at which he has agreed to do so.
A contract can be discharge by consent, under Section 63 and Section 64 of the Contracts Act 1950. Section 63 of the Contracts Act 1950 states ‘if the parties to a contract agree to substitute a new contract for it, or to rescind or alter it, the original contract need not be performed’. Illustration (b) provides an example of a debtor enters into an arrangement with his creditor, this is a new contract and extinguishes the old. Section 64 of the Contracts Act 1950 states ‘every promise 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. Illustration (b) portrays an example of a creditor agree and accept payment of a smaller sum in discharge or satisfaction of a large debt from his debtor.
When a promisor fails to perform his promises or obligations under the contract, he perpetrates a breach of contract. Section 40 of the Contracts Act 1950 states ‘when a party to a contract has refused to perform, or disabled himself from performing, his promise in its entirety, the promise may put an end to the contract, unless he has signified, by words or conduct, his acquiescence in its continuance’. Following the principles enunciated in Choo Yin Loo v. Visuvalingam Pillay, a breach of an essential part of the contract would entitle the innocent party to repudiate the contract. The innocent party has the right to claim damages under Section 76 of the Contract Act 1950, which...
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