Discharge of a contract

What is Discharge?

🤝 A contract is discharged when it is no longer enforceable. Think of it like a game that ends when both players agree the game is finished or when the rules say it should stop. Once discharged, neither party can sue the other for the contract’s obligations.

Ways a Contract Can Be Discharged

1. Performance – Both parties do what they promised. ??
   • Example: You buy a bike; you pay, the seller delivers.
2. Agreement (Mutual Release) – Both parties agree to end the contract. ⚖️
   • Example: A landlord and tenant agree to terminate the lease early.
3. Breach (Default) – One party fails to perform. ❌
   • Example: A contractor fails to finish a house on time.
4. Operation of Law – A legal rule automatically ends the contract. ⚖️
   • Example: The sale of a property becomes void if the property is destroyed by fire before transfer.
5. Frustration – An unforeseen event makes performance impossible or radically different. ⚡
   • Example: A concert venue is destroyed by a storm; the concert contract is frustrated.
6. Rescission – The contract is cancelled due to misrepresentation, mistake, or duress. 🔄
   • Example: A buyer learns the seller lied about a car’s mileage.
7. Release – One party is released from duties by the other. 🔓
   • Example: A supplier releases a buyer from the obligation to pay after the buyer cancels the order.

Key Points to Remember

• Discharge ends all future obligations under the contract.
• Some discharges (like breach) may also give the non-breaching party a right to claim damages.
• Discharge by agreement requires both parties to consent.
• When a contract is frustrated, neither party can claim the other for non-performance.

Exam Tip Box

📌 Exam Question Strategy:

1. Identify the type of discharge (performance, breach, frustration, etc.).
2. Apply the relevant legal test (e.g., for frustration: “the event must be unforeseeable and make performance impossible”).
3. Explain the consequences for each party (e.g., right to damages, release of duties).
4. Use a clear structure (definition → test → application → conclusion).