DISCHARGE of a CONTRACT
Post 322 ⇒ by Gautam Shah →
At a very elementary level a contract could be matter of intensely felt mutual faith, which is not necessarily expressed orally or spelt in writing. A contract is, yet a very formal document, that must be credible and legal. It is often mandatory to be registered with an appropriate authority, in terms of its date of signing, and in few instances even the contents. All contracts once signed, and registered or not, cannot be cancelled.
Advantages of legal contracts are many. A legal contract makes it easier for the parties to register the document, enforce the terms and conditions as specified within the contract document, add, delete or modify the terms of contract, continue the contract beyond the lifespan or terms of the signatories (after death of a party), solve the disputes and discharge the relationship.
Contracts are promises that the law will enforce. The law provides remedies if a promise is breached or recognizes the performance of a promise as a duty.
Contracts arise when a duty is due, because of a promise was made by one of the parties. To be legally binding as a contract, a promise must be exchanged for adequate consideration. Adequate consideration is a benefit or detriment that a party receives. For example, promises that are purely gifts are not considered enforceable because for the personal satisfaction the grantor of the promise, ‘may receive’ is normally not a consideration.
Contracts are very formal and binding documents, which if once signed cannot be easily dissolved. Some contracts become void, after particular time set, others become useless once required actions are carried out, or considerations are given. Some contracts like marriage, and understandings like partnership, require execution of another contract or understanding to dissolve the original.
A contract may be discharged (done away, dissolved) in any of the following ways:
- Performance: Contracting parties fully discharge their obligations.
- Agreement: Contracting parties with mutual consent, and as per the terms laid down in a contract, agree to cancel, reduce, or alter, the effects of a contract. Such agreements take into consideration consequences of such actions.
- Law: On judgement over a dispute, or bankruptcy (insolvency) of either of the parties.
- Circumstances: Due to change in legislation (of higher order), and declared war like conditions.
- Lapse of time: Most contracts have arrangement for automatic time closure specifications.
- Breach of a contract: Intentionally or unintentionally either of the party fail to fulfil the obligations as per the contract and takes recourse to law for enforcement of a contract or redress.