Test: Discharge of Contracts - CLAT PG MCQ

A waiver involves a party voluntarily relinquishing or abandoning a right specified in the contract. This act can release the other party from their obligations, demonstrating the flexibility and mutual understanding in contractual relationships.

The case of Krell v. Henry illustrates the principle of frustration, where the contract was rendered impossible to fulfill because the anticipated event (the coronation procession) did not occur. This case emphasizes that unforeseen circumstances can excuse parties from their obligations, reflecting the need for contracts to be adaptable in the face of changing realities. It demonstrates how the law acknowledges the significance of the underlying purpose of agreements.

Novation occurs when a new party is introduced to take over the contractual obligations, and all original parties consent to this change. This effectively discharges the original contract and creates a new obligation under the new party.

The court ruled that the doctrine of frustration did not apply because, despite the closure of the Suez Canal due to war, there was an alternative shipping route available. Thus, the defendants could still fulfill their contractual obligations, demonstrating that not all war-related disruptions lead to frustration of contract.

The assignment of contractual rights and liabilities must be done in writing to be valid. This ensures clarity and legality in the transfer of obligations and rights between parties, as outlined in the governing laws.

When one joint promisor dies, their rights and obligations under the contract pass to their legal representatives, meaning that the contract continues to be enforceable among the surviving promisors and the heirs of the deceased. This ensures that contractual obligations are not easily escaped due to the death of one party, thus providing security and continuity in contractual relations. It illustrates the importance of understanding joint obligations in contracts.

If the order of performance for reciprocal promises is not explicitly specified, the promises should be performed in an order that aligns with the nature of the transaction. This ensures that the contractual obligations are fulfilled in a logical sequence that respects the intent and purpose of the agreement. Understanding the nature of the promises aids in determining the appropriate order, reflecting the collaborative spirit of contractual relationships.

A valid tender of performance must be made at the correct time and place, allowing the promisee a reasonable opportunity to assess the performance. This ensures that the promisee can adequately verify and accept the performance offered. A tender that is conditional or only relates to part of the obligations does not meet the legal requirements and may not protect the rights of the promisor. This emphasizes the importance of adhering to the stipulated terms in a contract to avoid disputes.

A contract can be discharged through various means including performance (fulfilling obligations), frustration (impossibility of performance), agreement (mutual consent to terminate), and assignment (transfer of rights and obligations). However, a unilateral decision by one party does not constitute a valid mode of discharge unless it adheres to the terms agreed upon in the contract. This highlights the necessity for mutual agreement in contractual relationships.

Rescission refers to the mutual agreement between parties to cancel a contract, effectively discharging all obligations without creating a new agreement. This can happen even if the performance is not yet due, emphasizing the parties' intention to withdraw from the contract.

Section 65 of the Indian Contract Act addresses the restoration of benefits when a contract is frustrated. It ensures that parties receive back what they have contributed, promoting fairness and equity when unforeseen circumstances prevent contract performance.

The principle of frustration indicates that frustration cannot be self-induced; it must occur due to external circumstances beyond the control of the parties. If a party's actions cause the frustration, it cannot claim relief under this doctrine.

Anticipatory breach occurs when one party indicates they will not fulfill the contract before the performance date, allowing the other party to take legal action immediately. This contrasts with actual breach, which happens when obligations are not fulfilled on the due date.

If a promisee refuses to accept the performance offered by the promisor, the contract remains valid, and the promisor is not liable for non-performance. This is because the promisor has fulfilled their obligation by offering to perform, and the refusal of the promisee does not negate the contract. It highlights the importance of acceptance in contractual performance and protects the rights of the party attempting to fulfill their obligations.

To succeed in a claim for breach of contract, the innocent party must demonstrate that they have fulfilled their obligations under the contract. This establishes their standing to seek remedies for the breach committed by the other party.

A contract can be deemed frustrated when a new law or government order directly affects its fulfillment, making it impossible to perform as originally intended. This means that any legal changes that hinder contract performance can release the parties from their obligations, thereby frustrating the contract.

For a contract to be discharged by frustration, the impossibility of performance must arise from an unforeseen event that occurs after the contract has been formed. This doctrine allows parties to be excused from their obligations when circumstances beyond their control make it impossible to fulfill the contract. It emphasizes the need for flexibility in contractual obligations in the face of unexpected events.

Supervening impossibility occurs when an unforeseen event renders a contract impossible to fulfill after it has been formed. In the case of goods becoming damaged before delivery, the promised performance (delivery of goods) becomes impossible due to circumstances beyond the control of the parties. This principle protects parties from liability when performance becomes unfeasible due to unforeseen events, ensuring fairness in contractual obligations.

When time is deemed essential in a contract and one party fails to perform within the stipulated timeframe, the other party has the right to cancel the contract. This provision underscores the significance of timely performance in contractual obligations, particularly in transactions where delays could lead to substantial losses or detriments. It reinforces the idea that parties must adhere strictly to deadlines when explicitly agreed upon as critical to the contract's purpose.

A party can terminate a contract when the other party's refusal to perform is complete, meaning they fail entirely to fulfill their obligations. This is crucial because if the refusal is partial and the promisee accepts some performance, they may not have the right to terminate the contract. This principle protects parties from being unfairly penalized for minor breaches while recognizing the importance of complete performance in contractual obligations.