Discharge of contract means the termination of the contractual relationship. There are six primary modes of discharge:
- By Performance: The most natural mode. When both parties successfully complete their respective promises. Performance can be:
- Actual Performance: Doing exactly what was promised.
- Attempted Performance (Tender): When a party offers to perform, but the other party refuses to accept the performance. A valid tender discharges the performing party from liability.
- By Mutual Agreement (Section 62): Parties can mutually decide to end or modify their relationship:
- Novation: Substituting the old contract with a completely new contract (can be between the same parties or new parties).
- Rescission: Cancelling the contract by mutual consent.
- Alteration: Changing one or more terms of the contract.
- Remission (Section 63): Accepting a lesser performance or waiving a right (e.g., accepting Rs. 500 to settle a Rs. 1000 debt).
- By Lapse of Time: Under the Limitation Act, if a contract is broken and no lawsuit is filed within the period of limitation (usually 3 years), the contract is discharged by time-lapse.
- By Operation of Law: e.g., Death of a party (in personal skill contracts), Insolvency, or Merger of rights.
- By Impossibility of Performance (Section 56).
- By Breach of Contract.