FORMATION OF CONTRACT:

Section 10 of the Indian Contracts Act, 1872

All agreements are contracts, If they are
- made by the free consent of the
parties
- competent to contract
- for a lawful consideration and
- with a lawful object
And, are not hereby expressly declared
to be void.

Discharge or Termination of Contract
The formation of Contract gives rise to rights and
obligations for the contracting parties. A Contract is a
legal bond (vinculum juris) and it binds the parties to it.
Then, how long they continue to be, so legally bound?
May be for - a few minutes, or hours; or
- a few days or months; or
- a year or a few years; or
- unto the death of one of the parties to it.
One day or the other, the contract must be put to an end.
When such rights and obligations come to an end, or
when the parties get out of the legal bond
the contract is said to be discharged / terminated.
Modes of Discharge or Termination of Contract.
A contract may be discharged or terminated
- by Performance [Sec - 37 and 38]
- by Impossibility of Performance [Sec 56]
- by Agreement [Sec62 and 63 r/w 39, 63 & 64]
- Novation,
- Rescission, or
- Alteration.
- by Operation of Law
- by Laps of Time, and
- by Breach of Contract
- Anticipatory Breach
- Current Breach.

Discharge or Termination of Contract by
Operation of law

A Contract may be discharged/terminated by operation
of law in the following cases:
- by death of Promisor [Sec 37]
- by insolvency
- by merger
- by rights & liabilities becoming vested in the
same person
- by material alteration of a Negotiable
Instrument
- by notice within 6 months of attaining the age of
majority under Partnership Act.

Breach of Contract.
A Contract comes to an end, when any party to it
- refuses to perform its part of obligation (s).

If such refusal occurs before due date of
- fulfillment of its promise or
- performance of its obligations it is
known as Anticipatory Breach.
If such refusal occurs
at the time of performance; or
during the course of performance it is
called Current Breach.
Remedies for Breach of Contract

A Breach of Contract entitles the aggrieved
party:
- to rescind the contract and also
- to sue the defaulting party for damages.
The aggrieved party may take other remedies
available to it under Specific Relief Act, such
as
- Specific Performance of the contract, or
- request for issue of Injunction Order
etc.,
Discharge or Termination of Contract by
Laps of Time
Every Contract mentions the time during which it
should be performed.
If no time is mentioned, it should be performed
within a reasonable time.
What is a reasonable time depends upon each
particular case.
The laps of - time agreed, or
- reasonable time
discharges the Contract.
Applicability of Law of Limitation to Contracts.
If a contract is not performed, the aggrieved party has
a right to enforce its rights available under the
contract.
Law will come to the rescue of the aggrieved party
only when it seeks legal remedy in time.
Law will not support indolent and lazy who do
not act in time. [vigil Antibus, non dormantibus, jura]
So, the rights can be enforced at any time before it
becomes barred by the Law of Limitation.
Therefore, an action to enforce rights available under
a contract must be taken within 3 years of
- Due date of performance, or
- Date of Breach in India.