Discharge of Contract
Discharge of Contract
APPENDIX ‘A’
On
SUBMITTED BY
SAIFUL ISLAM,
B.A.LLB
Roll no- 44 (S/F)
SEMESTER X
SUBMITTED TO
FACULTY OF LAW
APPENDIX ‘B’
CERTIFICATE
The project entitled “Conflict of Laws in relation to Discharge of Contract” submitted to the Faculty of
Law, Jamia Millia Islamia for Conflict of Laws as part of Internal Assessment is based on my original
work carried out under the guidance of Dr. Alisha Khatun. The Research work has not been submitted
elsewhere for award of any degree.
The material borrowed from other sources and incorporated in the research paper has been duly
acknowledged.
I understand that I, myself would be held responsible and accountable for plagiarism, if any, detected later
on.
Saiful Islam
3
APPENDIX ‘C’
TABLE OF CONTENT:
1. Acknowledgement 4
2. Table Of Cases 5
3. Introduction 6
7. Public Policy 14
8. Conclusion 15
ACKNOWLEDGEMENT
First and foremost, I would like to thank our subject teacher Dr Alisha Khatun, for the valuable guidance
and advice. She inspired us greatly to work on this interesting assignment. Her willingness to motivate us
contributed tremendously to our assignment. I also would like to thank him for showing us some sample
assignments on how to go about the research assignment. It gave me an opportunity to analyze and learn
about the operation of various theory and laws relating to the topic. In addition, I would also like to thank my
seniors who provided me with the valuable information acting as a source of guidance in making the
assignment. Finally, an honorable mention goes to my family and friends for their understandings and
supports in completing this assignment. Without the help of the particulars mentioned above, making of this
assignment would not have been possible.
5
Table of Cases
INTRODUCTION
To discharge a contract is to end it. There are along these lines however many kinds of the discharge as there
are various methods of ending a contractual obligation. Discharge of a contract alludes to the manner by
which it reaches a conclusion.
At the point when the contract is formed by agreement, it might likewise be discharged or terminated
through agreement, subject to the states of the contract. The agreement to smother or end the actual contract
turns into an official contract whenever upheld by thought or made under seal. Coming up next are three
fundamental sorts of discharges:
● Bilateral Discharge: The contract will be commonly discharged where the parties consent to deliver
each other from any further obligations existing from the first contract. The contract is discharged
notwithstanding the parties failing to fully or partially discharge every one of their obligations.
● Accord and Satisfaction: Accord and satisfaction occurs where one party accords the arrival of
another party, who is in break of the first agreement, from its obligations as a trade-off for the
satisfaction for the presentation of another obligation.
● Unilateral Discharge: Unilateral Discharge occurs where one party has finished its piece of the deal
and consents to deliver the other party from its exceptional obligations under the contract. The
agreement is possibly restricting whenever upheld by thought or made under seal.
Discharge of a contract suggests end of contractual obligations. This is on the grounds that when the parties
initially went into the contract, the rights and obligations as far as contractual obligations were set up. Thus
when those rights and obligations are put out then the contract is said to have been discharged. When a
contract stands discharged, parties to it are not any more at risk despite the fact that the obligations under the
contract stay deficient.
According to Section 62 of the Indian Contract Act, 1872 whose heading is – Effect of novation, rescission,
and alteration of contract, if the parties to a contract consent to substitute another contract for it, or to repeal
or change it, the first contract need not be performed.
A Contract is considered to be discharged, that is, closed and done restricting, in the accompanying conditions:
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● Discharge by performance.
● Discharge of Contract by Substituted Agreement.
● Discharge by lapse of time.
● Discharge by operation of law.
● Discharge by Impossibility of Performance.
● Discharge by Accord and Satisfaction.
● Discharge by breach
Discharge by performance
Where both the parties have either done or tendered (endeavored) to do their obligations under the contract,
is alluded to as discharge of the contract by performance. Since performance by one party comprises the
event of a useful condition, the other party's obligation to perform is likewise set off, and the individual who
has performed has the option to get the other party's performance. The larger part of contracts are discharged
thusly.
A contract radiates from an agreement between the parties. It hence follows that, the contract should likewise
be discharged by agreement. Hence, what is required, unavoidably, is commonality. Discharge by subbed
agreement emerges when a contract is deserted, or the terms inside it are modified, and both the parties are
in congruity over it.
Novation
The term novation suggests the replacement of another contract for the first one. This game plan might be
either with similar parties or with various parties. For a novation to be legitimate and compelling, the
consent of the multitude of parties, including the new one(s), assuming any, is fundamental. Additionally,
the resulting or second agreement should be one fit for implementation in law, the thought for which is the
exchange of vows not to authorize the first contract.
Rescission
This alludes to abrogation of all or a portion of the material terms of the contract. On the off chance that the
contracting parties commonly choose to do as such, the individual contractual obligations of the parties stand
terminated.
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Alteration
This alludes to a change in at least one of the conditions of a contract with the consent of all the contracting
parties. Alteration brings about another contract yet parties to it continue as before. Here the supposition that
will be that both the parties are to acquire a new however unique profit by the new agreement. Remission
this implies the acknowledgment (by the promisee) of a lesser whole than what was contracted for, or a
lesser satisfaction of the guarantee made. According to Section 63, 'each promisee may (a) dispatch or
abstain from it, entirely or to some extent, or (b) extend the hour of performance, or (c) acknowledge some
other satisfaction rather than performance'.
Waiver
The term waiver infers surrender or surrender of a right. Where a party purposely abandons its privileges
under the contract, the other party is delivered of its obligations, in any case restricting upon it.
A contract stands discharged if not authorized inside a predefined period called the 'time of limitation'. The
Limitation Act, 1963 recommends the time of limitation for different contracts. For example, time of
limitation for practicing option to recuperate an immovable property is twelve years, and option to
recuperate a debt is three years. Contractual rights become time barred after the expiry of this limitation
period. Accordingly, if a debt isn't recuperated inside three years of its instalment turning out to be expected,
the debt stops to be payable and is discharged by lapse of time.
An international contract can lead to numerous private international law issues. Contracts are a rich ground
for decision of law issues. The variety of potential associating factors, the arranged idea of contractual
relations, the various issues that could emerge, and the delay among execution and performance all give feed
to numerous issues of private international law in international contracts. Surely, the fact that there are such
countless various kinds of contract regularly raises the issue of whether a similar decision of law rules ought
to be applied furthermore, as we would examine, extraordinary systems frequently established on
international shows have been made for certain sorts of contract. This section talks about decision of law
issues emerging
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from international contracts. These incorporate the situation with party self-rule and the limitations
subsequently, the rules for deciding the appropriate law without decision of law by the parties, limit and the
extent of the relevant law.
The obligations made by a contract don't exist independently. For such obligations to be restricting in law, an
overall set of laws should remember them by connecting to them 'the force of law'. This leads to the need to
determine the pertinent law. Contracts come in different structures and can manage assorted topic. Some
may lead to one-of-a-kind decision of law issues, frequently in view of their topic and the idea of the
connections they create.1 Indeed, in the nations under investigation, a few contracts are managed by explicit
resolutions, which may impact assurance of the law pertinent to them. Albeit not inspected in this section,
two sorts of contracts prominent in such manner are contracts for carriage by ocean and carriage by air. Both
are managed by international conventions executed in the nations under study.2
Party self-rule, for example the opportunity to pick the law overseeing a contract, is regarded and maintained
in most, if not all, of the nations under study. Despite the fact that a few questions exist in South Africa, 3 the
Supreme Court of Appeal has as of late confirmed that 'where parties have made an express decision of law
to oversee such contract, their decision ought to be upheld'.4
When all is said in done, there is no express prerequisite in the cases concluded that there should be any
association between the arrangement of law picked by the parties and their contract. 5 The parties' decision
might be express or suggested. Be that as it may, it seems the courts have not been mindful so as to
recognize circumstances of suggested decision from situations where they are objectively searching for the
overall set of
1
See, e.g., E. A. Fredericks and J. L. Neels, ‘The Proper Law of a Documentary Letter of Credit (Part 1) and (Part 2)’ (2003) 15
South African Mercantile Law Journal 63 at 207.
2
For jurisprudence in relation to carriage by air, see:
Gambia – Ghana Airways v. Williams [1994] GR 184.
Ghana – Grippman v. Nigerian Airways [1992] 2 GLR 80; Sylvanus Juxon-Smith v.
KLM Royal Dutch Airline, Suit No. FTC 46/2002 (High Court, Ghana, 2003); Sylvanus
Juxon-Smith v. KLM Royal Dutch Airline, Civil Appeal No. HI/18/2004 (Court of Appeal,
Ghana, 2004); Slyvanus Juxon-Smith v. KLM Royal Dutch Airline, Civil Appeal No. J4/19/2005
Lesotho – S Carlos v. Government of Lesotho [1999–2000] LLR-LB 139.
Nigeria – African Continental Bank Ltd v. Swissair Air Transport Co. Ltd 1968 (1)
ALR Comm. 202.
3
Forsyth, p. 321; W. de Vos, ‘Freedom of Choice of Law for Contracts in Private International Law’ (1961) Acta Juridica 1.
4
Creutzburg v. Commercial Bank of Namibia Ltd [2006] 4 All SA 327 at 330.
5
Sonnar (Nigeria) Ltd v. Partenreedri MS Nordwind [1987] 1 All NLR (Part I) 396 at 414, [1988] LRC (Comm.) 191 at 210,
where Justice Oputa observed: ‘It is also conceded that when the intention of the parties to a contract, as to the law governing the
contract, is expressed in words, this expressed intention in general and as a general rule determines the proper law of the contract.
But to be effective the choice of law must be real, genuine, bona fide, legal and reasonable. It should not be capricious and absurd.
Choosing German law to govern a contract between a Nigerian shipper and a Liberian “shipowner” is to my mind capricious and
unreasonable. Luckily nowadays a choice of the proper law by the parties is not considered by the courts as conclusive . . . the
proper law of the contract must have some relationship to, and must be connected with the realities of, the contract considered as a
whole.’
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laws with which the contract is most intently connected. 6 A South African court has forewarned that a
decision of law agreement 'ought not be promptly implied'. 7 Whatever the qualification, it stays undeniable
that the factors pertinent to choosing whether there is a suggested decision are similarly critical in finding
out the lawful framework with which a transaction is most firmly associated.
Improvair (Cape) (Pty) Ltd v. Establissements Neu is one of the cases of dicta that support the position that
different aspects of a contract may be governed by different proper laws, and the ability of parties to change
the governing law. In that case Justice Grosskopf observed:
“An indivisible contract laying down reciprocal rights and obligations can, as a matter of logic, not be
governed by more than one proper law. I exclude contracts where the parties have expressly agreed
otherwise, or possibly some other exceptional cases, but in the ordinary contract which forms an organic
whole, the parties’ rights and obligations would be distorted if some were to be governed by one system of
law and others, by another. The same logic applies in a temporal sense – the proper law which is assigned
to a contract at the time of its formation should continue to apply until all rights and obligations thereunder
are extinguished.”
In breaking down the impact of the conflict of laws upon the unpredictable territory of contracts,' generally
little consideration has so far been given to questions of performance and alternate ways by which
contractual obligations might be discharged.8 This has happened both on account of the frequency 9 with
which contract cases are contested with regards to legitimacy or understanding and since various different
hypotheses have been progressed around here as appropriate solutions. On the other hand, discharge cases,
emerging with less recurrence, have generally been viewed as administered by a single firm decision of law
rule. The chose cases, in any case, demonstrate that the utilization of characterization, public arrangement,
and other decision of law gadgets have affected an extensive level of adaptability and vulnerability around
here.
The conflicts guideline most as often as possible affirmed by the courts in the contracts field is that inquiries
of performance and different techniques for discharge10 are appropriately represented by the law of the spot
6
Roger Parry v. Astral Operations Ltd 2005 (10) BLLR 989 at [80]–[88].
7
Improvair (Cape) (Pty) Ltd v. Establissements Neu 1983 (2) SA 138 at 145.
8
The Restatement of Contracts lists twenty-one methods of discharging a contractual obligation. See Restatement Contracts 3 85
(1932). Conflicts questions have, however, been litigated only in relation to a limited number of these contexts.
9
Rabel, Conflict Of Laws 452 (1947); Stumberg, Conflict Of Laws 224 (2d Ed. 1951).
10
Greenwald & Co. v. Kaster, 86 Pa. 45 (1878) (release); Duval v. Skouras, 181 Misc. 651, 44 N.Y.S.2d 107 (Sup. Ct. 1943), aff'd,
267 App. Div. 811, 46 N.Y.S.2d 288 (lst Dept. 1944), aff'd, 270 App. Div. 841, 61 N.Y.S.2d 379 (lst Dept. 1946) (statute of limitation).
11
of performance (lex loci solutionis), while matters of legitimacy and understanding are considered to
influence the hidden obligation and are referrable to the law of the spot of making (lex loci contractus).11 In
perspective on the help given this characterization by the Restatement of the Conflict of Laws and by various
commentators, a moderately serious level of consistency and consistency may be normal.
Lex loci solutionis (Latin: "law of the place of performance"), in conflict of laws, is the law applied in the
spot of an occasion. In the event that a case precedes a court and every one of the principal highlights of the
case are nearby, the court will at that point apply the lex fori, the predominant municipal law, to choose the
case. Assuming there are unfamiliar components to the case, the forum court might be obliged under the
conflict of laws framework to consider whether the forum court has jurisdiction to hear the case (see forum
shopping). It at that point characterizes the issues and designate the factual premise of the case to its
pertinent legitimate classes. It at that point applies decision of law rules to choose the law to be applied to
each class.
Lex loci solutionis is one of the conceivable decisions of law decides applied to cases that test the legitimacy
of a contract or that arrangement with a misdeed. For instance, if an individual domiciled in Bolivia and an
individual habitually occupant in Germany make a contract by email and agree to meet in Arizona to explore
a book, there would be a few potentially pertinent decision of law rules:
● the lex domicilii, lex patriae or the law of habitual home to decide if the parties had the ability to go
into the contract;
● lex loci contractus, which could be hard to set up since the two players never left their own state
(dependence on postal guidelines for offer and acknowledgment in the few putative lex causae may
deliver various outcomes)
● lex loci solutionis may be the most important since Arizona is the most firmly associated with the
substance of the obligations accepted
● the proper law
● lex fori, which may have public strategy issues on the off chance that one of the parties is a minor.
Lamentably, this has not been the case.12 Instead, various courts have created conflicts rules which apply a
solitary collection of law to at any rate all significant episodes of the contract, including discharge. Those
courts which pronounce their adherence to the conventional principle all things considered hold an extensive
level of opportunity to fluctuate the decision of relevant law and thereby accomplish wanted outcomes. This
11
Scudder v. Union Nat'l Bank, 91 U.S. 406, 411 (1875); Louis-Dreyfus v. Paterson Steamships, Ltd., 43 F.2d 824, 826 (2d Cir.
1930); Union Nat'l Bank v. Chapman, 169 N.Y. 538, 543, 62 N.E. 672, 673 (1902).
12
Cheatham, Goodrich, Griswold And Reese, Conflict Of Laws 494-95 (3d ed. 1951); Note, 40 CORNELL L.Q. 772 (1955).
12
opportunity originates from a few factors present in practically all cases. To begin with, there is the need of
deciding regardless of whether the issue introduced will be characterized as an issue of obligation, remedy,
or performance. If the performance mark is appended, another variable may emerge in finding the spot of
performance in order to choose the material lex loci solutionis. Furthermore, the utilization of public
approach consideration or on the other hand the doctrine of renvoi16 might be accessible to change the
outcome.
It ought to be stressed that courts, in arriving at resolutions at difference with the conventional guideline,
may not expressive the contemplations affecting their actions. In any case, courts do show up at various
outcomes in light of the fact that of these factors.
It would appear to be clear that any assurance influencing the discharge of contractual connections should
have a significant impact on the hidden obligations imposed, the Restatement has endeavored to isolate
episodes of performance from the rest of the agreement. It indicates that matters identifying with the way,
time, and territory of performance, the people to whom performance will be coordinated, the adequacy of
performance and sufficiency of pardon for non-performance will be characterized as issues appropriately
administered by the lex loci solutionis. Although the Restatement mirrors the view that the qualification
between obligation also, performance may now and again be hard to state in exact terms, it was accepted that
the region between the two ideas would be explained through practice. Basically, be that as it may, the
qualification may have superimposed upon agreements a superfluous majority of administering law.
In the space of discharge of contractual obligation by performance, the courts have, in applying the
Restatement or comparable measures, thought of as issue of performance questions identifying with paces of
exchange13 or interest, the sort of money which might be utilized for payment, the accessibility of checks as a
technique for payment, breach of warranty,14 conveyance of goods, and the "workmanlike" way of doing
contractual requirements. However, while convenient presentment of a bill of exchange15 also, the quantity
of long stretches of effortlessness permitted in protesting 16 have been thought of matters of performance, the
need of requesting such dissent has been seen as influencing the fundamental obligation and requiring
utilization of the lex loci contractus.17
13
Anglo-Continentale Treuhand, A. G. v. St. Louis Southwestern Ry., 81 F.2d 11 (2d Cir. 1936), cert. denied sub nom. Henwood v.
Anglo-Continentale Treuhand, A.G., 298 U.S. 655; Lann v. United Steel Works Corp., 166 Misc. 465, 1 N.Y.S.2d 951 (Sup. Ct.
1938).
14
See Victorson v. Albert M. Green Hosiery Mills, Inc., 202 F.2d 717 (3d Cir. 1953) (place of making was also place of
performance); Texas Motorcoaches, Inc. v. A. C. F. Motors Co., 154 F.2d 91 (3d Cir. 1956) (same).
15
Pierce v. Indseth, 106 U.S. 546 (1882).
16
Brown v. Jones, 125 Ind. 375, 25 N.E. 452 (1890); Skelton v. Dustin, 92 Ill. 49 (1879); Amsinck v. Rogers, 189 N.Y. 252, 256, 82
N.E. 134 (1907) (dictum).
17
Brown v. Ford Motor Co., 48 F.2d 732 (10th Cir. 1931).
13
The cover between inquiries of substance and performance was perceived in Swift and Co. v. Financiers
Trust Co.- where the issue was whether checks, attracted to an invented payee by an individual uninformed
of the fiction, through the misrepresentation of one more of the cabinet's representatives, were conveyor
paper. The court understood that the inquiry was one relating somewhat to performance and halfway to
translation. It decided that since the appropriate response would tangibly decide the degree of the obligation,
the law of the spot of making ought to be applied.
PUBLIC POLICY
As in different spaces of the conflict of laws, the decision of law arrangement in discharge cases has been
made less unsurprising as a result of the capacity of the forum to apply its own public strategy to issue which
it considers to abuse "some major standard of justice." Where the forum has no generous association with the
agreement, the rare utilization of public arrangement has commonly brought about refusal to give recovery. 18
The res judicata impact of this action is hazy, yet the ideal view shows up to regard it as an excusal without
bias instead of as an arbitration on the merits.19 When such a forum utilizes its own public approach to strike
down a safeguard, there has plainly been a choice on the benefits yet some uncertainty might be
communicated with respect to the lawfulness of that action. In the more regular circumstance where the
forum has a significant connection, 20 public strategy has hitherto been utilized generally in cases including
such discharge issues as illegal performance and limitations of the liability of normal transporters.21
The respectability of the forum's action in forestalling infringement of its own law or in ensuring its own
indispensable advantages in its citizens and organizations is hard to deny, however the mechanical utilization
of the forum's public strategy might be just about as frightful similar to the programmed utilization of the lex
loci solutionis.
All things considered; a more eloquent assessment of the interests moved by all purviews associated with the
agreement appears necessary. This assessment may well bring about a tracking down that the forum actually
has the dominating interest or is the focal point of gravity of the agreement, yet the result would not be
unavoidable.
18
Ayub v. Saloman, 252 S.W. 291 (Tex. Civ. App. 1923); Watson v. Murray, 23 N.J. Eq. 257 (Ch. 1872);
19
Paulsen & Sovern, supra note 93, at 1010.
20
Reed v. Kelly, 177 F.2d 473 (7th Cir. 1949); Nonotuck Silk Co. v. Adams Express Co., 256 Ill. 66, 99 N.E. 893 (1912);
21
Pennsylvania R.R. v. Hughes, 191 IJ.S. 477 (1903);
14
CONCLUSION
As with the fundamental contract, the performance of a contract may involve associations with numerous
frameworks of law. In fact, distinguishing what comprises performance under a contract can at times be a
test. It shows up from the concluded cases to have been acknowledged that performance is represented by
the appropriate law of the contract and lex loci solutionis. It stays unsure which wins on account of
irregularity, for example, where performance is legitimate under the appropriate law of the contract, yet is
illegal under lex loci solutionis. What is sure is that the courts won't enforce a contract which is illegal under
lex loci solutionis or in the country where enforcement is looked for. Then again, the simple fact that
performance is illegal under the laws of whatever other country which has some association with the
contract, like the spot of residence, business, ethnicity or domicile of one party, won't forestall enforcement
of the contract. Comity and public policy contemplations which advise the non-enforcement regarding
contracts for which performance is illegal under lex loci solutionis, the appropriate law of the contract or
where enforcement is looked for, have not been extended to nations for certain different associations with the
contract. This is a proper position since it forestalls a circumstance emerging where one party can depend on
their own independent associations with an arrangement of law to crush performance under the contract.
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APPENDIX-“D”
BIBLIOGRAPHY
● Arthur Nussbaum, “Conflict Theories of Contracts: Cases Versus Restatement” ¸ The Yale Law
Journal Vol 51, (1942)
● Elliott E. Cheatham, “Sources of Rules for Conflict of Laws,” University Of Pennsylvania Law
Review (2005).
● Geoffrey Chevalier Cheshire: Private International Law, Clarendon Press, Oxford.
● J. H. C. Morris: Conflict of Laws, Sweet & Maxwell, London.
● John P. Tiernan: Conflict of Laws, Callaghan & Co, Chicago.
● Paras Diwan: Indian and English Private International Law, Deep & Deep, New Delhi.
● Rabel Ernst, “The Conflict of Laws: A Comparative Study.”, Vol. 3. Ann Arbor: The University of
Michigan Press, 1950.
● Robert A. Leflar: The Law of Conflict of Law, The Bobbs-Merrill Company, Inc., Indianapolis.
● Raviteja P.A.N.V, “Discharge by Performance & Contingent contracts”, Academike (2014).
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