Unit 7: Discharge of a Contract — Discharge by Breach of Contract: Actual Breach and Anticipatory Breach; Discharge by Performance; Discharge by Operation of Law; Discharge by Agreement of Parties; Discharge by Impossibility and Doctrine of Frustration; Discharge by Lapse of Time
1. The Concept
Discharge = the contract’s termination — the obligations extinguished (by their fulfilment, the parties’ consent, the law’s operation, the supervening impossibility, the breach, or time’s bar). The discharge’s consequence-map: discharged-and-performed (the perfect end); discharged-but-breached (the remedies of Unit 8 following).
2. Discharge by Breach: Actual and Anticipatory
- Actual breach: the performance-time’s failure (the refusal-or-inability at the due time: the non-delivery, the non-payment, the defective performance beyond the substantial line); the breach’s immediate consequence: the discharge of the injured party’s own counter-obligations + the remedies’ accrual (damages, rescission — Unit 8);
- Anticipatory breach: the repudiation before the performance-time (the express refusal “I will not deliver”; the disabling conduct — the goods sold elsewhere, the factory dismantled); the innocent party’s options: (i) sue immediately (the breach’s acceptance-and-action — the Hochster line by name only); (ii) wait for the due date (the contract subsisting till then — the risk-of-changed-circumstances problem: if the contract would have been frustrated by the due date, the damages may fail — the Avery v. Bowden classic by name only); the Nepali practice’s recognition (the Code’s-and-courts’ anticipatory-breach treatment in the construction-and-supply cases);
- The breach’s discharge-function clarified: the breach discharges the injured party (his obligations end or become election-dependent); the breaching party remains liable — the discharge here is the exit-right, not the obligation’s forgiveness.
3. Discharge by Performance
The complete-and-exact performance (Unit 6): all parties’ obligations fulfilled at the time-place-manner — the natural-and-perfect discharge; the substantial performance’s qualified-discharge (the almost-complete performance: the discharge with the damages-for-the-deficiency — the builder’s 99% cases); the divisible contracts’ part-performance (the completed parts’ discharge).
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