Chapter 6 - Discharge of a Contract (Part 2)

Question 1

What is discharge by agreement?

Answer 1

The parties to a contract have the freedom to release each other from the contract. They may discharge their contract

1) by agreement, where they enter into a new contract to discharge the original contract or
2) if there is a term in the contract, which lists down the circumstances that would trigger the contract

Question 2

What happens in the new contract?

Answer 2

Parties to a contract may enter into a new contract where the purpose of the new contract is to discharge the original contract.

Both the original contract and new contract must each satisfy all the requirements of a legally binding contract.

Fresh consideration is not required if both parties have not performed their obligations under the original contract.

Fresh consideration is required to bind the party who has performed his contractual obligations. if only one party has performed his obligations under the contract.

Question 3

What is discharge by repudiation/anticipatory breach?

Answer 3

It occurs when a party indicates either expressly or impliedly that he will not perform his obligations before they arise.

It could be that he defaulting party is unable to perform or is not intending to perform his obligations for some reasons or other.

The repudiation must be clear and in respect of a vital (essential) obligation in the contract that means it must be a breach of condition.

Question 4

What are the remedies for repudiation/anticipatory breach?

Answer 4

The innocent party may sue immediately for breach of contract or wait until actual breach then sue.