Page 71 - DCOM103_COMMERCIAL_LAW

Commercial Law

Notes
Example: A contracted with a Railway Company to supply it certain quantity of railway
chairs at a certain price. The delivery was to be made in installments. After a few installments
had been made, the Railway Company asked A to deliver no more. Held, A could sue for breach
of contract.

How is a contract breached by making performance impossible? Suppose you hire an agency
to clean carpets in your home on Saturday for ` 500. You go out for the day neglecting to make
arrangements to let the agency people into your home to clean the carpets. You have breached
the contract by making performance impossible. You would owe the money since the cleaning
agency could not clean and because the agency probably turned down requests to clean for other
clients.
Partial breach of a contract. That happens when a non-material (unimportant) part of the
contract gets breached. It may happen if the contract has several divisible parts each of which
you may treat as a separate contract. Then you could sue for damages even though the breach is
not complete. An example of this would be agreeing to perform a duty once every three months

for one year and then not performing for the final three months.
What is the Effect of the Death of one Party on the Contract?

The contract may or may not be discharged. It depends upon the personal skill, qualifi cation or

ability of the promisor. Where the personal skill, qualification or ability of the promisor is the
basis of the contract the contract stands discharged by his death or physical disablement or illness
as a result of which the contract could not be performed. However, in a case where the personal

skill, qualification or ability of the promisor is not the basis of a contract, his death does not result
in the discharge of his obligations under the contract.

Example: (i) A agrees to paint a picture for B by a certain date. A dies before that time
without painting the agreed picture. The death of A results in the discharge of the contract
and therefore his legal representatives are not liable either to perform the contract or to pay
compensation for non-performance.
(ii) A borrows a sum of ` 5,000 from B to be paid by a certain date. A dies before that date
without meeting his obligation. His legal representatives are liable to pay the borrowed amount.
However, their liability is limited to the extent of the value of the assets inherited.

6.3 Summary

A contract may be discharged by (i) performance; (ii) tender; (iii) mutual consent;
(iv) subsequent impossibility; (v) operation of law; (vi) breach.
If the parties to a contract agree to substitute a new contract for it, or to rescind it or alter
it, the original contract is discharged. A contract may terminate by mutual consent in any
of the six ways viz. novation, rescission, alteration and remission, waiver and merger.
Novation means substitution of a new contract for the original one. The new contract may
be substituted either between the same parties or between different parties.
A contract may be discharged because of impossibility of performance. There are two types
of impossibility: (i) Impossibility may be inherent in the transaction (i.e., the contract),
(ii) Impossibility may emerge later by the change of certain circumstances material to the
contract.
The anticipatory breach of contract occurs when a party repudiates it before the time

fixed for performance has arrived or when a party by his own act disables himself from
performing the contract.

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