Discharge of Contract by Performance: What it Means and How it Works

Contracts are an essential part of any business transaction or agreement. They specify the terms and conditions of the arrangement between two parties and ensure that both parties are legally obligated to uphold their end of the deal. But what happens when one of the parties fulfills their obligations under the contract? This is where discharge of contract by performance comes into play.

What is discharge of contract by performance?

Discharge of contract by performance is the legal term used to describe the situation where one party`s obligation under a contract is fulfilled according to the terms and conditions specified in the contract. In other words, when a party performs their responsibilities under the contract, the contract is considered fulfilled or discharged.

How does it work?

When one party fulfills their obligations under a contract, the other party is legally obligated to accept the performance and discharge the contract. This means that all obligations under the contract have been met, and the contract is no longer valid or enforceable.

For example, let`s say that Party A enters into a contract with Party B to deliver a certain product by a specified date. Party A delivers the product on time, and Party B accepts the delivery. At this point, the contract is considered discharged by performance.

It`s important to note that performance must be complete and satisfactory for the contract to be discharged. If there are any issues with the performance, such as delivering a defective product or delivering the product late, the other party may have the right to reject the performance and pursue legal action.

When is discharge of contract by performance applicable?

Discharge of contract by performance is applicable in most types of contracts, including employment contracts, sales contracts, and service agreements. However, not all contracts can be discharged by performance. Some contracts may have conditions or contingencies that must be met before the contract can be discharged.

For example, a contract may require that a certain outcome or result be achieved before it can be discharged. In this case, performance alone may not be sufficient to discharge the contract, and additional conditions must be met.

Conclusion

Discharge of contract by performance is an essential concept in contract law. It allows parties to fulfill their obligations under a contract and ensures that contracts are legally enforceable. When one party performs their duties as specified in the contract, the other party is legally obligated to accept the performance and discharge the contract. However, it`s important to note that performance must be complete and satisfactory for the contract to be discharged, and not all contracts can be discharged by performance alone.