Discharge of a Contract

Greetings to you, my benevolent reader. Once again, we meet on this platform so as to share various insights on law.

Today, we are going to continue with our discussion on the series of notes on Contract Law in Tanzania.

In this post, we are going to have a scrutinizing coverage on the concept of contract discharge, or some other people refer to it as termination of contract.

So, without wasting time, let’s get down to business.

Meaning of Discharge of a Contract

There is a popular saying that everything that has a beginning has an end. Well, who am I to oppose or criticize such a notion, while the whole statement is nothing but the truth!

So, we move on to the context under Contract Law, we can assert the previous saying by saying Every Contract formed has an end. So, the action of parties fulfilling their contractual obligations and finalizing a deal, in simple terms such action signifies the end of a contractual relation between parties to a contract.

 A contract is discharged if the obligation created by it, become no longer binding the parties. Discharge of a contract refers to coming to and an end of the obligation, liabilities of the parties to a valid contract.

Also, as a reminder the term “discharge” and “termination” refer to the same subject, so don’t be surprised if you meet with one of the terms and get confused, they all have the same meaning, and sometimes they are used synonymously.

There are four main methods of discharging a contract namely discharge by agreement, discharge by performance, discharge by way of breach, and acceptance of such breach, and discharge by impossibility of performance and frustration.

Discharge by Agreement

The general rule is expressed in Marxism that says that what has been created by agreement may be dissolved by agreement, parties to an agreement may have agreed their contract to be discharged.

Discharge by Performance

When parties conclude a contract, they complete or conclude the due performance of obligation by either parties, it follow a party who has performed his obligation would be discharged from liability.

As illustrated the case of CUTTER VS POWELL [1795] A ship’s engineer undertook to sail a ship from Jamaica to Liverpool, but died before the voyage was complete. Nothing could be recovered in respect of his service; he had not fulfilled his obligation.

Discharge of contract by performance may occur in the following ways/forms;

• Mode of performance.
• Vicarious performance/ subcontract performance/sub delegation performance.
• Place of performance.
• Time of performance.
• Part/partial performance.

Discharge by Breach

When parties breach a contract, it does not mean that the obligation of the parties have been discharged, it is open to the innocent party to decide on whether or not to accept such breach.