Discharge of Contract in United Kingdom

Definition of Discharge of Contract

In accordance with the work A Dictionary of Law, this is a description of Discharge of Contract : The termination of a contractual obligation. Discharge may take place by: (1) *performance of contract; (2) express agreement, which may involve either *bilateral discharge or unilateral discharge (See accord and satisfaction); (3) *breach of contract; or (4) *frustration of contract.

Discharge by Performance or Breach

This part is concerned with ways in which a contract may be discharged, so that the parties no longer have any obligations under it. We have already discussed one way in which this can happen in the previous chapter, under the doctrine of frustration. Contracts may also be discharged by express agreement. If both parties decide that neither of them wishes to carry on with a contract which contains continuing obligations, or in relation to which some parts are still executory, they may agree to bring it to an end early. The only problems which arise here are where the executory obligations are all on one side, so that the party who has completed performance receives no consideration for promising not to enforce the other party’s obligations. This issue has already been dealt with in other entry, in connection with the doctrine of consideration and, in particular, the concept of promissory estoppel, and so is not discussed further here. The focus in this chapter is on discharge by performance or by breach: discharge in this context meaning that all further obligations of either or both of the parties are at an end.

Discharge by Breach

A breach of contract will have a range of consequences. It may entitle the innocent party to seek an order for performance of the contract, to claim damages, or to terminate the contract, or some combination of these. It is termination that we are concerned with in this chapter,46 since this will also entail the discharge of future obligations. Where the innocent party terminates a contract as a result of a breach by the other side, it is in fact likely to be indicating three things: (1) that it will not perform any of its outstanding obligations under the contract; (2) that it will not expect the other party to perform any of its outstanding obligations, and will reject performance if it is tendered; and (3) that it may seek financial compensation (damages) for losses resulting from the other party’s breach.

Source: Richard Stone, The Modern Law of Contract, 2013, Routledge, London

Discharge by Performance

See in this legal encyclopedia.