In one line
Discharge means that contractual obligations come to an end by performance or another rule recognized by law.
After this note, you should be able to
- Classify the correct mode of discharge.
- Distinguish novation from alteration and remission.
- State whether accrued rights and restitution survive.
Six practical modes of discharge
Start by identifying the event that ended the obligation.
- Performance
- Actual performance or a valid tender discharges the promisor to the extent recognized by Sections 37 and 38.
- Mutual agreement
- Section 62 covers novation, rescission and alteration. Section 63 permits the promisee to remit or extend performance.
- Impossibility
- Section 56 discharges a contract when later performance becomes impossible or unlawful.
- Breach
- Repudiation or fundamental non-performance may entitle the promisee to terminate.
- Operation of law
- Death in a personal contract, insolvency, merger and limitation can affect enforceability or obligations.
Novation is not the same as remission
The source of the change determines the section.
- Novation
- All necessary parties agree to substitute a new contract or party so the old obligation is extinguished.
- Alteration
- The parties agree to change material terms while retaining the contractual relationship.
- Remission
- Under Section 63, the promisee may accept less, extend time or dispense with performance without fresh consideration.
Work through the facts
Illustration
Facts
A owes B Rs 2 lakh. A, B and C agree that C will become debtor under a fresh arrangement and A will be fully released.
Likely result
If the new agreement completely substitutes C's obligation with the consent of all parties, the original contract is discharged by novation.
What to learn
A new document is not enough. Ask whether the old obligation was actually extinguished.
Cases with a purpose
Landmark judgments
Learn the rule and where to use it. A case name without its legal function adds very little to an answer.
Lata Construction v. Dr. Rameshchandra Ramniklal Shah
Further reading(2000) 1 SCC 586
Principle: Novation under Section 62 requires complete substitution of a new contract in place of the old by agreement of the parties.
Use in an answer: Use it where a later settlement is said to have extinguished earlier contractual rights.
Scarf v. Jardine
Further reading(1882) 7 App Cas 345
Principle: Novation replaces an existing contractual relationship with a new one through the consent of the parties concerned.
Use in an answer: Use it where a new debtor or creditor is substituted.
For a 10-mark answer
Answer structure
- Identify the event said to discharge the contract.
- Connect it to the correct statutory provision.
- Check consent, completeness and any accrued rights.
- Address restoration or damages that survive discharge.
Common mistakes
- Calling every later agreement novation.
- Requiring fresh consideration for remission under Section 63.
- Assuming discharge removes every accrued claim.
Before you close the tab
Quick revision
- Performance is the normal mode of discharge.
- Section 62 requires agreement between the relevant parties.
- Section 63 gives the promisee a distinct power of remission.
- Discharge may still leave restitution or damages claims.
Test yourself
- What makes a later contract a novation?
- Does Section 63 require fresh consideration?
- Can rights already accrued survive discharge?
Short answers
Frequently asked questions
Does every new agreement discharge the old one?
No. Novation requires a clear and complete substitution intended to extinguish the earlier contract.
Can a promisee accept a smaller performance?
Yes. Section 63 allows the promisee to remit or dispense with performance, extend time or accept another satisfaction.
Primary sources
- Indian Contract Act, 1872 on India Code
- Lata Construction judgment hosted by the High Court of Jammu and Kashmir and Ladakh
This is an educational study note. Always read the bare provision and the full judgment before relying on a proposition in research or practice.