Discharge of a Contract by Breach

Discharge of contract means parties to the contract is no more liable to the contract. In other words, the liability of the parties to the contract will come to an end.

Discharge by breach of contract: Breach of contract by a party thereto is also a method of discharge of a contract, because “breach” also brings to an end the obligations created by a contract on the part of each of the parties. Of course the aggrieved party i.e., the party not at fault can sue for damages for breach of contract as per law; but the contract as such stands terminated. Breach of contract may be of two kinds: (1) Anticipatory breach; and (2) Actual breach.

1. Anticipatory breach: An anticipatory breach of contract is a breach of contract occurring before the time fixed for performance has arrived. It may take place in two ways: (a) expressly by words spoken or written. Here a party to the contract communicates to the other party, before the due date of performance, his intention not to perform it. (b) Impliedly by the conduct of one of the parties. Here a party by his own voluntary act disables himself from performing the contract. When a party to a contract has refused to perform or disabled himself from performing, his promise in its entirety, the promise may put an end to the contract, unless he has signed, by words or conduct his acquiescence in its continuance.
2. Actual breach: Actual breach may also discharge a contract. It occurs when a party fails to perform his obligations upon the date fixed for performance by the contract. Actual breach entitles the party not in default to elect to treat the contract as discharged and to sue the party at fault for damages for breach of contract.

Source: Docstoc.com