TN State Board 11th Commerce Important Questions Chapter 31 Discharge and Breach of a Contract

Question 1.
What are the kinds of consent?
Answer:
The kinds of consent are:

  1. Express: Express consent may be given at the time of formation of the contract or subsequent to its formation.
  2. Implied: The contracts are also discharged by implied consent.

Question 2.
What are the types of Impossibility of Performance?
Answer:

  1. Impossibility existing at the time of agreement.
  2. Impossibility arising subsequent to the formation of contract.

Question 3.
What is Quantum merit?
Answer:
The claim for quantum merit may arise if a contract performed by one party has become discharged by breach of the other party. The meaning of the phrase quantum merit is ‘as much as earned’. The claim is not for the original contract that has been discharged or void, but on an implied promise by the other party to pay for what he has done

Question 4.
What are the different modes of discharged by implied consent?
Answer:
The contracts are also discharged by implied consent, different modes of discharge by implied consent are mention below:

  1. Novation,
  2. Alteration,
  3. Recession,
  4. Remission,
  5. Accord and Satisfaction,
  6. Waiver and
  7. Merger.

Question 5.
Define discharge by Performance.
Answer:

  1. Performance implies carrying out the obligation of the contract. Performance must be completed according to the real intentions of the agreement. Performance must be done according to time and manner prescribed.
  2. Performance of contract may be of two types namely
    (a) Actual performance and
    (b) Attempted performance.

Question 6.
What are reasons for impossibility arising after the formation of contract?
Answer:
(i) According to the Section 56 of the Act, all acts to do impossible acts are void. There are two types of impossibility of performance such as
(a) Impossibility existing at the time of agreement,
(b) Impossibility arising subsequent to the formation of contract.

(ii) On the other hand, impossibility of performance existing at the time of performance of a contract may be either
(a) Known to the parties or
(b) Not known to the parties.

(iii) Likewise impossibility arising subsequent to the formation of a contract or supervening impossibility maybe
(a) By some event beyond the control of the parties or
(b) By some act either of the promisor or of the promisee.

Question 7.
What are the various rules regarding damages?
Answer:

  1. Damages are a monetary compensation awarded by the court to the injured party for the loss or injury suffered by him.
  2. As per contract, one party can claim damages if other party breach the contract.
  3. The main purpose of awarding the damages is to make good the loss suffered by him.
  4. There are mainly four types of damages, such as
    (a) Ordinary damages.
    (b) Special damages.
    (c) Vindictive or exemplary damages and
    (d) Nominal damages.

Question 8.
Explain the ways of discharge of Contract.
Answer:
(i) Discharge by performance:
Performance implies carrying out the obligation of the contract. Performance must be completed according to the real intentions of the agreement. Performance must be done according to time and manner prescribed. Performance of contract may be of two types namely
(a) Actual performance,
(b) Attempted performance.

(ii) By agreement on consent:
Agreement between the parties comes to an end by mutually agreeing for it. Any contract is created by an agreement, hence m the same way, it can be discharged by an agreement. In this connection the rule of law is as follows. “Eodem modo qus and quide constitutor, eodem modo destruitur,” the meaning of which is that a thing may be destroyed in the same manner, in which, it is constituted. The consent may be of the following types.

Express:
Express consent may be given at the time of formation of the contract or subsequent to its formation.

Implied:
The contracts are also discharged by implied consent, different modes of . discharge by implied consent are –

  1. Novation,
  2. Alteration,
  3. Recession,
  4. Remission,
  5. Accord and Satisfaction,
  6. Waiver and
  7. Merger charge.

(iii) By Impossibility of Performance:
A contract may be discharged if its performance becomes impossible. The rule of impossibility of performance is based on the following maxims

  • the law does not recognize what is impossible and
  • what is impossible does not create an obligation

(iv) By Lapse of Time:
According to the Limitation Act, 1963 a contract must be performed within a specified time. If it is not performed within this specified time limit and against which if no action is taken by the promisee in the Court of Law within specified time, then the promisee is deprived of his remedy at law. In such cases, the contract is discharged.

(v) By Operation of Law:
A contract can be discharged by the operation of law. The operation of law by which contract can be discharged are as follows:
(a) By Death,
(b) By Merger,
(c) By Insolvency,
(d) Unauthorized Alteration ofthe Terms of a Contract,
(e)Rights and liabilities vesting in the same person.

Question 9.
Write about the various remedies for breach of contract.
Answer:
Remedies for Breach of Contract:
All parties to a contract are expected to perform their promises. When one party refuses to perform his promise, then the breach of contract takes place. The other party or parties are called aggrieved or injured party or parties. There are various types of remedies for the injured parties. They are:
(a) Recession of Contract,
(b) Claim for Specific Performance,
(c) Claim for Injunction,
(d) Claim for Quantum Merit and
(e) Claim for Damages.

(i) Recission of Contract:
In case of breach of contract by one party, then the other parties may rescind the contract and thereby the party is absolved from his all obligations under the contract.

(ii) Claim for Specific Performance:
In some specific cases if the damages are not the adequate remedy, then the court can direct the party in breach for the specific performance of the contract. In such case, the promise is carried out as per terms and conditions of the contract.

(iii) Claimfor damages:
Damages are a monetary compensation awarded by the court to the injured party for the loss or injury suffered by him. As per contract, one party can claim damages if other party breach the contract. The main purpose of awarding the damages is to make good the loss suffered by him. It is known as doctrine of restitution. The Section 73 of the Indian Contract Act, 1872 deals with the compensation for loss or damages caused by a party for breach of contract. There are mainly four types of damages, such as
(a) Ordinary damages,
(b) Special damages,
(c) Vindictive or exemplary damages and
(d) Nominal damages.

(iv) Claim for Quantum Merit:
The claim for quantum merit may arise if a contract performed by one party has become ‘ discharged by breach of the other party. The meaning of the phrase quantum merit is ‘as much as earned’. The claim is not for the original contract that has been discharged or void, but on an implied promise by the other party to pay for what he has done.

(v) Claim for Injunction:
Injunction is an order passed by a competent court restraining a person from doing some act. Injunction can be defined as a mode of securing the specific performance of the negative terms of a contract. Negative terms of contract imply doing something, which a party has promised not to do. Injunction is an order which is granted by the court restraining the person to do what he had promised not to do.

Question 10.
Discuss the different types of damages awarded to the injured party.
Answer:
Claim for damages:
Damages are a monetary compensation awarded by the court to the injured party for the loss or injury suffered by him. As per contract, one party can claim damages if other party breach the contract. The main purpose of awarding the damages is to make good the loss suffered by him. It is known as doctrine of restitution. The Section 73 of the Indian Contract Act, 1872 deals with the compensation for loss or damages caused by a party for breach of contract. There are mainly four types of damages, such as-
(a) Ordinary damages,
(b) Special damages,
(c) Vindictive or exemplary damages and
(d) Nominal damages.

(a) Ordinary damages:
Damages that arises ordinary course of business from the breach ‘ of contract is called ordinary damages.
eg: A, He is a seller, B, He is a buyer. B order the sugar 100 bags ₹ 2000 per bag. Amount to be paid at the time of delivery. At the same time the price increased from ₹ 2,000 to ₹ 2,500. A refused to sell sugar. It is called ordinary damage.Special damage: Special damages .are those damages that are payable for the lose arising due to some special circumstances.

(iii) Vindictive exemplary damages:
These damages are claims against the party who has committed to refuse die contract. So he compensates the aggrieved party, eg: Dishonour of a cheque.

(iv) Nominal damages:
These damages are claimed to the aggrieved party. In this case loss is very small amount. When there is only technical violation of the legal rights.

Question 11.
To draw inference about the nature of contract and legal ways of discharging it.
Answer:
(i) Performance implies carrying out the obligation of the contract.
(ii) Performance must be completed according to die real intentions of the agreement, performance must be done according to the time and manner prescribed.

Question 12.
To understand the modes of discharge of contract.
Answer:
To explain two modes of discharge of contract.
Merger: Two or more contracts combined together to form a contract and discharge of contract.

Question 13.
To interpret the consequence of breach of performance of contract.
Answer:
All parties to a contract are expected to perform their promises when one party refuses to perform his promise. Then the breach of contract takes place.

Question 14.
Illustrate with example the modes of discharge of contract and if not discharged, the consequences.
Answer:
Recission of contract:
In case of breach of contract by one party then the other parties may rescind the contract and thereby the party is absolved from his all obligations under the contract.

Question 15.
To foresee the suitability of remedies for breach of contract violation of which leading to legal consequences.
Answer:
Remedies of breach of contract for that to claim damages.
Ordinary damages:
Damages that arises in the ordinary course of events from, the breach of contract are called ordinary damages.
eg: Annie contracted to sell and deliver Bala 100 bags of Dhall at ₹ 3000 per bag and price to be paid at the time of delivery.
The price of Dhall is raised to ₹ 4000 per bag and Annie refused to sell the dhall. Bala can claim damages at the rate of ₹ 1000 per bag.

Choose the Correct Answer:

Question 1.
On the valid performance of the contractual obligation by the parties, the contract:
(a) is discharged
(b) becomes enforceable
(c) becomes void
(d) none of these
Answer:
(a) is discharged

Question 2.
An agreement to do an act impossible in itself under Section.56 is:
(a) void
(b) valid
(c) voidable
(d) unenforceable
Answer:
(a) void

Question 3.
Any agreement which becomes impossible to perform under various circumstances:
(a) voidable
(b) void
(c) valid
(d) none of these
Answer:
(b) void

Question 4.
Discharge by mutual agreement may involve:
(a) novation
(b) rescission
(c) alteration
(d) all of the above
Answer:
(d) all of the above

Question 5.
The compensation given for breach of contract is:
(a) damage
(b) remuneration
(c) money
(d) cheque
Answer:
(a) damage

Samacheer Kalvi 11th Commerce Notes Chapter 31 Discharge and Breach of a Contract

→ Discharge of contract implies termination of the contractual relationship between the parties. A contract is discharged if it ceases to operate and when the rights and obligations created by it come to an end. Sometimes other rights obligations may arise as a result of discharge of the contract. These are independent of the original contract.

→ Modes of discharge of contract: Different modes of discharge of contract have been provided under different section of the act.

→ Discharge by performance: Performance implies carrying out the obligation of the contract. Performance must be completed according to the real intentions of the agreement. Performance must be done according to time manner prescribed.

→ Performance of contract may be of two types namely:

  • Actual performance,
  • Attempted performance.

→ Agreement between the parties comes to an end by normally agreeing for it. Any contract is created by an agreement. At the same time it can be discharged by an agreement.

→ The consent may be of the following types:

  • Express and
  • Implied.

→ Remedies for breach of contract:
All parties to a contract are expected to perform their promises. When one party refuses to perform his promises. Then the breach of contract takes place. The other party or parties are called aggrieved or injured party or parties.

→ Remedies:
There are various types of remedies for the injured parties listed as follows:

  1. Recission of contract,
  2. Claim for specific performance,
  3. Claim for injuction,
  4. Claim for quantum merit and
  5. Claim for damages.

TN Board 11th Commerce Important Questions