Discharge of Contracts

 

DISCHARGE OF CONTRACTS

Discharge of contracts implies a termination of the contractual agreement and the contract obligations come to an end.

·         Discharge by performance

·         Discharge by breach

 

Discharge by performance is where all parties to a contract have fulfilled their part of the terms to the contract agreement, so all primary obligations will cease.

Discharge by breach is where a party to a contract does not fulfill their part of the terms to the contract agreement. In the business environment, this is commonly seen when a credit customer doesn’t comply with the credit terms and doesn’t make the needed payments at the due date. In the situation of a breach of contract, legal action can be taken against the defaulting party.