Contracts are essential in any business transaction. They bind parties to their promises and ensure that both parties fulfill their obligations. However, not all contracts go as planned, and there may come a time when parties have to perform and discharge their obligations.
Performing a Contract
Performing a contract means fulfilling contractual obligations. Both parties must perform their obligations under the agreement. The party that fails to perform their obligations is called the non-performing party.
Contracts may be performed by either party simultaneously or at different times. For instance, if Party A is selling goods to Party B, Party A will deliver the goods, and Party B will pay for them. In this case, Party A`s obligation is to deliver the goods, while Party B`s obligation is to pay for them. Therefore, Party A will perform their obligation by delivering the goods, while Party B will perform their obligation by paying for the goods.
Discharging a Contract
Discharging a contract means ending the contractual obligations and releasing both parties from their obligations. There are several ways to discharge a contract, including:
1. Performance: Once both parties have performed their obligations, the contract is considered discharged. This means that both parties have fulfilled their obligations under the agreement, and there are no further obligations.
2. Mutual agreement: Both parties may mutually agree to discharge their contract. For instance, if Party A is selling goods to Party B, and Party B decides that they no longer want the goods, both parties may agree to discharge the contract.
3. Frustration: Frustration occurs when an unforeseeable event occurs that makes the contract impossible to perform. For instance, if Party A is selling goods to Party B, and the goods are destroyed before they can be delivered, the contract will be discharged due to frustration.
4. Breach: If one party fails to perform their obligations, the other party can terminate the contract. This is called a breach of contract. For instance, if Party A is selling goods to Party B, and Party A fails to deliver the goods as promised, Party B may terminate the contract.
Conclusion
Contracts are binding agreements that ensure parties fulfill their obligations. Parties perform their obligations simultaneously or at different times, and once both parties have performed, the contract is considered discharged. Contracts may also be discharged by mutual agreement, frustration, or breach of contract. Understanding how to perform and discharge contracts is essential in any business transaction. Therefore, it is crucial to seek legal advice before entering into any contractual agreement.