Karan and Arjun had entered into a contract where Karan was to supply 50,000 phones to Arjun within 2 months from the date of signing of contract. Karan was to procure the phones from China and deliver the same to Arjun. The rate of the phone was Rs. 5000/- a piece (inclusive of all taxes and duties). At the time of the execution of the contract, the duty was at 5% (five percent). Immediately after the execution of the Agreement, India had increased the duties to 1000% (one thousand percent). Therefore, Karan was finding it difficult to sell the phones at the price agreed earlier. In the circumstances, kindly advice: How can Karan discharge such a contract? How can Arjun enforce such a contract?
Answers
It is important to understand the meaning of the term discharge first,
Discharge refers to the termination of contractual relationship between two or more parties.
The contract ceases to operate in this case when the rights and obligations under the contract ends. According to Sections 73-75 of the Contracts Act, a contract may be discharged in the following ways:-
1- Performance or tender
The obvious mode of discharge of a contract is by performance, where the parties have done whatever was contemplated under the contract.
2- Mutual consent
Section 62 of the Act there is a case that if the parties to a contract agree to substitute a new contract for the old or alter the terms pf the contract, the original contract is discharged.
A contract may be terminated by mutual consent in such ways, novation, rescission, alteration and remission, waiver, etc.
This is a case of alteration of terms post contract so it may be discharged.