Question

In which of the following cases a contract is discharged by operation of law?

• A. Unauthorized alteration
• B. Accepting any other satisfaction instead of performance
• C. Extension of time
• D. Recession

Answer 1

The correct option is A Unauthorized alteration

After a contractual relationship has been established between the parties, there are several ways in which a contract can be discharged. This may occur by the actions of the parties, operation of the law or by events outside the control of the parties. A contract may be discharged independently of the wishes of the parties. There are rules of law that will discharge a contract in certain circumstances, such as:

• Merger- A simple contract is discharged by a deed made between the same parties dealing with the same subject matter. The lower form of contract is said to ‘merge’ into the deed.
  
• Bankruptcy- a party to a contract becomes a bankrupt under the Bankruptcy Act 1966 and is released from obligations under the contract and the other party may prove the debt in the bankrupt’s estate.
  
• Material alteration- Where one party to a contract makes a material alteration to the terms of a written contract without the consent of the other party, the party benefiting from the alteration is prevented from maintaining any action under the contract.