Question

X owes Rs. 2,00,000 to B enters into an arrangement with him thereby giving B a mortgage of his estate for Rs. 1,50,000. The contract is discharged under __________.

• A. novation
• B. alteration
• C. rescission
• D. surrender

Answer 1

The correct option is A novation

• Under section 62 to 64 of the Contract Act, there are different methods by which a contract is discharged through mutual agreement. One such method is 'novation' under section 62, which means substitution of a new contract in place of the old existing. This new contract may be either between the same parties or between different parties, the consideration being mutually the discharge of the old contract.
  
• In this case, the old contract was between A and B regarding the money owed by A and then a new agreement was entered into which gave B the mortgage of A's estate. This means that the old contract was substituted by a new contract with different object which is the Novation of the contract.