CONTRACTS
WHICH NEED NOT BE PERFORMED
Law states that if the parties to a contract agree to substitute a new contract for it or to rescind or alter it, the original contract need not be performed. Thus, A contract need not be performed under following circumstances – novation, rescission, alteration and remission.
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| BASICS IN INDIAN LAW |
(a) Novation
Novation means substitution, that is, replacement of one obligation by another. Where a given contract is substituted by a new contract it is called Novation. On novation, the old contract ceases to be enforceable and need not be performed. Novation can take place with mutual consent. However novation can take place by substitution of new contract between the same parties or between different parties.
For example, A owes money to B under a contract. It is agreed between A, B and C that B shall thenceforth accept C as his debtor, instead of A. The old debt of A to B is at an end, and a new debt from C to B has been contracted.
(b) Rescission
Recession means ceding back. In rescission, the old contract is cancelled and no new contract takes its place. Contract may be rescinded by mutual agreement of the parties or by implication of conduct. But is not a unilateral act. Once rescinded, parties are not obliged to perform their part under the contract.
(c) Alteration
Where the contract is altered, the original contract is rescinded. Alteration involves changes in the terms of contract by mutual consent, without change of parties. Again, there can be no unilateral material alteration to a contract. Unilateral alteration is void.
(d) Remission
Remission means waiver. Law provides that every promisee may dispense with or remit, wholly or in part, the performance of the promise made to him, or may extend the time for such performance, or may accept instead of it any satisfaction which he thinks fit. For example, A owes B Rs. 5000/-. A pays Rs. 2000/- to B, and B accepts it in satisfaction of the whole debt. The whole debt is discharged. The balance is deemed to be remitted.
Remission can be in following forms –
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Dispense with performance
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Remit, wholly or in part
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Extend Time
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Accept any other satisfaction
Remission is a unilateral act of the promisee and does not require consideration. The provision is based on contractual nature of obligation and a person’s right to determine for himself.
