Discharge of a contract by operation of law refers to the termination of a contract that is not due to an agreement between the parties involved in the contract. Instead, it is due to the operation of law or legal principles that void the contract in certain circumstances. In this article, we will explore the various methods of discharge of a contract by operation of law.
1. Impossibility of Performance
This method of discharge of a contract by operation of law arises when the performance of a contract becomes impossible due to unforeseen circumstances that occur after the contract was signed. These circumstances can be natural like earthquakes, floods, or hurricanes, or human-made like wars, strikes, or government regulations. In such a scenario, the contract becomes void, and parties are not obligated to perform their duties.
2. Frustration of Purpose
Frustration of purpose is another method of discharge of a contract by operation of law that occurs when the purpose of the contract becomes impossible due to unforeseen circumstances beyond the control of the parties involved. For example, if a contract was signed between two parties to lease a building for a specific purpose, and that purpose is frustrated by a fire that destroys the building, the contract becomes void.
3. Breach of Contract
Breach of contract is another method of discharge of a contract by operation of law that arises when one of the parties involved fails to fulfill their contractual obligations. When one party breaches the contract, the other party can legally terminate the contract. The party affected by the breach can also seek damages for the losses incurred.
4. Operation of Law
Operation of law occurs when provisions of the law come into effect that makes the performance of a contract impossible or illegal. For example, if a contract was made between two parties that involves an illegal activity like drug trafficking, the contract becomes void.
5. Insanity or Death
The death or insanity of one of the parties involved in a contract can lead to the discharge of the contract by operation of law. The contracts become void and unenforceable in such situations.
In conclusion, discharge of a contract by operation of law can occur when one or more of the above circumstances arise. The parties involved in a contract need to ensure that the contracts they sign are lawful, and their obligations can be fulfilled. In situations where unforeseen circumstances arise, parties can seek legal advice to determine the best course of action to take.