Revocation of Contract
Revocation of a contract refers to the act of terminating or canceling a contract before it is fully performed. The Indian Contract Act, 1872 provides for revocation of contracts in certain circumstances.
Revocation of contract can take place in the following ways:
- Mutual Agreement: The parties to a contract may mutually agree to revoke the contract. In such cases, both parties must agree to terminate the contract, and any consideration given must be returned.
- Breach of Contract: If one party breaches the terms of the contract, the other party may be entitled to revoke the contract. However, this right to revoke is subject to the non-breaching party having given a notice to the breaching party and the latter not having remedied the breach within a reasonable time.
- Lapse of Time: If a contract has a specific duration, it will automatically be revoked upon the expiration of the term for which it was made.
- Impossibility of Performance: If a contract becomes impossible to perform due to unforeseen circumstances such as an Act of God, the parties may agree to revoke the contract.
It is important to note that revocation of a contract does not discharge the parties from their obligations that have accrued up to the time of revocation. For example, if a party has already performed their part of the contract, they are entitled to be compensated for their performance even if the contract is subsequently revoked.
Termination of Contract
Termination of a contract refers to the act of ending a contract before it has been fully performed. Termination of a contract can occur in various circumstances and is governed by the Indian Contract Act, 1872. The Act provides for termination of a contract in certain situations.
Termination of a contract can take place in the following ways:
- By mutual agreement: The parties to a contract may mutually agree to terminate the contract. In such cases, both parties must agree to terminate the contract, and any consideration given must be returned.
- Breach of contract: If one party breaches the terms of the contract, the other party may be entitled to terminate the contract. However, this right to terminate is subject to the non-breaching party having given a notice to the breaching party and the latter not having remedied the breach within a reasonable time.
- Frustration of contract: A contract may be terminated due to frustration of contract, which means that unforeseen circumstances have made it impossible to perform the contract. For example, if a contract is for the sale of a specific product that is destroyed before delivery, the contract may be considered frustrated and terminated.
- Performance of contract: A contract may be terminated upon completion of the performance by the parties.
- Impossibility of performance: If a contract becomes impossible to perform due to unforeseen circumstances such as an Act of God, the parties may agree to terminate the contract.
It is important to note that termination of a contract does not discharge the parties from their obligations that have accrued up to the time of termination. For example, if a party has already performed their part of the contract, they are entitled to be compensated for their performance even if the contract is subsequently terminated.