(a) What is a contract?
(b) List and explain four ways by which a contract can be discharged.
Explanation
(a) A contract is an agreement that is enforceable in law. It may be written or oral.
(b) WAYS BY WHICH A CONTRACT CAN BE DISCHARGED
(i) By agreement
(ii) By performance
(iii) By breach
(iv) By frustration
(v) By lapse of time
(vi) Operation of law.
(vii) Act of God.
EXPLANATIONS
(i) By agreement: Both parties may decide to end the contract by mutually agreeing that the contract be ended.
(ii) By performance: A contact is automatically brought to an end if each party has performed his own part of the agreement, e.g. contract to supply machinery to end when the machinery is supplied and paid for.
(iii) By breach: A contract ends if one party fails to perform his own part of the contract.
(iv) By frustration: A contract is ended when factors that are not only beyond control but also not contemplated upon by both parties prevent any party from performing his own part, e.g. death or sickness of one party.
(v) By lapse of time: A contract is terminated if the time fixed for its performance has elapsed.
(vi) Operation of law: Contracts could be discharged when it becomes legally impossible to operate. e.g. a court declaring one party bankrupt, insane or subsequent illegality of the object of the contract.
(vii) Act of God: Contracts can be terminated by the occurrence of natural events like flooding, earthquake and storm