5. Modes of discharging a are several modes of discharging a contract, all of which we cannot discuss here. Among them, however, are the following: discharge by agreement, by payment or performance, by novation, by breach, by perform ance becoming impossible, by operation of law, by confusion, by compensatipn.
6. Discharge by the parties who make a contract may in turn agree to cancel it. The contract itself may contain a stipulation for its cancellation under certain conditions. Thus, in an in surance policy it may be provided that if the risk in sured is increased or changed, the policy shall be im mediately void. The release of an obligation may be made either expressly or tacitly. The release would be considered to be tacit when the creditor voluntarily surrenders to the debtor the original title of the obli gation, unless there is proof of a contrary intention.
7. Discharge by payment or payment is meant not only the delivery of a sum of money in satisfaction of an obligation, but the per formance of anything to which the parties are respec tively obliged. If a contract is bilateral, that is, in volves the doing of something by both parties, then the performance of obligation by one party discharges that person, but the contract is not wholly discharged, because he is entitled to enforce performance by the other party thereto.
Whether the payment or performance is sufficient will depend upon the construction of the contract. Generally speaking, if the debtor has substantially performed his part of the contract, he may recover payment, but will be subject to a deduction for such damages as his omission or deviation from the con tract may have caused the other party, tho this omis sion or deviation must be slight and not such as to deprive the other party of his rights. If the omission or deviation cannot be adequately compensated for in damages, the performance may be held incomplete.
A contract may provide that it must be performed to the satisfaction of the creditor, and the debtor will be strictly held to his obligation to meet the personal taste or judgment of the creditor, where this is in tended. It has been held in some cases that under such circumstances performance will be sufficient if it satisfies the mind of a reasonable man. The obligation may be to deliver a thing determined in kind only; in this case, the debtor need not give a thing of the best quality, nor can he offer one of the worst : he must offer a thing of merchantable quality.
Unless the contract so stipulates, a debtor must per form or pay his obligation as a whole, and not in parts; and if a creditor has a right under his contract to receive a specific thing, he is not bound to accept another, tho it be of greater value than the thing due.
If the obligation is to do a certain thing, the parties to the contract may agree that money shall be paid in lieu of such performance, and the new contract dis charges the old.
Generally speaking, where a negotiable instrument is given in payment of a debt which is due, under the English law the original obligation is only condition ally discharged, in which case if the instrument is not paid, the creditor may sue on the original contract, or on the instrument.
8. Time and place of payment or performance.— If the contract does not fix a date for performance, it is implied that the contract is to be performed within a reasonable time; but performance on a certain date may be of the essence of the contract. If so, the con tract will be strictly construed. Performance later will not be binding on the other party, unless he waives the delay, as, for example, by agreeing to per formance at a later date, or by accepting perform ance when it is made. In mercantile contracts the assumption is that time, when specified, is an essen tial condition, and when a person promises to do a thing "as soon as possible," he is bound to do it within a reasonable time.
Payment must be made in the place expressly or impliedly indicated by the contract. As a general rule, if no place is indicated and the thing to be paid or delivered is a certain specific thing, payment must be made at the place where the thing was at the time the contract was made. In all other cases, as, for example, where money is to be paid, the general rule is that payment must be made at the domicile of the debtor. Thus, in a Manitoba case it was held that when a contract is silent as to the place of payment, and the debtor is a contractor who has done work in another province, the money will be payable at his residence.' In a Quebec case 2 it was held that the domicile which determines the place of payment is the debtor's actual domicile at the place of payment, and not some different domicile which he had at the time of the contract. The fact that the debtor may have paid certain instalments at the domicile of the cred itor is not in itself of such a nature as to modify the law, or the rights of the parties in this respect. The court refused to hold that the defendant had, by vir tue of any such payment at the domicile of the cred itor, waived his right to pay the subsequent instal ments at his own domicile.