DISCHARGE OF CONTRACTS 1. Discharge by breach.—The failure of one party to a contract to perform his part or undertaking is a breach of the contract, and gives rise to an action by the other party for damages that he may have sus tained. The breach may also discharge the other party from the performance of his obligation. Whether the breach will have the effect of discharg ing the other party will depend upon the circum stances of the particular case. A creditor may in cer tain cases demand specific performance of the obli gation, or he may be authorized to execute it at the debtor's expense, or the contract be set aside. There are exceptions to the rule, however. For ex ample, the seller of a chattel cannot demand the dissolution of the sale because the buyer fails to pay the price, unless there is a special stipulation to that effect in the contract. But a party to a contract may be estopped from seeking a recision of it for non performance, when he has himself done something that makes it impossible to restore the debtor to his former position. It has been held in Quebec that perform ance after action brought to rescind a contract is not a valid ground of defence, and that no notice of fail ure to perform the undertakings of a contract is re quired as a condition precedent to an action to rescind the contract for non-performance.
Under the following circumstances there will be a breach of contract and the contract be discharged: 1. Where one of the parties does not perform his obligation or promise; 2. Where one of the parties renounces his liabili ties under the contract; 3. 'Where one of the parties does something which renders performance of the contract impossible.
2. Breach thru failure of one party to a contract has failed in performance, as we have already said, the injured party may or may not be discharged from the performance of his part of the contract. He may merely have a right of action-for damages. The distinction depends upon whether the contract is divigible or indivisible, or whether the prom ises in the contract are independent of one another or mutually dependent. Thus, if a contract is divisi
ble and the promises are independent of one another, as, for example, if the contract as a whole is made up of a series of contracts, a breach of one of them need not discharge the others : but if the contract cannot be broken up into parts, and the promises contained in it depend upon one another, so that if one is broken all are broken, a breach of performance by one party will discharge the other, and also give that other an action in damages, if he has suffered damages.
The courts differ in their interpretation as to whether given contracts are divisible or indivisible.
The Supreme Court of the United States has held that if A contracts to sell to B 600 bushels of corn in three monthly instalments of 200 bushels each, the con tract is indivisible, and that if A fails to deliver one instalment, ,the whole contract is discharged. In England, the contrary is held to be law. The Su of Canada has held that an agreement between the parties to several transactions involving litigation, to do a series of acts in settlement of their differences, is divisible, and a performance of part of them will be held binding and effective, notwithstand ing the failure to perform the whole, more particularly as against the party thru whom such failure appears.
A person sold a restaurant to another, and part of the price was to be paid at the time of the contract, part when the license should be transferred, and the balance in monthly payments; the vendor turned over the restaurant to the purchaser, but later re-took pos session. The purchaser, on the other hand, made no attempt to get the license transferred, and the vendor did not offer to assist him. Later, the purchaser asked that the contract of sale be set aside and that he be re imbursed what he had paid, alleging that he had dis possessed himself. It was held that, as both parties had failed to execute their promises and apparently did not wish to carry out the contract entered into be tween them, there was no need to pronounce it dis solved.