DISCHARGE OF CONTRACT. A con tract may be discharged in the following ways: Performance according to its terms; a breach of such a nature as to justify the innocent party in treating the contract as rescinded or as giving rise to a right of ac tion for breach of the entire contract; rescis sion of a voidable contract, at the will of one party, as for fraud, mistake, duress; re lease; rescission by parol agreement; accord and satisfaction; cancellation and surrender; alteration (of a written contract) ; merger (in judgment); arbitration and award; im possibility ; bankruptcy ; statutes of limita tion, though the latter generally only bars the remedy. A right of, action on a contract may be discharged in any of these ways ex cept where a breach justifies the innocent party in treating the contract as rescinded, or as giving rise to a right of action, or in the case of impossibility. Williston's Wald's Pollock on Contracts. An executed contract cannot be discharged except by release un der seal or by performance, except• that a promissory note or a bill of exchange stands on a different footing; 6 Exch. 851, per Parke, B.; but only, in the United States, when the note or bill has been surrendered; Bragg v. Danielson, 141 Mass. 195, 4 N. E. 622; it is said here to have become extin guished; Slade v. Mutrie, 156 Mass. 19, 30 N. E. 168.
Discharge may be by payment under the contract, or, after breach, by an agreement which is effectual as an accord and tion (q. v.). Tender of performance, such as by delivery of goods, discharges the party; but tender of a sum of money due under the contract does not work a discharge ; the party must stand ready and willing to pay the debt, and, if sued, must pay the money into court. A substantial performance will suffice; Crouch v. Gutmann, 134 N. Y. 45. 31 N. E. 271, 30 Am. St. Rep. 608, but if the deviation is not slight, or is willful, it is otherwise; Elliott v. Caldwell, 43 Minn. 357. 45 N. W. 845, 9 L. R. A. 52; and one to whom a sum of money is tendered must not be called upon to make change ; Anson, Contr. 349.
Discharge may be by breach, though a breach, while it always gives a right of ac tion, does not always discharge the contract, for it may be broken in whole or in part, and if the latter, the breach may not be important enough to work a discharge, or the other party may not regard it as a breach but may continue to carry out the contract. See BREACH.
Where a contract between A and X is dis charged by default of X, A may (1) consider himself exonerated from any further per formance and successfully defend an action brought for non-performance ; (2) sue at once upon the contract for such damages as he has sustained by the breach without be ing obliged to show that such performance has been done or tendered by him; (3) if he has done all or a portion of that which be promised, so as to have a claim to a money payment for such performance, he may treat such a claim as due upon a new contract arising upon the promise which is understood from the acceptance of an exe cuted consideration ; Anson, Contr. 352. Prof. Huffcut in his edition of Anson's Contr.
points out that the first two propositions are illustrated in Davison v. Von Lingen, 113 U. S. 40, 5 Sup. Ct. 346, 28 L. Ed. 885; and that the second is discussed in Lake Shore & M. S. Ry. Co. v. Richards, 152 Ill. 59, 38 N. E. 773, 30 L. R. A. 33; also that A may elect and keep the contract for both parties, thus giving X a period for repent ance; Kadish v. Young, 108 Ill. 170, 43 Am. Rep. 548; but he cannot thereby increase the damages ; Dillon v. Anderson, 43 N. Y. 231.
A party may break a contract by renounc ing his liabilities under it, or by making it impossible that be should fulfill them, or by failing totally or partially to perform what he has promised. As to anticipatory breach es, see BREACH.
Where one party has, before performance is due, created an impossibility of perform ance, this is equivalent to a renunciation of the contract ; Anson, Contr. 356; U. S. v. Peck, 102 U. S. 64, 26 L. Ed. 46. So where, during performance, one party has made it impossible for the other to perform; Western Union Telegraph Co. v. Semmes, 73 Md. 9, 20 Atl. 127; Woodberry v. Warner, 53 Ark. 488, 14 S. W. 67; Bing. 14; [18951 2 Q. B. 70.
As to breaches of contracts containing conditional and independent promises, see BREACH.
A contract may contain the elements of its own discharge, which may be by non-ful filment of a condition precedent, by the oc currence of a condition subsequent, or by the exercise of an option to determine the contract reserved to one of the parties by its terms; Anson, Contr. 338. Of the first, a case in L. R. 7 Exch. 7, is in point, where a horse was warranted to have been hunted with the Bicester hounds and if it did not answer to its description, the buyer might return it. It did not answer to its descrip tion and had never been so hunted. Held, that the buyer might return it, though in jured without his fault; the sale vested the property in the buyer subject to a right of rescission in a particular event ; the de preciation in value must fall upon the per son in whom the property revested. In such case the buyer may refuse to receive the article if he discovers that the term is not fulfilled; Ganson v. Madigan, 13 Wis. 67; or on discovery he may return it ; but not, it was held, if injured while in his posses sion; Ray v. Thompson, 12 Cush. (Mass.) 281, 59 Am. Dec. 187. Instances of condi tions subsequent are bonds defensible upon a condition expressed therein and the "ex cepted risks" of charter parties.
If a statute requires the contract to be in writing, there is authority for saying that a discharge may be by word of mouth ; 5 B. & A. 66; Anson, Contr. 343 ; Wulschner v. Ward, 115 Ind. 219, 17 N. E. 273. "But if the dis charge be not a simple rescission, but such an implied discharge as arises from the making of a new agreement inconsistent with the old one, then there must be writ ing in accordance with the requirements of the statute ;" Anson, Contr. 343; Hill v. Blake, 97 N. Y. 216 ; Burns v. Real Estate Co., 52 Minn. 31, 53 N. W. 1017; contra, Stearns v. Hall, 9 Cush. (Mass.) 31.
See ESTOPPEL.