Discharge of Contract by New Agreement
Discharge of Contract by New Agreement: Understanding the Basics
As a business owner, it`s important to understand the legalities involved in contracts and agreements. Contracts help define the terms of a business transaction and offer a level of security for all parties involved. However, sometimes, parties may wish to modify or release themselves from their obligations under the contract. This is where discharge of contract by new agreement comes into play.
Discharge of contract by new agreement occurs when parties agree to cancel or modify a previous contract as part of a new agreement. This can be done through express or implied agreement. Express agreement involves the parties negotiating and agreeing to terms that release them from their previous obligations. Implied agreement, on the other hand, occurs when the conduct of the parties indicates their intent to discharge the previous contract.
One of the benefits of discharge of contract by new agreement is that it enables parties to modify terms within a contract that no longer work for them. This flexibility can be especially useful in business transactions, where circumstances and needs can quickly change. It allows businesses to adapt their contracts to changing situations, without having to terminate the entire agreement.
However, it`s important to note that discharge of contract by new agreement is not always an option. Contracts that are considered „unilateral“ cannot be discharged by new agreement. Unilateral contracts are agreements in which only one party is obligated to perform. For example, a reward contract, where only the person who performs the action specified in the contract is entitled to the reward.
It`s also important to ensure that the new agreement properly discharges the previous contract. If the new agreement is not clear or lacks formality, it may not discharge the previous contract and both parties may still be bound by its terms.
In conclusion, discharge of contract by new agreement can be a useful tool for businesses looking to modify their contracts or release themselves from previous obligations. However, it`s important to understand the legalities involved and ensure that the new agreement properly discharges the previous contract. Consultation with legal professionals can help ensure that discharge of contract by new agreement is executed properly and effectively.