Statute of Limitations in Discharge by Operation of Law

A contract is said to be ended, no longer binding between the parties, or discharged under the following circumstances:

Discharge by performance: When the parties involved in the contract hs made the decision to fulfil contractual obligations, it is called discharge of contract by performance. The performance of one party triggers the performance of another person.

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Discharge of contract by substituted agreement: When the existing contract gets deserted, or the terms of the existing contract are altered with mutual acceptance by both parties, there is a discharge of the existing contract by substituted agreement. Agreement discharge may happen through Novation, Rescission, Alteration and Waiver.

Discharge by lapse of time: A contract shall remain discharged if it is not enforced within a definite period called the period of limitation.

Discharge by operation of law: When either party involved in a contract makes changes or alterations to the written agreement, the other party can consider the contract to be discharged due to unauthorized material alteration made to the agreement.

Discharge by impossibility of performance: After a contract is established between the parties, certain actions can occur, which makes the contract unable to be performed further. There is no fault on either party, but the contract may turn to be illegal or impossible to be performed. Hence the contract is discharged due to the impossibility to perform further.

Discharge by accord and Satisfaction: When parties involved in the contract accept to performance which is other than the originally accepted performances, the contract is discharged by accord, and Satisfaction.

Discharge by the breach: When either party involved in the contract fails to carry out his or her performance, delivers a subpar performance or does not perform as per the contractual obligations, the other party can discharge the contract due to breach.

Discharge of Contract by the Operation of Law

The contract is said to be discharged by operation of law under the following circumstances:

A material alteration of a written document that is not authorized: When one of the parties involved in the contract changes the written documents or makes alterations to the written documents without consulting or seeking consent from the other person in the contract, the latter can treat the contract is as discharged. Some of the material alterations include making changes to the quantity, increasing or decreasing the price, changes to the liability of the person who signed the contract, and changes made to date.

Statutes of Limitations: The contract which is discharged can be enforced within a definite period. This definite period is termed a period of limitation. Law determines the period of limitations for different contracts. The limitation period for using a person’s right to recuperate an immovable property is 12 years. The limitation period for using a person’s rights for debt recovery is 3 years. By the expiration of the limitation period, the obligations under the contract become barred by the passage of time. Eventually, suppose an immovable property or debt is not recuperated within 12 years or 3 years respectively of its payment becoming due. In that case, the corresponding debt ceases to be paid and gets discharged due to a lapse of time.

Insolvency: Most of the debtor’s contract shall be discharged due to filing of insolvency. The debtor or the entities can no longer pay the outstanding debts as per the contractual obligations.

Merger: The contract shall also be discharged due to mergers. Mergers can happen between inferior rights and special rights in the contract for the same person. Let a person understand this with an example. X takes a factory on rent from Y for 3 years for production activity. By the end of 2.5 years, before the expiry of the initial lease contract, X purchases the factory premises from Y. X is now the owner of the factory premises. His inferior rights associated with renting the factory are merged with special ownership rights of the factory premises. The initial lease contract does not exist any longer.

Death: By the promisor’s death, the contract is considered to be discharged where personal ability is involved. When the deceased person’s legal representative is available per contract, the rights and liabilities are passed to the legal representative.

Statute of Limitations
When one of the persons (obligor) involved in the contract breaches by not performing contractual obligations, the other person (obligee) can sue against the obligor in the court of law for the damages incurred. The right to sue does not remain with the obligee for a long period. There is a definite period within which the suit must be brought to the court of law. The rule relating to statutes of limitations differ from state to state. Each state determines the definite period within which the suit must be brought to the court of law. The period derivation depends upon the different types of legal wrongdoings, contractual breaches, torts, offenses, etc. The definite period for taking action is between 2 and 6 years for most statutes of limitations. The Uniform Commercial Code has a four-year statute of limitations. The period begins from the day on which the suit could have been filed in the court of law or from the moment the contract was breached. Suppose an obligee does not seek assistance for the contractual breach within the specified time period as mentioned by statute limitations. In that case, he or she cannot further go to court to dispute. The obligee shall have no legal remedy. If the parties involved in the contract are in a good relationship even after the breach of contract, the obligee can recover the damages incurred. This can be done by debt offsetting, which the obligee owes to the obligor, by paying for another debt.

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