A contract may be discharged before any breach of its provisions has occurred, first, by the agreement of all parties thereto; secondly, for impossibility of performance; and, thirdly, in consequence of the bankruptcy, since the making of the contract, of one of the parties thereto. Discharge of the contract by agreement may take any of the following forms: - (1) Simple and express waiver or abandonment of the contract; (2) implied waiver by entering into a new contract inconsistent with the performance of the old; (3) non-fulfilment of some condition imposed by mutual assent and taking effect either as a condition precedent to the existence of the contract or as a condition subsequent annulling it; and (4) rescission in exercise of an express proviso in that behalf contained in the contract.

Discharge of contract before breach.

(a) Above, pp. 665 sq.

(b) Above, p. 1.

16(2)

With regard to the first of these forms of discharge by mutual assent, so long as a contract remains executory on both sides, consisting of mutual promises only, it may be discharged, before breach, by the parties' simple agreement to waive performance of, or to abandon, the contract (c). In this case each exonerates the other from the performance of his part of the contract in consideration of receiving the like exoneration himself; so that the release of each by the other is given for valuable consideration (d). And the oft-cited statement that "a simple contract may, before breach, be waived or discharged, without a deed and without consideration" (e), can only be accepted as applying to a contract wholly executory, and with the qualification that "without consideration" must be taken to mean "without other consideration than is implied in the mutual abandonment of the contract" (f). Where the contract has been executed on one side, it appears that, as a rule, the party who still remains under obligation can only be released by agreement to that effect when made under seal or for valuable consideration; and a promise or assurance of release given without consideration, either in words or unsealed writing, is of no effect (g). The only exception to this rule occurs in the case of bills of exchange and promissory notes, which may be discharged by the holder's absolutely and unconditionally renouncing, at or after maturity, his rights against the acceptor or maker, provided that the renunciation be in writing, or the bill or note be delivered up to the acceptor or maker thereof (A). All simple contracts may be discharged, before breach, by a parol agreement of waiver or abandonment, if made for valuable consideration (including mutual exoneration in the case of executory contracts); and, according to the preponderance of authority, this rule applies not only to contracts governed by the Common Law, but also to those required by statute to be put in writing (?). But such an agreement, being itself a contract, must be established by as clear evidence as would be required to prove the formation of any other parol contract (k). With regard to special contracts, the common law rule was that a covenant could not be discharged, before breach, by any agreement made between the covenantor and covenantee for valuable consideration, but without deed (/), although in all other respects than as operating to discharge the covenant, the new agreement was valid and enforceable as an independent parol contract (m). In equity, however, it was established that such an agreement should amount to a valid discharge, and the covenantee would thereafter be relieved against any attempt by the covenantor to enforce the contract at law (n). Since the commencement of the Judicature Acts it has been decided that in this respect the rule of equity shall prevail (o). The result appears to be that there is now no difference between simple and special contracts as regards the manner or form of their discharge prior to breach; and that a contract for the sale of land may be discharged, before breach, by an express parol agreement of waiver or abandonment, if made for valuable consideration, whether the memorandum of the contract were signed only or executed under seal.

Discharge by agreement.

1. Express waiver.

(c) Price v. Dyer, 17 Ves. 356, 364; Robinson v. Page, 3 Russ. 114, 119; Goss v. Nugent, 5 B. & Ad. 58, 65, 66; Vezey v. Rash-leigh, 1904, 1 Ch. 634, 636.

(d) See King v. Gillett, 7 M. & W. 55, 59; Moore v. Crofton, 3 Jo. & Lat. 43S, 445; Dobson v. Espie, 2 H. & N. 79.

(e) Dobson v. Espie, 2 H. & N.

79, 83; Edwards v. Walters, 1896, 2 Ch. 157, 161.

(/) The law is correctly stated by Parke, B., in Foster v. Dauber, 6 Ex. 839, 851: "It is competent for both parties to an executory contract by mutual agreement without any satisfaction to discharge the obligation of that contract."

Bills and notes.

Simple contracts.

Contracts required to be put in writing.

Special contracts.

{g) Foster v. Dauber, 6 Ex. 839, 851; Edwards v. Walters, 1896, 2 Ch. 157, 168; above, p. 3.

(h) Stat. 45 & 46 Vict. c. 61, ss. 62 (1), 89, adopting the rule laid down in Foster v. Dawber, 6 Ex. 839, but imposing the further requisite of writing or delivery up of the document; see Edwards v. Walters, 1896, 2 Ch. 157.

(i) Goman v. Salisbury, 1 Vern. 240; Davis v. Symonds, 1 Cox, 402, 406; Nolle v. Ward, L. R. 1 Ex. 117, 2 Ex. 135, 137, as to the contract of Aug. 12; and cases cited above, p. 908, n. (c); see Sug. V. & P. 167, 168; Benjamin on Sale, 159, 2nd ed.

(k) Carolan v. Brabazon, 3 Jo. & Lat. 200, 209; Moore v. Crofton, ib. 438, 445; Clifford v. Kelly, 7 Ir. Ch. Rep. 333; Cartan v. Bury, 10 Ir. Ch. Rep. 387, 400; Whittaker v. Fox, 14 W. R. 192; Harrison v. Brown, 14 W. R. 193, n.; Sug. V. & P. 167.

(l) Heard v. Wadham, 1 East, 619; Kaye v. Waghorn, 1 Taunt. 428; Brymer v. Thames, &e. By.

Discharge before breach of contracts to sell land.