Section 247 The Indian Contract Act, 1872
Section 247 – The Indian Contract Act, 1872
📘 Title: Effect of novation, rescission, and alteration of contract
🔹 Bare Act Language:
“Where a contract is substituted for another contract, or where a contract is rescinded or altered, the rights and liabilities under the original contract are extinguished or modified accordingly.”
🔍 Explanation:
Section 247 deals with what happens when contracts are changed, replaced, or cancelled by mutual agreement of the parties involved.
Novation: When a new contract replaces the old contract, the old contract is extinguished, and only the new contract remains.
Rescission: When parties agree to cancel the contract entirely.
Alteration: When some terms of the original contract are changed.
In all these cases, the rights and obligations under the original contract are either terminated or modified as per the new agreement.
✅ Example:
A owes B ₹50,000 under a contract.
Later, they agree to replace the contract with a new one where A owes ₹30,000.
The original contract is extinguished, and the new contract takes effect.
📌 Key Points:
Applies when contracts are mutually changed or cancelled.
Original contract's rights and liabilities cease or change.
Requires mutual consent of the parties.
RELATED Blog
0 comments