Section 62 The Indian Contract Act, 1872
Certainly! Here's a detailed explanation of Section 62 of the Indian Contract Act, 1872:
⚖️ Section 62 – Effect of novation, rescission, and alteration of contract
📜 Bare Act Language:
“If the parties to a contract agree to substitute a new contract for it, or to rescind or alter it, the original contract need not be performed.”
✅ Explanation in Simple Terms:
Section 62 lays down three important ways a contract can be discharged (i.e., it no longer needs to be performed):
Novation – Replacing the old contract with a new contract.
Rescission – Cancelling the contract by mutual agreement.
Alteration – Changing the terms of the original contract by mutual agreement.
If any of these are done, then the original contract is discharged, and performance of the original terms is no longer required.
🔄 Types Explained:
🔹 1. Novation:
A new contract is created, either:
Between the same parties, or
With different parties.
The old contract is no longer binding.
🔸 Example:
A owes B ₹10,000. B and A agree that C will pay B instead. This is novation — the old contract between A and B is replaced by a new one involving C.
🔹 2. Rescission:
Both parties agree to cancel the contract.
No party needs to perform any obligations.
🔸 Example:
A agrees to sell goods to B. Later both mutually agree to cancel the deal. This is rescission.
🔹 3. Alteration:
The terms of the contract are modified.
The original contract ends, and the altered one takes its place.
🔸 Example:
A agrees to supply 100 chairs to B by 10th July. Later, both agree to change the date to 20th July. This is alteration.
📌 Effect of Section 62:
The original contract becomes void and need not be performed.
The new, altered, or rescinded terms take legal effect.
🏛️ Important Case Law:
Lata Construction v. Dr. Rameshchandra Ramniklal Shah (2000) –
The Supreme Court held that for novation to apply, the new contract must be valid and enforceable. If the new contract is vague or uncertain, novation will not be effective.
RELATED Blog
0 comments