There is a very old statement that “All contracts are an agreement, but all agreements are not contracts” which makes clear that an agreement is different from a contract. Without knowing the fact, parties enter into thousands of agreements daily, which may or may not bound us legally. Those which bind us legally are known as a contract, while the rest are agreement. Section 2(e) defines the term agreement and section 2(h) of the Indian Contract Act talks about contract. The Indian contract act is a very age old Act which came into existence even before India getting independence. Previously, people used to enter into contracts daily and most of them did not fulfil the same. In order to prevent that, the Indian contract act came into existence which provides a legal effect to the contracts.

Discharge of contract

Discharge simply means to release, terminate or cancel something. So the discharge of contract means to cancel the contract which is made between the parties. The Indian Contract Act of 1872 talks about various ways by which the contract gets discharged. One of the ways by which the contract gets discharged is due to lapse of time.

The other ways by which the contract gets discharged are :

  1. Discharge by Performance
  2. Discharge by Agreement or Consent
  3. Discharge by Impossibility of Performance
  4. Discharge by Operation of Law
  5. Discharge by Breach of Contract

Discharge of contract by Lapse of Time

The Limitation Act, 1963 prescribes a specified period for performance of a contract. If the promisor fails to perform and the promisee fails to take action within this specified period, then the latter cannot seek remedy through law. It discharges the contract due to the lapse of time.

So, as already mentioned, there is a stipulated time period by which the parties to the contract needs to fulfil their obligations. But, if the parties fails to fulfil their obligation within that stipulated time, then the contract gets discharged. Normally, the stipulated time period to fulfil the obligations is 3 years. If the party to the contract fails to perform their duty within the stipulated time and if the aggrieved party also fails in filing the complaint within a stipulated time, then the contract gets discharged automatically and the aggrieved party can’t blame the defaulted for the fulfilment of the contract. So, as per the Limitation Act, 1963, there is a time limit by which the parties has to fulfil the contract known as the period of limitation.

The Limitation Act, 1963 specifies the period of limitation for various contracts. For example, the period of limitation for exercising the right to reclaim an immovable property is twelve years, and the period of limitation for exercising the right to recover a debt is three years. The contractual rights cannot be enforced after the limitation period has expired. In other words, if a debt is not paid and the creditor does not file a suit against the buyer for recovery of the amount within three years after its payment has become due, it becomes time-barred and is discharged owing to the passage of time.

In civil suits, the obligations and liabilities in contracts are barred by limitation. The provisions of law are stated in the Limitation act.

The Limitation Act 1963 tells that a contract should be performed within a specific period called period of limitation. If it is not performed within that stipulated time and if no action is taken by the aggrieved party within that stipulated time he is deprived of his remedy at law.

Illustration 1.: A took Rs.50,000/- loan from B and agrees to pay instalments every month for the next 6 years.  But, A failed in paying even one instalment. B calls him a few times but then gets busy and takes no action. Three years later, he approaches the court to help him to get his money back. But the court rejects his suit since he has crossed the time-limit of three years to recover his debts.

Illustration 2: B owes Rs.20,000 to A. The last date for the repayment of the loan has expired and A does not file a suit against B for three years. A then loses the right to recover the money back, because the contract gets discharged.

Illustration 3:  the price of goods sold without any stipulation as to credit should be paid within three years of the delivery of the goods. If the price is not paid and creditor does not file a suit against the buyer for the recovery of price within three years the debt becomes time-barred and hence irrecoverable.


The Indian Contract Act, 1872 is an act which prevents the parties from entering into  unnecessary legal agreements. There are various ways by which a contract gets discharged. Actually, the parties enter into contracts with the intention of fulfilling the contracts. But, in certain cases, the contract gets discharged due to several reasons. The various ways by which  a contract gets discharged are by performance, by breach, by lapse of time, by frustration or impssibility, by supervening impossibility etc. The contract gets discharged by lapse of time, if the party to the contract fails to fulfil the obligation within a stipulated time period and the aggrieved party fails to file the case within that period. According to the Limitation Act, 1963, the time period to file the complaint by the aggrieved party is mostly 3 years and aftet that time period the contract gets discharged automatically and the aggrieved party can’t claim for the money.

Actually, many people are unaware of the time limit by which a contract gets discharged, this is the reason why many people fails in filing the complaint to the concerned authorities within that time. So. In my opinion, in schools, basic law should be a compulsory subject and each and every person should know the basic laws. So, that no one should be badly affected in any way due to his lack of knowledge in laws.


  1. Discharge by Operation of law and by Lapse of time – Finlawportal
  2. Discharge of Contract – Law Times Journal

Aishwarya Says:

I have always been against Glorifying Over Work and therefore, in the year 2021, I have decided to launch this campaign “Balancing Life”and talk about this wrong practice, that we have been following since last few years. I will be talking to and interviewing around 1 lakh people in the coming 2021 and publish their interview regarding their opinion on glamourising Over Work.


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In the year 2021, we wrote about 1000 Inspirational Women In India, in the year 2022, we would be featuring 5000 Start Up Stories.

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