Discharge by agreement

A contract may be discharged by agreement when both parties agree to bring the contract to an end and release each other from their contractual obligations. For a contract to be discharged through agreement there must be Accord & Satisfaction.

• Accord = agreement

Each party must agree to end the contract. The agreement must be freely given.

• Satisfaction = consideration 

Both parties must also provide consideration. If both parties have continuing obligations then generally the consideration will be simply each of them giving up their rights under the contract. The only time consideration becomes an issue is where one party has fully performed their part of the contract when the other has not. The non-performing party must then provide consideration to make the agreement binding. Also if the agreement is made by deed there is no requirement to provide consideration. There is in effect a contract to end a contract.