Discharge by Agreement — MCQs

All questions with answers and explanations

Read the full set here, or use the practice card above to test yourself one question at a time.

1. Section 62 covers all of the following EXCEPT:

   • Novation
   • Rescission
   • Alteration
   • Frustration (correct answer)

   Explanation. Section 62 covers novation, rescission, and alteration as forms of discharge by agreement. Frustration is covered separately under Section 56.

2. Novation requires:

   • Only the debtor's consent
   • The consent of all parties involved, including any new party (correct answer)
   • A court order
   • No consent at all, since it happens automatically

   Explanation. Novation requires the consent of all parties involved, including any new party being brought into the substituted contract.

3. What distinguishes rescission from novation?

   • Rescission always involves a new party; novation never does
   • Rescission simply cancels the contract with nothing replacing it, while novation substitutes a new contract (correct answer)
   • They are legally identical
   • Rescission requires court approval, novation does not

   Explanation. Rescission is a plain cancellation with no replacement, whereas novation substitutes an entirely new contract for the old one.

4. Under Section 63, a promisee can do all of the following WITHOUT needing fresh consideration EXCEPT:

   • Dispense with or remit performance, wholly or in part
   • Extend the time for performance
   • Accept a different satisfaction instead of the original promise
   • Force the promisor to pay double the original amount (correct answer)

   Explanation. Section 63 allows a promisee to remit, extend time, or accept different satisfaction without fresh consideration — it does not allow demanding more than originally promised.

5. Section 63 is a genuine exception to which general rule?

   • The rule that offers must be communicated
   • The rule that "no consideration, no contract" (correct answer)
   • The rule on capacity to contract
   • The rule on free consent

   Explanation. Section 63 lets a promisee remit or accept different satisfaction without needing any fresh consideration from the promisor — a direct exception to the general consideration rule.

6. "Accord and satisfaction" refers to:

   • A separate Indian Contract Act provision distinct from Section 63
   • The common-law name for what Section 63 already permits — agreeing to and carrying out a different performance (correct answer)
   • A type of criminal settlement
   • A remedy available only in international contracts

   Explanation. "Accord and satisfaction" is not a separate statutory provision — it is the common-law label for the situation Section 63 already covers.

7. According to Scarf v. Jardine (1882), a creditor who accepts a new debtor in place of the old one:

   • Can still hold the old debtor liable as well
   • Cannot also hold the old debtor liable (correct answer)
   • Makes the new debtor's liability void
   • Needs a court order to complete the change

   Explanation. Lord Selborne described novation as a new contract replacing an existing one. A creditor who accepts the new debtor cannot also hold the old one.

8. Alteration under Section 62 differs from novation because alteration:

   • Always brings in a new party
   • Changes one or more terms between the same parties, without bringing in anyone new (correct answer)
   • Cancels the contract entirely
   • Requires the promisee to pay additional consideration

   Explanation. Alteration changes specific terms of the contract between the same parties; if a new party is involved, it can only be novation, never alteration.

9. A owes B 5,000 rupees. A pays, and B accepts, 2,000 rupees in satisfaction of the whole debt, at the time and place the debt was payable. Under Section 63:

   • Only 2,000 rupees is discharged
   • The whole debt is discharged (correct answer)
   • The agreement is void for want of consideration
   • B can recover the balance later

   Explanation. Section 63, Illustration (b): the whole debt is discharged.

10. A owes B 1,000 rupees and B owes C 1,000 rupees. B tells A to credit C in his books but C does not assent. Under Section 62, Illustration (c):

    • A's debt to B is ended
    • No new contract is made and B still owes C (correct answer)
    • C becomes A's creditor
    • B is released

    Explanation. Novation needs the consent of all parties; C did not assent.