Contracts and Sales Multistate Bar Practice Exam

What is required for a discharge by cancellation of a contract?

1. Destruction or surrender of the contract

2. Written agreement between parties

3. A verbal agreement between parties

4. Partial performance of contract

The correct answer is: Destruction or surrender of the contract

In the context of contract law, a discharge by cancellation typically requires the destruction or surrender of the contract, meaning that the parties involved have agreed to terminate or nullify the existing contract. This can be achieved through various means, such as physically destroying the written agreement or returning it to the other party, indicating that both parties are no longer bound by its terms. A cancellation emphasizes the mutual intention of both parties to terminate their obligations under the contract, leading to a complete discharge from any future performance. This aligns with the principle that a contract is an agreement, and so if both parties agree that they wish to cancel it, a clear method of doing so—such as destruction or surrender—is necessary to eliminate any potential confusion about the status of their obligations. The other options, while they may relate to termination in some contexts, do not adequately reflect the formal requirements for a discharge by cancellation. A mere written or verbal agreement, for example, may not fulfill the requirement for a clear action that demonstrates the intent to terminate the contract outright. Partial performance does not imply cancellation either, as it indicates that some obligations have been completed without necessarily ending the contract entirely. Therefore, the clear, affirmative action of destruction or surrender is essential for achieving a discharge by cancellation of