Real Estate Council of Alberta Fundamentals Practice Exam

What does it mean when a contract is described as 'discharged'?

1. The contract is under negotiation

2. The contract was valid and has now ended

3. The contract is currently active

4. The contract is awaiting ratification

The correct answer is: The contract was valid and has now ended

When a contract is described as 'discharged,' it means that the obligations and responsibilities outlined in the contract have been fulfilled, resulting in the contract's termination. This can happen in several ways, such as through the completion of the terms agreed upon by the parties, mutual agreement to end the contract, or an event that prevents further obligations, known as a 'frustration of purpose.' Understanding the implications of a contract being discharged is crucial for all parties involved. It signifies that they are no longer bound by the terms of the contract and can engage in new agreements or transactions without the constraints of prior obligations. If a contract were simply under negotiation or awaiting ratification, it would still be considered active, meaning the parties involved have ongoing obligations and responsibilities. Therefore, the designation of 'discharged' is specifically tied to the complete and valid end of a contract's lifecycle.