A contract is said to be discharged by rescission:
(A) When terms of a contract are altered
(B) When a party makes novation of a contract
(C) When an aggrieved party exercises his option to avoid the contract
(D) When a party to a contract waives his rights under the contract
(E) Where none of the parties has performed its part for a long time and no other party has objected against it
Choose the correct answer from the options given below:

Correct option is D

A contract is said to be discharged by rescission when the contract is canceled or terminated by mutual agreement, breach, or operation of law. Rescission releases both parties from their obligations and restores them to their original positions.

The correct conditions under which a contract is discharged by rescission include:

1. When an aggrieved party exercises his option to avoid the contract (C) – If one party breaches a contract or enters into it under fraud, misrepresentation, undue influence, or coercion, the aggrieved party can rescind the contract, thereby discharging it.
2. Where none of the parties has performed its part for a long time and no other party has objected against it (E) – If both parties fail to act on the contract for an extended period and neither party enforces it, the contract may be considered abandoned and discharged by rescission.

Information Booster:

1. When an aggrieved party exercises his option to avoid the contract (C) – Rescission can be done unilaterally when one party has a legal right to cancel the contract due to fraud, mistake, undue influence, or misrepresentation.
2. Where none of the parties has performed its part for a long time and no other party has objected against it (E) – If a contract remains unperformed for an extended period and both parties remain inactive, it is deemed abandoned, leading to implied rescission.

Additional Knowledge:

1. When terms of a contract are altered (A) - Incorrect: This is known as alteration, not rescission. In alteration, the contract remains valid but with modified terms.
2. When a party makes novation of a contract (B) - Incorrect:Novation occurs when an old contract is replaced with a new one, either by changing the parties or obligations, rather than being discharged by rescission.
3. When a party to a contract waives his rights under the contract (D) - Incorrect: This refers to waiver, not rescission. A waiver means voluntarily giving up rights, but the contract remains in force.