Module: | Pledge, Lien, Agency, and Discharge
Q18: When a bank and a borrower agree to an One-Time Settlement (OTS), or a restructuring of a loan, what type of discharge of contract does this represent?
✅ Correct Answer: C
A discharge by performance is when the loan is fully repaid.
A breach is a default.
An OTS or restructuring is a "discharge by mutual agreement" (or 'Novation' per Section 62 of the Contract Act), where the original contract is replaced by a new one with modified terms agreed upon by both parties.
A breach is a default.
An OTS or restructuring is a "discharge by mutual agreement" (or 'Novation' per Section 62 of the Contract Act), where the original contract is replaced by a new one with modified terms agreed upon by both parties.