Section 62 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 62 is a single sentence with a large effect: if the parties to a contract agree to substitute a new contract for it, or to rescind it, or to alter it, the original contract need not be performed. It is the section behind most contract amendments, restatements and changes of debtor. If you are restructuring a deal, a properly drawn agreement makes clear what is replaced and what survives.
If the parties to a contract agree to substitute a new contract for it, or to rescind or alter it, the original contract need not be performed. The word is "agree": the change comes from the parties, not from one side alone. The Act's illustrations show a new debtor replacing the old one, a mortgage replacing a debt, and an order that fails because the third party never assented.
What the section says
"If the parties to a contract agree to substitute a new contract for it, or to rescind or alter it, the original contract need not be performed."
Three routes are named, and each needs the agreement of the parties.
| Route | Plain meaning | Effect under s.62 |
|---|---|---|
| Substitute a new contract (commonly called novation) | A new contract takes the place of the old one | The original contract need not be performed |
| Rescind | The parties agree to cancel the contract | The original contract need not be performed |
| Alter | The parties agree to change its terms | The original contract (as it stood) need not be performed |
The section does not use the word "novation"; it speaks of agreeing "to substitute a new contract". Likewise, the section does not say what form the agreement must take or what it needs by way of consideration. It states only the result: "the original contract need not be performed".
Notice who must agree. The text says "the parties to a contract". If a new party is to be brought in, the Act's illustration (a) shows all three persons agreeing.
The Act's illustrations
| Illustration | Facts | Result |
|---|---|---|
| (a) | A owes money to B under a contract. A, B and C agree that B shall thenceforth accept C as his debtor, instead of A. | The old debt of A to B is at an end, and a new debt from C to B has been contracted. |
| (b) | A owes B Rs. 10,000. A and B arrange that A gives B a mortgage of his estate for Rs. 5,000 in place of the debt of Rs. 10,000. | This is a new contract and extinguishes the old. |
| (c) | A owes B Rs. 1,000 under a contract. B owes C Rs. 1,000. B orders A to credit C with Rs. 1,000 in his books, but C does not assent. | B still owes C Rs. 1,000, and no new contract has been entered into. |
Illustration (a) is the classic change of debtor, with all three persons agreeing. Illustration (c) shows the limit: where one of the persons whose agreement is needed (C) does not assent, nothing is substituted.
A modern example (ours)
Pioneer Print has a one-year contract to supply brochures to Quartz Hotels at Rs. 10 a copy. After six months, Pioneer, Quartz and a new group company, Quartz Hospitality LLP, sign a short letter: from 1 July, Quartz Hospitality will be the customer, and the price will be Rs. 12 a copy. Under s.62 the original contract with Quartz Hotels need not be performed, because the parties agreed to substitute a new contract. If instead Quartz Hotels alone told Pioneer "send the bills to the LLP from now on", and Pioneer never agreed, the Act's illustration (c) suggests that no new contract has been made.
What can the parties change?
The section is itself a statement of what parties can do by agreement. A contract can also say how it may be varied, for example "no change is valid unless in writing and signed by both parties". The text of s.62 does not address such clauses and does not require writing; it says "agree".
Practical points
- Say what is replaced. Use words like "this agreement replaces the earlier agreement dated ..." and list what carries over (security, guarantees, notice periods).
- Get every affected person to sign, including any third person whose rights or liabilities change. Illustration (c) shows what happens if one does not assent.
- Alter in writing, even though the section does not require it, so there is proof of the agreed change.
- Check security and guarantees. A guarantor's position can change if the main contract changes; our overview of indemnity and guarantee explains where to read further.
- Update stamping and registrations as advised; see our guides, as this article gives no figures.
- For a promisee who simply gives up or reduces a claim, see sections 63 to 65.
Need help amending or restating a contract?
Changing a customer, a price or a schedule midway through a contract needs a clear document that all affected parties sign. Our agreement drafting service can prepare a novation, amendment or termination agreement that says exactly what stays and what goes. Share the original and a summary of the change you want.
Key takeaways
- If the parties agree to substitute a new contract, or to rescind or alter the old one, the original need not be performed.
- The change must be agreed by the parties; the Act's illustration (c) shows no new contract where a necessary person did not assent.
- A new debtor can replace the old one if all three agree (illustration (a)).
- A mortgage in place of a larger debt can be a new contract that extinguishes the old (illustration (b)).
- The section does not mention form; put changes in writing anyway.
Read next
- Sections 59 to 61: appropriation of payments between debts
- Sections 63 to 65: remission of performance, rescission and restitution
- Specimen deed of guarantee: bank and performance guarantee format
Disclaimer: Based on the text of the Indian Contract Act, 1872 as consulted on 1 October 2026. Many questions under this Act turn on case law and on the wording of the particular contract, which this article does not cover. It is general information, not legal advice; check the official text and take advice before acting.