8 - Discharge of a contract

Question 1

ways of discharging contract

Answer 1

• perfromance
• ageement
• breach
• frustration

Question 2

discharge of contract

Answer 2

where a contract comes to an end

Question 3

perfromance

Answer 3

A contract isn’t discharged until all of the obligations are performed.
The general rule is that the performance must match the contracts obligations

Question 4

Cutter v Powell 1795 –

Answer 4

correct good were delivered in wrong size cases – part performance is no performance

Question 5

modification of the general rule of perfromace

Answer 5

• Severable contracts
• Part Payment
• Where Substantial Performance is achieved
• Acceptance of part performance can arise if both parties agree, but the agreement must be genuine
• If either party is prevented from performing
• If one party has tendered performance which has been refused by the other then obligations are discharged

Question 6

Startup v Macdonald 1843 –

Answer 6

the contract was to deliver at the end of March. The seller did on 31st March on Saturday – if a party offers to perform and is refused by the other party, then payment is recoverable

Question 7

Time Of Performance

Answer 7

A failure to preform on time is often a breach of warranty, which then allows damages but not a repudiation of the contract

Question 8

Where time is of the essence, repudiation can follow from a breach if:

Answer 8

• Both parties had made this clear
• The subject matter dictates such
• A time extension is given on the proviso that repudiation will occur if this deadline is not met

Question 9

agreement

Answer 9

As a contract can be formed by an agreement it makes sense that it can be discharged with an agreement

Question 10

Unilateral discharge

Answer 10

only one party discharges the contract

Question 11

bilateral discharge

Answer 11

– both parties discharge the contract

Question 12

Williams v Roffey 1990

Answer 12

extra money was promised to the builders if they completed their contract on time. They agreed to end a contract but consideration must be provided to end the contract

Question 13

breach

Answer 13

A breach occurs where a party fails to perform their obligations under contract
* Non performance
* Defective performance
* Repudiating obligations without any justification

Question 14

types of breach

Answer 14

breach of a general term of a contract
breach of a condition (expressed or implied)
anticipatory breach

Question 15

Breach of a general term of contract –

Answer 15

allowing action for damages

Question 16

breach of a condition which is either expressed or implied

Answer 16

– where the breach is significant enough to allow the repudiation of the contract

Question 17

anticipatory damage

Answer 17

where one party notifies that other of an intention to breach under contract

Question 18

Hong Kong Fir 1962 –

Answer 18

ship was contracted for cargo but the ship was unseaworthy and the crew incompetent. The ship was lost and the cargo was lost – the owners of the cargo tried to repudiate the contract. C of A held that it was only a warranty which allowed them to claim for damages not to repudiate the contract

Question 19

Horchester v De La Tour –

Answer 19

D agreed to employ H at a future date. Before the employment started D wrote to H stating that his services were no longer needed. He sued D for breach of contract. D argued h couldn’t sue before the contract was due to start. Court held that still a breach

Question 20

conqouences of a breach

Answer 20

Where a general terms is breached – damages are available but a party cannot repudiate a contract for breach of warranty
A breach of condition allows an action for damages and/or repudiation of the contract
Anticipatory Breach – a party can either wait until the contract is underperformed or can sue immediately

Question 21

Frost v Knight 1872

Answer 21

D promised to marry his fiancé when his father died. D broke off the engagement before he died. Fiancé successfully sued D, even though the actual breach had not yet arrived

Question 22

frustration

Answer 22

A frustrated contract occurs where an unforeseen event prevents the absolute performance of the contract

Question 23

doctorine of furstration

Answer 23

developed to provide a remedy for situations that arise during the duration of the contract which make future performance:
* illegal, or
* Impossible, or
* Fundamentally different

Question 24

illegal

doctorine of frustration

Answer 24

a change in law prevents the performance, for example the outbreak of war maing trade with a certain country illegal

Question 25

Metropolitan Water Board v Dick Kerr 1915 –

Answer 25

contract to build a reservoir was stopped by the government due to the outbreak of war - Frustration of contract

Question 26

impossible

Answer 26

**contract ends in 1 of 4 ways - **
Subject matter is destroyed

Subject matter is unavailable

One of the parties dies

There is a risk of the contract being unable to be performed completely

Question 27

Taylor v Caldwell 1863

Answer 27

a music hall central to a contract was destroyed in a fire – frustration is impossible

Question 28

Fundamentally Different

Answer 28

The central purpose of the contract is destroyed by a frustrating event
The result of the frustration depends upon whether the commercial purpose of the contract is destroyed as per

Question 29

Krell v Henry 1903

Answer 29

A room was booked to observe the coronation of King Edward. The coronation was postponed because of Kind Edwards illness. As the central purpose of the booking the room was to observe the procession the contract was frustrated.

Question 30

limits to the doctroine of frustration

Answer 30

Certain limitations are imposed by the courts as it may be unfair on one of the parties to simply set aside the contract. Instead obligations remain:
* Where one party induces the frustrating event (then the contract is breach)
* If the event is expressly provided for in the contract – then the frustration does not apply
* Where the actual event was or should have been foreseen.

Question 31

Law Reform – Frustrated Contracts Act 1943

Answer 31

The Act was created to address some of the unfairness of the common law doctrine. It states:
* Any money already paid before the frustrating event is recoverable
* Any money payable before the frustrating event is no longer owed
* Where any expenses have occurred, payment can be ordered by the court
* If any valuable benefit has been obtained, payment may be ordered by the court