8 - Discharge of a contract Flashcards
ways of discharging contract
- perfromance
- ageement
- breach
- frustration
discharge of contract
where a contract comes to an end
perfromance
A contract isn’t discharged until all of the obligations are performed.
The general rule is that the performance must match the contracts obligations
Cutter v Powell 1795 –
correct good were delivered in wrong size cases – part performance is no performance
modification of the general rule of perfromace
- 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
Startup v Macdonald 1843 –
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
Time Of Performance
A failure to preform on time is often a breach of warranty, which then allows damages but not a repudiation of the contract
Where time is of the essence, repudiation can follow from a breach if:
- 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
agreement
As a contract can be formed by an agreement it makes sense that it can be discharged with an agreement
Unilateral discharge
only one party discharges the contract
bilateral discharge
– both parties discharge the contract
Williams v Roffey 1990
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
breach
A breach occurs where a party fails to perform their obligations under contract
* Non performance
* Defective performance
* Repudiating obligations without any justification
types of breach
breach of a general term of a contract
breach of a condition (expressed or implied)
anticipatory breach
Breach of a general term of contract –
allowing action for damages
breach of a condition which is either expressed or implied
– where the breach is significant enough to allow the repudiation of the contract
anticipatory damage
where one party notifies that other of an intention to breach under contract
Hong Kong Fir 1962 –
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
Horchester v De La Tour –
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
conqouences of a breach
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
Frost v Knight 1872
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
frustration
A frustrated contract occurs where an unforeseen event prevents the absolute performance of the contract
doctorine of furstration
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
illegal
doctorine of frustration
a change in law prevents the performance, for example the outbreak of war maing trade with a certain country illegal
Metropolitan Water Board v Dick Kerr 1915 –
contract to build a reservoir was stopped by the government due to the outbreak of war - Frustration of contract
impossible
**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
Taylor v Caldwell 1863
a music hall central to a contract was destroyed in a fire – frustration is impossible
Fundamentally Different
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
Krell v Henry 1903
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.
limits to the doctroine of frustration
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.
Law Reform – Frustrated Contracts Act 1943
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
