(BLUE) Discharge: Performance and Breach Flashcards
What are the 3 main ways a contract can be discharged (when a valid contract comes to an end)?
-Performance
-Breach
-Frustration
What does performance mean?
Both parties carry out the obligations they have agreed in the contract.
What is the common law rule about performance?
Cutter v Powell- performance must be complete and exact or it will be a breach of the contract.
What are the 4 concepts which mitigate the harsh rule from Cutter v Powell?
-Divisible contracts
-Substantial performance
-Prevention of full performance
-Acceptance of partial performance
What are divisible contracts?
Contracts which can be divided up into separate parts so that breach of one part doesn’t necessarily breach the entire contract. For example, in Richie v Atkinson where A could get the agreed price for the cargo he actually transported and R could claim damages for the rest. (The agreement was for a price per ton of cargo).
What does substantial performance mean?
If one party has substantially performed the contract but with minor defects the other party may have to pay the contract price, minus an amount for the defective performance.
In which case was there substantial performance of the contract?
Hoenig v Isaacs- the work had been substantially performed and the buyer had to pay what the work was worth (quantum meruit). The case also said if the work required by the contract has been substantially performed, it can be successfully discharged rather than breached.
In which case was there not a substantial performance of the contract?
Bolton v Mahadeva- there was a lot of work not done properly therefore this was not substantial performance and instead a breach of contract.
What does prevention of full performance mean?
If one party prevents the other from fully performing a contract as agreed, this may not be breach as non-completion is not the party’s fault. For example in Planche v Colburn, P was prevented from finishing the work by C who changed their mind about the contract, so P was entitled to claim for the work they had done.
What does acceptance of partial performance mean?
If one party to a contract fails to complete performance, the victim of the breach can accept the partial performance and pay for what has been provided, instead of taking action for breach. The acceptance has to be voluntary and not made under any pressure- there has to be a genuine choice.
In which case was there not acceptance of partial performance?
Sumpter v Hedges- H had no option but to complete the work themselves as they were left with partially built houses on their land. S hadn’t completed enough of the work for it to be substantial performance, so they were in breach. H was not required to pay S for the work they had done.
What classification are terms about the time in which performance should be completed?
Innominate terms. They can be repudiated if the breach is serious, otherwise if the purpose of the contract is not defeated, damages will be paid.
What type of term is a time stipulation that says time is ‘of the essence’?
A condition meaning breach can lead to repudiation and or damages.
When is time ‘of the essence’?
-The contract expressly states that time is of the essence
-One party gives notice that time is of the essence to the other party while the contract is being performed
-The circumstances of the contract or the subject matter of the contract make it clear that time is of the essence
In which case could the contract be repudiated because late performance was a breach of condition?
Union Eagle v Golden Achievement- the terms of the contract stated that ‘time was of the essence’.
