Breach and Remedies Flashcards
What is discharge of contract and how does a contract discharge?
Ways a contract can end
Usually, a contract discharges because both parties have done what they agreed in the contract, if they haven’t done what they agreed this may be discharge by brief. However not all contracts that have been breached will be discharged
Discharge by performance:
It is a strict rule, performance must be complete and exact. as seen in Cutter v Powell
Cutter v Powell (1795)
The claimant’s husband agreed by contract to act as a second mate on the ship the ‘Governor Parry’ on a return voyage to Jamaica. The voyage was to take eight weeks and he was to be paid on completion. A term in the contract stated:
“Ten days after the ship ‘Governor Parry,’ myself master, arrives at Liverpool, I promise to pay to Mr. T. Cutter the sum of thirty guineas, provided he proceeds, continues and does his duty as second mate in the said ship from hence to the port of Liverpool. Kingston, July 31st, 1793.”
Six weeks into the voyage the claimant’s husband died. The claimant sought to claim a sum to represent the six weeks work undertaken.
Held: The wife’s action failed. Payment was on condition that he worked the ship to Liverpool, since he did not fulfil this condition the widow was entitled to nothing.
Strict rule
Re Moore & Co Ltd (1921)
The number of tins in each carton was incorrect and so the goods did not correspond with the description of the contract
Harshness : what ways can discharge by performance be utilized
- Divisible contracts
- Substantial performance
- Prevention of full performance
- Acceptance of part performance
Divisible contracts:
If the contract has separate parts to it, then non completion of one part will not be breach of the whole contract
Case authority: Ritchie v Atkinson
Ritchie v Atkinson (1808)
Divisible contract
By contract the claimant agreed to carry a cargo of specified quantity of hemp and iron. The price agreed was £5 per ton for the hemp and 5 shillings per ton of iron. The claimant only carried part of the agreed quantity. The defendant argued the contract had not been fully performed and therefore no payment was due.
Held:
The contract could be divided into separate parts as the parties had agreed a price per ton. The claimant was thus entitled to payment for the amount carried although the defendant was entitled to damages for non performance in relation to the amount not carried.
Substantial performance: subjective
If the party has substantially done what was required under the contract, then the doctrine of substantial performance may apply, the payment will be appropriate to the work done
This is only applicable to divisible contracts, not contracts where the entire agreement is a single transaction
Dakin and co v Lee
Dakin and co v Lee
The claimant builders contracted to perform some renovation work for the defendant at the defendant’s home. The price was to be paid on completion of the work. The defendant refused to pay the agreed price, arguing that the work had not been completed. Though the project was finished, the claimant had used materials which did not match the contractual specifications. They had also failed to properly cleat and join a set of joists over a window.
Issue(s)
Was the defendant bound to pay the price?
Decision
The Court of Appeal held in favour of the claimant. The work was substantially completed and the defendant had enjoyed the benefit of the contract. The fact that not all contract terms had been complied with did not prevent the obligation to pay from becoming live.
This Case is Authority For…
Some contracts have ‘entire contract’ obligations, which normally mean that one party is not obligated to pay until the other party has fully performed. However, the obligation to pay will still become live if the other party has ‘substantially’ performed the relevant work. This is likely the case if the only outstanding obligations are minor.
This ‘substantial performance’ principle does not apply if 1) the other party refuses to finish the work, 2) the work is of no benefit, or 3) the work is something completely different than what the parties contracted for.
Hoenig v Isaacs (1952)
The claimant agreed to decorate and furnish the defendant’s flat for £750 payable by two instalments and the balance on completion. The claimant completed the work but the defendant was unsatisfied some of the furnishings and refused to pay the all the final instalment. The cost of the defects in the furniture came to £56.
Held:
The claimant had substantially performed the contract and was therefore entitled to the contractually agreed price minus the cost of the defects.
Bolton v Mahadeva
The claimant installed central heating in the defendant’s home. The agreed contract price was £560. The defendant was not happy with the work and refused to pay. Defects in the work amounted to £174. The action by the claimant to enforce the payment failed since the court held there was no substantial performance.
Quantum Merit - Young v Thomas Properties Ltd
the courts will award as ‘much as its worth’
Young - contractor was contracted to resurface a car park, overall did his job but some small defects, the contractor was entitled to the contract less the savings he had made from buying less expensive materials
Prevention of full performance
If one party prevents the other from carrying out their end of the contract, then the innocent party can still claim to be paid on quantum merit basis.
Planche v Colburn = The claimant agreed to write a book on costume and armour for the defendant as part of a series called ‘the Juvenile Library’. The agreed contract price was £100 to be payable on completion. The claimant commenced writing and had completed a great deal of it when the defendant cancelled the series. The defendant refused to pay the claimant despite his undertaking and the fact that the claimant was still willing to complete. The claimant brought an action to enforce payment.
Held:
The claimant was entitled to recover £50 because the defendant had prevented the performance.
Acceptance of part payment:
If one party agrees that the other party does not need to complete the entire contract, then it must be paid on a quantum merit basis
The other party has to consent to the part payment
If the innocent party has no choice but to take the benefit of the work done, this is not considered consent to part payment
Sumpter v Hedges
Sumpter v Hedges
The claimant agreed to build two houses and stables for the defendant. It was agreed that £565 would be payable on completion. The claimant commenced performance and then ran out of money and was unable to complete. He had performed just over half of the contract. The defendant completed the work himself. The claimant sought to recover £333 representing the value of the work he had completed. He argued that in completing the work himself, the defendant had thereby accepted partial performance and prevented the claimant from completing the contract.
Held:
The claimant’s action failed. The court held that the defendant had no choice but to accept partial performance as he was left with a half completed house on his land.
