Breach and remedies Flashcards
discharge of contract
usually a contract discharges because both parties have done what they agreed in the contract
if they havent performed what they agreed then this may be discharged by breach
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
cutter v Powell 1795
cutter agreed to work as second mate on a voyage for a fixed fee. unfortunately, cutter died at sea near the end of his voyage. his widow sued for a proportion of his fee. however, she was entitled to nothing as he had agreed to work the entire voyage and had not done so. was also confirmed in the case of Re moore & co Ltd 1921 where even though the total number of tins was correct, the number of tins in each carton was incorrect and so goods did not correspond with the description in the contract
Harshness
the rule of discharge by performance has different ways that it can be utilised.
divisible contracts
substantial performance
prevention of full performance
acceptance of part performance
this is because the rule of discharge by performance being only when all aspects of the contract have been performed is too harsh
divisible contracts
if the contract has separate parts to it, then non completion of one part will not be a breach of the whole contract.
e.g in the case cutter v Powell if his contract was described as £1 per day then the contract would have been divisible
Ritchie v Atkinson 1808
a ship owner agreed to carry a cargo at an agreed rate per ton. he carried only a part of the cargo. The ship owner was entitled to be paid for the part of the cargo he had carried at the agreed price per ton, but was liable in damages for breach of contract for not carrying the whole cargo.
substantial performance
-if the party has substantially done what was required under the contract, then the doctrine of substantial performance may apply
- if it does apply there will be payment of the amount appropriate for the work that has been done
- this is only applicable to divisible contract not contract where the entire agreement is one single transaction
there is no general rule for what amount to substantial
instead the courts will look subjectively at this on a case by case basis
Dakin an co v lee 1916
Builders agreed to repair the defendants premises for £1500. they performed the contract completely but there were three relatively poorly performed aspects. these cost £80 to rectify. the court decided that the contract had been substantially if not precisely performed. The fact that the work was done badly did not mean it had been performed at all. the builder was entitled to be paid the price subject. to a deduction for the defective work.
Hoeing v Isaacs 1952
a decorator was contracted to decorate and furnish a room for £750 . some of the furniture was defective but could be repaired for £55. The court decided that the contract was substantially completed on a financial basis. decorator was paid on a quantum merit basis .
Bolton v mahadeva 1972
a builder agreed to install a central heating system for £560. however, the installation was defective. repairs cost £170 . the court decided that the builder was entitled to nothing , as there had not been substantial performance of the contract.
Quantum meruit
this is where the courts will award as much as it is worth
young v Thames properties ltd 1999
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 that he had made from buying less expensive material.
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 meruit basis.
planche v colburn 1831
a publisher hired an author to write one of a series of books, when the publisher decided to abandon the whole series , the author was prevented from completing the work though no fault of his own. he was entitled to recover a fee for his wasted work
acceptance of part payment
if one party agrees that the other party doesn’t need to complete the entire contract, then the contract must be paid om a quantum meruit 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 1898
a Builder agreed to build two houses. he completed just over half of the work and then ran out of money. the customer completed the outstanding work himself. the builder argued that the customer had accepted part payment because he completed the work himself. the court said that the customer had no other choice and therefore the builder was not entitled.
timing
many contracts have a term in relation to time inserted into it
the courts will regard time as a condition if :
1 the parties have expressly stated in the contract that time is critical aspect
2 in the circumstances time for completion is critical
3 one party has failed to perform on time and the other has insisted on a new date for completion of the contract
if none above apply time will be seen as a warranty and not a term.
charles Rickards v oppenheim
a buyer of rolls Royce chassis kept pushing for delivery
and said he would cancel the contract if not delivered within 4 weeks. the car was delivered on time. when the car was completed he rejected it. he was entitled to cancel the contract as time had been made of the essence and that term had not been complied with.
discharge of contract ; Breach
types of term a condition
a condition is a term in a contract that is so important that a failure to perform the obligation would destroy the main purpose of the contract.
e.g if i make a contract to buy a phone , it is central to the contract that i can receive and make calls
if a condition is broken, the person suffering the failure the victim is entitled to end the contract
this is known as repudiation ( ending the contract)
repudiation can only be used for a breach of condition and not a breach of warranty
poussard v spiers and pond 1876
an actress agreed to performthe lead role in a production. she failed to attend the first few performances. her role was given to an understudy. when she did not attend, she was not allowed to take up the role . she had broken her contract by not turning up for the role. As the lead , her presence was central. It was therefore a condition in the contract so the contract could be repudiated.
Warranty
a warranty is a minor term in a contract, breach of which does not end the contract but allows a claim for damages only .
if a warranty is breached, the main purpose of the contract can continue to be performed despite the breach.
e.g for a phone it is not central to the contract if the phone will only store 99 contacts instead of the 100 it stated in thew contract
no right to repudiate if there is a breach of warranty
Innominate term
this is a term in a contract that is not regarded as a condition or warranty .
therefore, the consequences of a breach of an inominate term can be the same as either a breach of condition or warranty depending on the gravity of the breach.
essentially the severity of the breach decided whether it should be viewed as a condition or a warranty.
Bettini v Gye 1876
A singer was contracted to perform at a series of concerts and six days of rehearsal. He failed to attend the first three days of rehearsals. he was replaced as the singer for his failure to turn up to the rehearsals. it was held to be a breach of warranty, so the concert organiser could not repudiate and therefore the singer awarded damages for breach of contract.
Hong kong fir shipping v Kawasaki Kisen kaisha 1962
Defendants chartered a cargo ship from the claimants for two years. a term in the contract required that the ship should be ‘in every way fitted for ordinary cargo service’ there were issues with the ships engine and the ship was not fully seaworthy. Eighteen weeks use of the ship was lost while the ship was being repaired. the defendants repudiated the contract.
innominate terms arose from this case and it was held that on this occasion it was a breach of warranty so only damages could be awarded and they could not repudiate the contract.
Discharge by Breach
if a contract is not discharged through performance, then it may be that one party has failed to perform their obligation or both parties.
- the party that is considered with the victim will be entitled to damages.
- however just because there has been a breach does not mean the contract will be terminated (repudiated)
- termination of contract depends on if its a breach of condition
- breach can either be of the entire contract or it could be part - performance.
circumstances for breach
1 one party gives up their responsibilities under it e.g. not paying a bill on the due date.
2 impossibility to perform their end of the contract due to their own act e.g. closing a hairdressers business for holidays with appointments during that time
3 total or partial failure of performance e.g delivering defective goods
Repudiatory breach
repudiatory breach of contract- this occurs when a party commits a breach of contract that is sufficiently serious that it entitles the innocent party to treat the contract as terminated
this type of breach can happen in three ways
1 breach of condition
2 refusal to perform the contract e.g delivering goods or carrying out contracted work.
3 a sufficiently serious breach of an innominate term ie a breach that would be considered a breach of condition
this is where the other party may terminate the contract and claim damages
or if they want to they can continue the contract and still claim damages
if a contract contains an express termination provision, such as in the case of stocznia Gdynia sa Gearbulk holdings , then the contract can be terminated even if it is not a repudiatory breach
Anticipatory breach
one party gives advance notice that they will not be performing/ completeing the contract
the innocent party then has a choice
1 sue immediately for breach of a condition
2 wait for the time agreed for the performance and sue if performance does not take place then actual breach
if one of the parties to a contract , either expressly or by conduct leads the other party to the reasonable conclusion that they do not mean to carry out the contract this amount to a repudiation.
the other party can treat the contract as at an end
anticipatory breach : when a party to a contract gives notice in advance to the other party that they will not be performing or completing the contract
actual breach where the breach occurs at the time or during the course of performance
Hochester v de la tour 1853
Hochester agreed to work as a courier on a tour due to start in June . However the company told him in may that it no longer needed him. he was entitled to sue immediately and didn’t have to wait until the actual breach of contract , which would’ve occurred in June. the right to sue immediately is a good right to have because in the time they are waiting until performance they could encounter financial difficulties etc
remedies for breach
if they claim anticipatory breach, then the victim may claim damages immediately. these damages will put the victim in the same position as before the contract had been completed. recission the victim must take reasonable steps to mitigate their losses
the victim may not chose to accept the anticipatory breach but wait to see if there is an actual breach instead at the time of the performance . then the loss may increase an they will be entitled to more due to a change in market factors etc or it may lead to discharge by frustration which has different remedies
victim can also repudiate the contract under anticipatory breach
if it is a breach of condition the victim can claim for damages and or repudiation
if it is a breach of warranty the claim is limited to damages,
