Breach, termination, frustration Flashcards
When does a discharge by expiry occur?
Often by date or after the occurrence of an event.
What are the 5 main ways a contract can be ended?
- Expiry
- Performance
- Agreement
- Breach
- Frustration
Q: What is the entire obligations rule?
The promisor has to entirely complete performance to be entitled to the entire payment. The promisee receives full benefit of complete performance.
Q: What are the exceptions to the entire obligations rule?
- acceptance of partial performance
- substantial performance
Q: What happens if the innocent party accepts partial performance?
The promisor will be entitled to payment on a quantum meruit (as much as is deserved) basis, assessed by the courts on an objective basis
Q: What does the court consider in substantial performance?
The court considers the nature and extent of defect before adjusting the contract price. They assess if breaches have gone ‘to the root of the contract’.
What is the performing party entitled to if there are divisble obligations/ Severable contracts
They are entitled to payment for each part that is performed.
Q: What can the promisor do if wrongfully prevented from performing?
The promisor can sue for damages or breach of contract, or claim quantum meritum.
What can the defendant use as a defence in a claim that they have not performed their obligations under the contract?
They can prove that they tendered performance unconditionally and in accordance with terms
How can discharge by agreement occur?
By subsequent binding contract (accord and satisfaction) or by the operation of a term in the contract (conditions precedent or conditions subsequent).
What is a condition precedent?
A condition which must be satisfied before any rights come into existence. The contract is suspended until the condition is satisfied.
If there is a repudiatory breach, what losses can the innocent party claim?
Losses arising from breach and the loss of contract as a whole
What is a condition subsequent?
Terms providing for the termination of the contract and discharge of obligations in the event of a specific occurrence.
What are the remedies for breach of a warranty or an innominate term to be treated as a warranty
Damages only
What constitutes a repudiatory breach at common law?
When the breach is of a condition or innominate term treated as a condition
What is the remedy for breach of condition or innominate term to be treated as a condition
damages and a right of election.
What is an anticipatory breach?
When a party indicates they will not perform their contractual obligations in advance of the date for performance.
What rights does the innocent party have if there is an anticipatory breach?
- the right to accept renunciation and treat the contract as terminated
- they also have the right to affirm the contract
What are the limits on affirmation by the innocent party?
- Co-operation of the breaching party required for continued performance
- The innocent party has no legitimate interest in affirming the contract.
When does frustration discharge a contract?
whenever the law recognises that, without default of either party, a contractual obligation has become incapable of being performed because the circumstances in which performance is called for would render it a thing radically different from that which was undertaken
Is frustration automatic?
Yes
What are the reasons for frustration?
- impossibility - total or partial descturion of some object/person necessary to the performance of the contract
- illegal performance
- common purpose is frustrated
When is an act not a frustrating act
- when the contract becomes more difficult to perform
- self-induced frustration
- foreseeable events
- express contractual provision for a frustrating event
What is the consequence of frustration according to common law?
All future obligations are automatically discharged. The Law Reform (Frustrated Contracts) Act 1943 allows recovery of obligations arising before the frustrating event.
