Chapt 7: Discharge of Contracts (4 ways) Flashcards
What does discharge of contract means?
It means termination/end of a contract whereby both parties are relieved from their contractual obligations.
What are the 4 ways a contract can be discharged?
- By performance
- By breach
- By agreement
- By frustration
Breach by performance. State how we can analyse the question.
- State the general rule of performance (Case law to it)
2. Is there any exceptions to the general rule?
What is the general rule of performence?
Based Cutter v powell, it states that precise performance is needed to claim full payment.
In order words, they have to fulfil their obligations fully and precisely.
5 types of exceptions to general rule of performance:
- De minimis rule.
- Divisible contract
- Substantial performance
- Partial Peformance
- Prevented Peformance
Explain De Minimis Rule:
It states that if the deviation to the performance is microscopic, it will be deemed as fully performed.
Full Payment can be claimed.
Explain Divisible contract:
It states that by intentions of both parties there are separate and independent obligations.
Each subcontract can be discharged separately.
Claims: Only payment for the performance of the obligations that he work on.
Explain Substantial Performance
Party has substantially performed his obligations (Large portions performed but not all)
2 elements to consider if it’s substantial or not:
- Nature of defect
- Cost of rectifying the defect
(Nature of defect is serious, cost of rectification is higher than the contract price. = No substantial)
(Nature of defect is minor, cost of rectification is lower than contract price = Substantial)
Explain Partial performance:
If partial performance is accepted by promisee.
Claim: Payment on quantum meruit (As much as he deserved)
Explain Prevented performance:
The promisor has performed part of his contractual obligations, but is prevented by the other party from performing the rest.
Claim: Breach of contract or payment based on quantum meruit.
