Chapter 12: Performance and Breach Flashcards
What are the 4 ways that a contract can be discharged?
1) Agreement
- Parties decide to abandon contract (consideration)
- In order to abandon, there must be a mutual agreement by both parties to withdraw from the contract
- Another condition is there must be consideration
2) Operation of law
- Doctrine of Frustration
3) Performance
- Parties fulfil all obligations under contract
4) Breach
- Party has breached the terms of contract
What is the general rule of performance of a contract?
A party can’t recover their payment for a partial performance of an ‘entire obligation contract. The entire contract has to be fulfilled/finished
- Example - if a teacher has a contract to fulfil all 2 months to teach a child of a parent, but withdraws because she didn’t like the environment. She can’t claim payment
What is the case that supports the general rule of performance?
Cutter v Powell (1795)
Cutter v Powell (1795)
performance GR
Facts
- Going on a voyage
- Payment was to be given after completion of the voyage
- 7 weeks into the performance, Cutter dies
- His wife came to sue for payment
Held
- Court denied payment
- On grounds that the contract was not fully performed, can’t recover anything at all
Note
- This is a good precedent/principle as it makes parties have an obligation to complete the performance
What are the 3 ways to mitigate the harshness of the GR of performance?
1) Courts can interpret the contract as not being an entire obligation, making the contract into different ‘sections’ called ‘Series of Entire Obligations’
- Can create mini series to mitigate the harshness
- On grounds that court doesn’t encourage/like to allow unjust enrichment
2) Courts can allow some recovery/benefits if the party in breach has somewhat substantially performed the contract
- This means that if courts see that the party has already committed to so much of the contract, it wouldn’t be right to not award them anything
3) If the innocent party can accept the partial performance of the work that the contract breaker has done. Then might be liable to pay for the work done
What is the case for the 2nd way to mitigate the GR for harshness of performance - allow recovery for substantial performance
Hoenig v Issacs (1952)
Hoenig v Issacs (1952)
recovery for substantial performance of a contract - mititgate harshness
What is the case for the 3rd way to mitigate the harshness of the GR of performance - innocent party accepts partial performance?
Sumpter v Hedges
Sumpter v Hedges
innocent party accepts partial performance - mititgate harsheness
Facts
- Sumpter, a builder (C), entered into a contract to build 2 houses and some stables for a particular amount
- Started building, and mid way abandoned the project
Held
- Can’t sue for partial/part performance
- On grounds that he abandoned the contract
- But can claim the price for the remaining materials that Mr Sumpter had left behind (which the new contractor used)
Takeaway
- Since the builder already did half the work, and the claimant ‘accepted’ the performance by hiring another contractor to build the project
- He was entitled to pay for the remains of the materials that were used during the building
What is the definition for breach of contract?
What case provides this definition?
What authority states the 4 ways when a breach occurs?
Failure to perform the terms of the agreement - Photo Production Ltd v Securicor Transport Ltd
Prof Treitel states a breach occurs when -
- Party without lawful excuse fails to perform or refuses to perform what he is supposed to do; or
- Performs defectively; or
- partial/inadequate performance; or
- Incapacities himself from performance
When does a breach actually occur? (substance of the contract)
Depends on the construction of the terms of contract. Party that alleges/claims there is breach has to actually prove breach
- However, not necessary to prove fault
What are the 2 types of breach?
- Actual breach
- Anticipatory breach
What are the 2 types of Actual Breach?
What statute do these have in relation to?
1) Strict liabilty
- Where terms in contract demands a standard & performance to how they want to carry out the contract specifically
- Does not depend on fault – merely if the specifics of the contract were not fully done properly
- Section 14(2) Sales of Goods Act 1979
2) Standard of reasonable care & skill
- If a party is employed for the duty to exercise reasonable care and skill when performing a contract
- In this category, judges will look at the facts and faults of the case
- Section 13 of the Supply of Goods and Services Act 1982
What is the case for strict liability?
Actual breach
Arcos v Ronaasen (1933)
Arcos v Ronaasen (1933)
Strict liability
Facts
- Contract specifically stated barrel has to be 1/2 an inch
- Barrel turned out to be 9/16 (little more than ½) thick
Held
- Breach
- On grounds that this is a ‘strict liability’ contract, then the performance would be a breach of contract
Takeaway
- If details of a contract is specifically stated
Then required to fulfil perfectly
What action can the injured party take regarding Actual Breach?
What are the 2 things that depend on the ambit of action taken?
note terms chapter
A breach doesn’t automatically terminate the contract
1) Depends on the terms breached
* Condition - Can terminate & damages or affirm & damages
* Warranty - Damages only
* Innominate term - Consider the time of the breach and then the consequences of it
2) Depends on the decision of the innocent party
- Decro – Wall SA v International Practitioners in Marketing
What is Anticipatory breach?
Introduction
- Where 1 party informs the other, before the date of performance, that they are not going to perform the contract
Action by injured party
- Innocent party can terminate contract & claim damages immediately
- Don’t need to wait till actual date of performance
Note
- Once the actual date comes - then can sue for actual breach
What are the 4 cases for Anticipatory breach and what are the particulars of each case?
Hochster v De La Tour (1853)
- Claimed damages immediately
White & Carter v McGregor
- Innocent party chooses to affirm the contract and continue
Wvaery v Bowden (1856)
- Later frustration
The Simona
- Later breach
What are the 2 types of remedies possible for breach of contract?
What are the actual remedies gotten from each?
Common law
- As of right > damages
Equitable remedies
- Given at court’s discretion > specific performances or injunction
What are the 2 types of damages under common law?
Unliquidated damages
* Amount of damages not stated
Liquidated damages
* Amount of stated by the parties
What are the 2 types of losses under common law claimable by claimant?
What is the overview for each loss?
Pecuniary losses
* General rule
* Method of assessment
* Remoteness of damages
* Causation
* Mitigation
Non-pecuniary losses
* General rule
* Exception
What is the general rule for pecuniary losses?
- Any breach of any term has the right to claim damages
- Aim is to compensate the injured party for his loss (Bunge SA v Nidera BV (2015))
- Motive of breach is irrelevant, even if D purposely breached the contract
- Punitive damages not allowed, even if party deliberately breaches contract - Kuddus v Chief Constable of Leicestershire Constabulary (2001)
What are the 3 methods of assesment for Pecuniary loss?
- Expectation loss/interest (damages)
- Reliance loss/interest
- Restitutionary interest
What is reliance loss/interest?
What are the aims and the 3 cases for this?
Introduction
- C acted to his detriment by relying on the promise made by the D
Aim/purpose
- To put the C in the position that he would be before the promise was made
- To restore the Claimant
Case
- Mc Rae v CDC
- Anglia TV v Reed (1972)
- Chaplin v Hicks (1911)