Chapter 2 - Termination of Contract

Question 1

Ways to discharge a contract (3)

Answer 1

1. Performance - contract is completed as expected
2. Frustration - it is IMPOSSIBLE to now complete the contract
3. Breach - failure to perform the contract as expected

Question 2

Variants of performance of a contract (3)

Answer 2

1. Complete and exact performance
2. Substantial performance - majority is done, though damages may be payable
3. Partial performance - only part is done but only if the contract is severable (e.g. salaries)

Question 3

Types & examples of discharge by frustration (4)

Answer 3

1. Destruction of the subject matter (fire in village hall)
2. Personal incapacity to perform a personal service (drummer only able to perform 4 nights instead of 7)
3. Government intervention (new legislation renders a contract illegal - coronavirus & weddings)
4. Non-occurrence of an event which is the sole purpose (renting house to see King’s Coronation which was cancelled)

Question 4

The Law Reform Act - Basic rules of frustrated contracts (2)

Answer 4

1. Any money paid before the frustrating event is repaid

2. Any money due for payment under the contract ceases to be payable

Question 5

Types of breaches of contract (2)

Answer 5

1. Repudiatory Breach - Significant at the time (breach a fundamentally important term/ deprive injured party of substantially the whole benefit)
2. Anticipatory Breach - in advance (breached in advance when the other party shows they have no intention of performing their side)

Question 6

Injured party options for anticipatory breach (2)

Answer 6

1. Treat the contract as discharged immediately and sue for damages - safer option
2. Allow contract to continue until actual breach has happened and take action then

Question 7

Remedies for repudiatory breaches (5)

Answer 7

1. Not discharged from obligations at the time, but IS discharged from future obligations
2. Need not accept nor pay for future performance
3. Be able to refuse to pay for partial or defective performance already received, UNLESS contract is severable
4. Can reclaim money already paid in respect of defective performance
5. Claim damages from defaulter

Question 8

Two measures of damages

Answer 8

1. Expectation interest - to put the claimant where he would have been if the contract was performed
2. Reliance interest - To put the claimant in the position he would have been if they did not place reliance on the contract

Question 9

Liquid damages vs Penalty clauses

Answer 9

LD - pre-estimate of potential damage, written into contract. Genuine attempt to estimate likely losses.

PC - where LD are excessive .: not enforceable

Question 10

Specific performance

Answer 10

Court may order the defendant to perform his part of the contract instead of paying his way out.

Only where damages are not an adequate remedy.

Question 11

Injunctions (3 types)

Answer 11

1. Mandatory - has to undo something already done in breach of contract
2. Prohibitory - observe a negative promise (not do something)
3. Asset freezing (ch. 10)

Question 12

Unfair Contract Terms Act

Answer 12

Restricts the effectiveness of exclusion clauses in contracts B2B only by declaring them to be void unless they satisfy a reasonableness test

Question 13

Key provisions of Unfair Contract Terms Act (2)

Answer 13

1. Clause that attempts to restrict liability for death/ personal injury for negligence (VOID)
2. Clause that attempts to restrict liability for other loss from negligence (VOID unless reasonable)

Question 14

Consumer Rights Act

Answer 14

Applies to contracts and notices for consumers (B2C)