Chapter 3 - Termination of a contract Flashcards
What are the three ways to end a contract?
*Performance
*Frustration
*Breach of contract
What is a performance of the contract?
When it’s complete but it has to be done exactly the way it’s described
But if agreed it can be partially discharged
A contract is usually discharged by the performance by both parties of their obligations under the contract.
What is substantial performance?
If it’s sufficient enough to end the contract.
In a contract if there’s minor defects to the work performed they can get full cost minus the cost required for defects
What are severable contracts?
If the contract is divisible (broken down into smaller obligations) the contract can be discharged (ended) if parts of it is complete.
There may be some potential payment trigger points.
What is a Quantum meruit
amount one deserves
In these cases, just being willing and ready to do the work is enough to say they tried to meet their obligations
What is frustrations of the contract?
If it’s impossible to do what the contract says right from the start, then there’s usually no contract. But, if the contract is made and later it becomes impossible to do because of something that neither side can control, the contract is canceled due to “frustration.
What is an actual breach of contract?
Happens when the contract was due and happens when one party fails to put forward any sort of performance
Performance put forward is so inadequate the injured party is substantially deprived of the whole benefit of the contract
What is an anticipatory breach?
Happens before the due date for performance of the contract - one party states or shows that they won’t fulfill the contract
in simple terms, before it even starts someone
When does the anticipatory breach occur?
When they’ve said they won’t fulfill it
One of the parties does something and that makes the performance impossible - known as implied anticipatory breach
What is the effect of breach?
Can get damages if there is a breach of contract and if it effects the root of it then the contract can be ended
If the effect is serious (also known as repudiatory breach) the injured party can treat
> contract being ended
affirm the contract -> intend to continue
What are the two options available to the injured party when an anticipatory breach occurs?
- Contract treated as being discharged immediately and injured party can sue
- Injured party may continue with his or her obligations under contract until that happens
What are the circumstances of lawful excuses for a breach?
*One party has offered to perform her obligations but the other party refuses
*One party makes it impossible for the other to perform his or her obligation
*Where the parties have agreed that certain obligations can’t be performed
What are the three types of procedures used for dispute resolution?
Arbitration, mediation and concilliation
What is abitriation?
Dispute heard and settled by an independent person that’s not the judge
The parties choose this person
The parties choose the process into this agreement
Arbitration makes the final decision
What is mediation?
Independent party helps the parties make a decision
What’s a common law remedy
Legal solutions provided by court - Normally damages and are available as a right
What is remoteness?
Limits the amount of damages the court can award
What are the two forms of losses that can be recovered via Hadley x Baxendale?
*Losses which are natural consequences of the breach
*Losses that both parties thought might be possible. When a loss is not foreseeable the party in breach of them can only be liable is if they knew that such losses can arise in such a situation
What does it mean to protect the expectation interest?
Put back the claimant in the position they would’ve if the contract had been properly performed
What are the damages for loss of bargain?
If buyer buys something and the seller doesn’t deliver the buyer might get the difference between the cost and the final selling price
What are the reliance losses?
Claimant can recover expenses to complete the task before contract was breached
What is the mitigation of a loss?
When calculating damages, court assumes the claimant has taken all steps to reduce his or her loss
What are liquidated damages
fixed sum of money a party can be entitled to if the contract is breached
What’s a penalty clause?
a contractual term that requires a party to pay a monetary penalty if they breach a contract.
In what condition is the penalty a clause?
Amount is out of proportion to the potential loss
Same amount is given for a number of potential losses
What are equitable remedies?
legal remedy that a court can grant to fix a wrong or enforce a right when other remedies, like paying damages, are not enough
In what instances are equitable remedies not granted?
*Damages are an adequate remedy
*The claimant has acted unfairly
*Claimant has unduly delayed bringing an action to court
What’s a specific performance?
Court orders the defendant to complete their part of the contract
What’s an injunction?
Order for a person to do or not to do something
What are the three types of injunctions?
Mandatory
Prohibitory
Asset-freezing
What’s a mandatory injunction?
Party to take positive steps to undo something they’ve done in breach of contract
What’s a prohibitory injunction?
a court order that prevents a person or group from doing something that violates the legal rights of another party.
What’s an asset-freezing injunction?
a court order that prevents a person or company from disposing of or dealing with their assets.
What’s an exclusion clauses/exemption clauses?
Limits the parties liability for breach of contract
What’s a common law test in relation to exclusion?
Only enforceable if it has been properly incorporated into the contract and covers the losses suffered by the claimant
What is incorportation?
he inclusion of terms in contracts formed under English law in such a way that the courts recognise them as valid.
How can a clause be incorporation?
*Signature - document signed
*Notice - Defendant takes reasonable steps to bring the clause to the claimant’s attention
How does interpretation involve for the common law test in relation to exclusion?
The defendant can only use an exclusion clause if it specifically covers the claimant’s loss. If there’s any ambiguity, the clause will be interpreted against the person trying to use it.
What are statutory rules and the example of two laws that need to be satisfied
If clauses pass common law test they must also satisfy statutory laws
What are the two statutory rules
*Unfair contract terms Act 1977
*Consumer Act 2015
What is the Unfair contract term act 1977?
Applies to exclusion clauses
> States that a clause exempting liability for the death or personal injury to negligence is void
Other loss due to negligence is void unless reasonable
What is the Consumer Rights Act 2015
Usually between business and consumer - States that the business must be ‘fair’