Chapter 3 - Termination of a contract

Question 1

What are the three ways to end a contract?

Answer 1

*Performance
*Frustration
*Breach of contract

Question 2

What is a performance of the contract?

Answer 2

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.

Question 3

What is substantial performance?

Answer 3

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

Question 4

What are severable contracts?

Answer 4

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.

Question 5

What is a Quantum meruit

Answer 5

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

Question 6

What is frustrations of the contract?

Answer 6

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.

Question 7

What is an actual breach of contract?

Answer 7

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

Question 8

What is an anticipatory breach?

Answer 8

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

Question 9

When does the anticipatory breach occur?

Answer 9

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

Question 10

What is the effect of breach?

Answer 10

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

Question 10

What are the two options available to the injured party when an anticipatory breach occurs?

Answer 10

1. Contract treated as being discharged immediately and injured party can sue
2. Injured party may continue with his or her obligations under contract until that happens

Question 11

What are the circumstances of lawful excuses for a breach?

Answer 11

*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

Question 12

What are the three types of procedures used for dispute resolution?

Answer 12

Arbitration, mediation and concilliation

Question 13

What is abitriation?

Answer 13

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

Question 14

What is mediation?

Answer 14

Independent party helps the parties make a decision

Question 15

What’s a common law remedy

Answer 15

Legal solutions provided by court - Normally damages and are available as a right

Question 16

What is remoteness?

Answer 16

Limits the amount of damages the court can award

Question 17

What are the two forms of losses that can be recovered via Hadley x Baxendale?

Answer 17

*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

Question 18

What does it mean to protect the expectation interest?

Answer 18

Put back the claimant in the position they would’ve if the contract had been properly performed

Question 19

What are the damages for loss of bargain?

Answer 19

If buyer buys something and the seller doesn’t deliver the buyer might get the difference between the cost and the final selling price

Question 20

What are the reliance losses?

Answer 20

Claimant can recover expenses to complete the task before contract was breached

Question 21

What is the mitigation of a loss?

Answer 21

When calculating damages, court assumes the claimant has taken all steps to reduce his or her loss

Question 22

What are liquidated damages

Answer 22

fixed sum of money a party can be entitled to if the contract is breached

Question 23

What’s a penalty clause?

Answer 23

a contractual term that requires a party to pay a monetary penalty if they breach a contract.

Question 24

In what condition is the penalty a clause?

Answer 24

Amount is out of proportion to the potential loss
Same amount is given for a number of potential losses

Question 25

What are equitable remedies?

Answer 25

legal remedy that a court can grant to fix a wrong or enforce a right when other remedies, like paying damages, are not enough

Question 26

In what instances are equitable remedies not granted?

Answer 26

*Damages are an adequate remedy
*The claimant has acted unfairly
*Claimant has unduly delayed bringing an action to court

Question 27

What’s a specific performance?

Answer 27

Court orders the defendant to complete their part of the contract

Question 28

What’s an injunction?

Answer 28

Order for a person to do or not to do something

Question 29

What are the three types of injunctions?

Answer 29

Mandatory
Prohibitory
Asset-freezing

Question 30

What’s a mandatory injunction?

Answer 30

Party to take positive steps to undo something they’ve done in breach of contract

Question 31

What’s a prohibitory injunction?

Answer 31

a court order that prevents a person or group from doing something that violates the legal rights of another party.

Question 32

What’s an asset-freezing injunction?

Answer 32

a court order that prevents a person or company from disposing of or dealing with their assets.

Question 33

What’s an exclusion clauses/exemption clauses?

Answer 33

Limits the parties liability for breach of contract

Question 34

What’s a common law test in relation to exclusion?

Answer 34

Only enforceable if it has been properly incorporated into the contract and covers the losses suffered by the claimant

Question 35

What is incorportation?

Answer 35

he inclusion of terms in contracts formed under English law in such a way that the courts recognise them as valid.

Question 36

How can a clause be incorporation?

Answer 36

*Signature - document signed
*Notice - Defendant takes reasonable steps to bring the clause to the claimant’s attention

Question 37

How does interpretation involve for the common law test in relation to exclusion?

Answer 37

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.

Question 38

What are statutory rules and the example of two laws that need to be satisfied

Answer 38

If clauses pass common law test they must also satisfy statutory laws

Question 39

What are the two statutory rules

Answer 39

*Unfair contract terms Act 1977
*Consumer Act 2015

Question 40

What is the Unfair contract term act 1977?

Answer 40

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

Question 41

What is the Consumer Rights Act 2015

Answer 41

Usually between business and consumer - States that the business must be ‘fair’