Chapter 3 - Termination of Contract

Question 1

How can a contract be discharge?

Answer 1

By performance
Frustration
Breach

Question 2

How is a contract discharged by frustration?

Answer 2

Where is becomes impossible to perform a contract through no fault of either party

Question 3

How is a contract discharged by breach?

Answer 3

Failure to perform the contract, this will lead to remedies for breach of contract

Question 4

What are the rules of a contract being discharged by frustration?

Answer 4

• Contract must have been possible when entered into
• Contract includes a force majeure clause to deal with contracts that become impossible to perform
• It will not be discharged where another mode of performance is possible, even is more expensive/ difficult

Question 5

The Law Reform Act 1943

Answer 5

• Any money paid under the contract before the frustrating event is to be payable
• Any sums due under the contract ceases to be payable after frustration

Question 6

What is a breach of contract?

Answer 6

Where a party does not perform his obligations, he is said to be in breach of contract

Question 7

What are lawful excuses for a breach of contract?

Answer 7

• Where he has tendered performance but this has been rejected
• Where the other party has made it impossible for him to perform
• Where the parties have by agreement permitted non-performance

Question 8

What is a repudiatory breach?

Answer 8

Where the breach is of a term is a fundamentally important term which has the effect of depriving the injured party of substantially the whole benefit of the contract

Question 9

What is a anticipatory breach?

Answer 9

When one party renounces his contractual obligations explicitly or implicitly in advance by showing that he has no intention of performing them

Question 10

How can the injured party treat an anticipatory breach?

Answer 10

• Treat the contract as discharged immediately and sue for damages
• Allow the contract to continue until the actual breach and sue for damages

Question 11

What are the purpose of damages?

Answer 11

To put the parties in the position they would be in if the contract had been correctly performed

Question 12

What are the 2 types of measuring damages?

Answer 12

Expectation interest
Reliance interest

Question 13

What is expectation interest?

Answer 13

to put the person in the position he would have been if contract was performed

Question 14

What is reliance interest?

Answer 14

to put the claimant in the position he would have been in if he had not relied on the contract

Question 15

What are the 2 types of damages?

Answer 15

-Damages awarded for actual financial loss
-Mental distress and damages for loss of enjoyment

Question 16

What is liquidated damages?

Answer 16

A pre estimate of potential damages written into the contract

Question 17

What happens when liquidated damages are excessive?

Answer 17

The penalty clause is not enforceable

Question 18

What are the 3 types of injunction that can be granted in the court’s discretion?

Answer 18

1. Mandatory injunction
2. Prohibitory injunction
3. An asset-freezing injunction

Question 19

What is a mandatory injunction?

Answer 19

directs the defendant to take positive steps to undo something he has already done in breach of contract

Question 20

What is a prohibitory injunction?

Answer 20

requires the defendant to observe a negative promise in a contract

Question 21

What is a alternative dispute resolution?

Answer 21

a process where parties with a dispute use any time of procedure to resolve their differences rather than go to court.

Question 22

Key facts of a arbitration resolution

Answer 22

• the dispute is settled by an independent person
• they act similarly to a judge
• both parties must agree to submit to the process
• agreement sets out the process as well as rights and obligations
• disagreements must be settled in court

Question 23

Key factors of Mediation and Conciliation

Answer 23

• involves an independent third party
• does not act like a judge
• works to assist the parties in coming up with their own solution
• the agreements are not automatically legally binding

Question 24

What are the advantages of an alternative dispute resolution compared to litigation?

Answer 24

• Cheaper than going court
• Can choose person so can gain the services of an expert
• Proceedings are held in private
• Can tailor to the needs of the parties
• Quicker than going to court

Question 25

What are the disadvantages of an alternative dispute resolution compared to litigation?

Answer 25

• Lacks the legal authority
• Could run on for a long time and end up in court anyway
• No timescale
• Not legally enforceable

Question 26

What is an exclusion clause?

Answer 26

Any clause which purports to restrict or exclude liability for breach of contract

Question 27

What makes a exclusion clause enforceable?

Answer 27

Must be an integral part of the contract