Chapter 3 - Termination of Contract Flashcards
How can a contract be discharge?
By performance
Frustration
Breach
How is a contract discharged by frustration?
Where is becomes impossible to perform a contract through no fault of either party
How is a contract discharged by breach?
Failure to perform the contract, this will lead to remedies for breach of contract
What are the rules of a contract being discharged by frustration?
- 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
The Law Reform Act 1943
- 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
What is a breach of contract?
Where a party does not perform his obligations, he is said to be in breach of contract
What are lawful excuses for a breach of contract?
- 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
What is a repudiatory breach?
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
What is a anticipatory breach?
When one party renounces his contractual obligations explicitly or implicitly in advance by showing that he has no intention of performing them
How can the injured party treat an anticipatory breach?
- Treat the contract as discharged immediately and sue for damages
- Allow the contract to continue until the actual breach and sue for damages
What are the purpose of damages?
To put the parties in the position they would be in if the contract had been correctly performed
What are the 2 types of measuring damages?
Expectation interest
Reliance interest
What is expectation interest?
to put the person in the position he would have been if contract was performed
What is reliance interest?
to put the claimant in the position he would have been in if he had not relied on the contract
What are the 2 types of damages?
-Damages awarded for actual financial loss
-Mental distress and damages for loss of enjoyment
What is liquidated damages?
A pre estimate of potential damages written into the contract
What happens when liquidated damages are excessive?
The penalty clause is not enforceable
What are the 3 types of injunction that can be granted in the court’s discretion?
- Mandatory injunction
- Prohibitory injunction
- An asset-freezing injunction
What is a mandatory injunction?
directs the defendant to take positive steps to undo something he has already done in breach of contract
What is a prohibitory injunction?
requires the defendant to observe a negative promise in a contract
What is a alternative dispute resolution?
a process where parties with a dispute use any time of procedure to resolve their differences rather than go to court.
Key facts of a arbitration resolution
- 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
Key factors of Mediation and Conciliation
- 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
What are the advantages of an alternative dispute resolution compared to litigation?
- 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
