Chapter 7 Discharge of Contract Flashcards

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1
Q

What are the 4 ways a contract can be discharged

A
  1. Performance
  2. Breach
  3. Agreement
  4. Frustration
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2
Q

What is the general rule for discharge of contract through performance. Name the case study and details

A

general rule: a contract can only be discharged under performance when it has been performed precisely and exactly.

Case on Cutter V Powell: Cutter was a sailor to be paid for working on a ship. He died before he returned to shore. His widow could not claim compensation from the voyage due to the fact that the contract stated that payment was conditional upon full completion of the voyage

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3
Q

How many exceptions are there for discharge of contract through performance?

A

There are five exceptions. They are

  1. De mini mis rule
  2. Divisible contracts
  3. Substantial Performance
  4. Prevented Performance
  5. Acceptance of partial performance
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4
Q

Name the case study on the De Minimis Rule

A

The case study was on Arcos Ltds V E A Ronaasen
The case was regarding how a buyer contracted to purchase 1/2 inch thick barrels for storage of cement in his business.

However, the supplier provided 80% of the barrels with 9/16 inch thickness.

Therefore, this was a case where the court held the difference in specifications were not microscopic as it would cause the buyer to be unable to use it entirely for its intended purposes.

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5
Q

Explain the concept of divisible contracts

A

Contracts that can be sub-divided into smaller several independent parts which can be fulfilled and discharged separately. Payment is entitled to promisor in accordance with these “sub contracts”

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6
Q

Explain both case studies on discharge of contract due to substantial performance

A
  1. Hoenig V Issacs
    Showcased how a contract that was substantially performed with the terms not ‘being a whole contract’ allowed the promisor to claim compensation less amount needed to rectify any defects
  2. Bolton V Mahadeva
    Court refused to grant promisor compensation. This is because the contract was a whole contract and that the nature of the defects proved to not be sufficient for a substantial completion of the contract.
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7
Q

Explain the concept of discharge of contract through prevented performance and state its relevant case studies.

A

Concept: If promisee prevented performance of promisor. The contract can be discharged on this ground. Promisee will be awarded compensation based on a quantum merit basis.

Case: Planche V Colburn
Colburn contracted Planche to write a book for his project. However, Colburn decided to scrap the entire project. Therefore, this effectively prevented Planche from performing his duties.

Therefore, the court held that this was a case where the contract could be discharged based on prevented performance and Planche was awarded compensation on a quantum merit basis.

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8
Q

Explain the concept of discharge of contract due to acceptance of partial performance

Name its exception as well as the relevant case study

A

If the promisee accepts the partial completion of performance, the contract can be discharged and the promisor will receive compensation on a quantum merit basis.

Exception: The promisee did not voluntarily accept the partial completion and had no other choice but to accept.

Case: Sumpter V Hedges
Hedges contracted Sumpter to construct a building on Hedges’ land. However, Sumpter could not complete the construction.

As a result, Hedges had to complete the construction on his own.

The court held that Hedges had no choice but to accept the partial performance due to the fact that the construction was on his grounds. Therefore, Sumpter was not entitled to any compensation on a quantum merit basis.

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9
Q

What is the general rule of discharge of contract through breaches

A

Generally, the breach of a contract would not necessarily entail a repudiation. Only contracts whose breach was conditional or fundamental would warrant repudiation. Else, the injured party can just seek damages as remedies.

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10
Q

What are the two conditions that allow a contract to be repudiated?

A
  1. Fundamental Breech (Behn V Burness)

2. Conditional Breech

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11
Q

How many breaches are there?

List them and their relevant case studies

A
There are 4 breaches. 
1. Breach of Condition
2. Breach of Innominate Terms
(Hong Kong Fir)
3. Breach of Warranty
(RDC Concrete)
4. Anticipatory Breach
(Hochester V De La Tour)
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12
Q

Explain the concept of Actual Breach of Condition

A

If time of performance has arrived and performance has not been met. This would be an actual breach.

If the term breached was a condition, the injured party can seek to repudiate the contract. Gives the party the right to affirm or discharge the contract on the date of breach.

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13
Q

Explain the concept of Breach of Innominate Terms

A

If the date of performance has arrived but performance has not been fulfilled this would be an actual breach.

If the breach was a innominate term with serious consequences, it would allow the injured party to repudiate the contract. Became a fundamental breach.

Case: Hong Kong Fir

Injured party can choose to affirm or discharge the contract from the date of breach.

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14
Q

Explain the concept of breach of warranty

A

If the time of performance has arrived but performance has not been met, this would be an actual breach.

If the term breached was a warranty, which has serious consequences. The breach would amount to be a fundamental breach.

Case : RDC concrete

Injured party can choose to repudiate the contract.

Injured party can choose to affirm the contract or discharge it from date of breach.

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15
Q

Explain the concept of breach of warranty

A

If the time of performance has arrived but performance has not been met, this would be an actual breach.

If the term breached was a warranty, which has serious consequences. The breach would amount to be a fundamental breach.

Case : RDC concrete

Injured party can choose to repudiate the contract.

Injured party can choose to affirm the contract or discharge it from date of breach.

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16
Q

What are the four conditions that prevent affirmation from happening?

A
  1. No legitimate interest to safeguard [ Strongest Point ]
  2. Damages can be sufficient substitute
  3. Reliance of guilty party is necessary
  4. Losses are meant to be mitigated not increased.
17
Q

Name the case study for affirmation of contract

A

White & Carter V McGregor

White & Carter contracted McGregor to create plates. However, McGregor had anticipated their lack of performance. White & Carter chose to affirm the contract.

Court held that this was a valid affirmation because White & Carter had legitimate interest to safeguard despite the affirmation raising cost.

18
Q

Explain the concept of anticipatory breach and its case study

A

If the time of performance is not yet due, but promisor declared that they will not perform. This results in an anticipatory breach.

The innocent party has the option to affirm or discharge the contract from date of breach.

Case study was on Hochester V De La Tour.
Hochester was contracted by De La Tour, however, 3 weeks before performance was due, De La Tour told Hochester that his services were no longer needed.

Court held that De La Tour had an anticipatory breach and thus the contract was discharged allowing Ho Chester to claim damages

19
Q

What is the concept of discharge of contract through agreements?

A

Contracts can be discharged if the term of the contract allowed for it such as a conditional term or time bound terms.

HOWEVER, the fresh contracts need to have the four basic elements of a contract.

Offer, Acceptance, Consideration & Intention to create legal relation.

19
Q

What is the concept of discharge of contract through agreements?

A

Contracts can be discharged if the term of the contract allowed for it such as a conditional term or time bound terms.

HOWEVER, the fresh contracts need to have the four basic elements of a contract.

Offer, Acceptance, Consideration & Intention to create legal relation.

20
Q

`Explain the general rule of frustrated contracts.

[Three criteria for frustration]

A

Frustration can only take place during a
Supervening event
Not the fault of either party
Radical Change in Circumstances

21
Q

How many types of frustrated contracts are there?

List the case studies for them

A
  1. Destruction of Subject Matter
    (Taylor V Caldwell)
  2. Non - Occurrence of events
    (Krell V Henry)
  3. Government Interference
    (Metropolitan V Dick Kerr & Co)
  4. Change of circumstance
    (war, natural disaster)
  5. Personal Incapacity
    (Poussard V Spiers)
22
Q

What are the three factors that you from discharging a contract through frustration?

List the case studies

A

Foreseeability of Frustration

(If the frustration could be foreseeable, then contract cannot be discharged through frustration)
HDB V Microform Precision Industries

Force Majeur Clause
If there were terms within the contract that specifically listed the type of frustration and how it could not discharge the contract. The contract cannot be discharged due to frustration

Frustration was Self Induced

(If the topic of frustration was brought about by either parties in the contract. Then the contract cannot be discharged on grounds of frustration)

Case study of Maritime National Fish V Ocean Travellers:
Event was self induced because the guilty party sold his license to a 3rd party which caused them to lack the required license.

23
Q

What are the legal effects of frustrated contracts

A

All outstanding obligations are discharged
All monetary benefits conferred prior to the time of frustration is recoverable
All monies payable cease to be payable
All non-monetary benefits conferred can be compensated.