Chapter 7 Discharge of Contract Flashcards
What are the 4 ways a contract can be discharged
- Performance
- Breach
- Agreement
- Frustration
What is the general rule for discharge of contract through performance. Name the case study and details
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
How many exceptions are there for discharge of contract through performance?
There are five exceptions. They are
- De mini mis rule
- Divisible contracts
- Substantial Performance
- Prevented Performance
- Acceptance of partial performance
Name the case study on the De Minimis Rule
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.
Explain the concept of divisible contracts
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”
Explain both case studies on discharge of contract due to substantial performance
- 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 - 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.
Explain the concept of discharge of contract through prevented performance and state its relevant case studies.
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.
Explain the concept of discharge of contract due to acceptance of partial performance
Name its exception as well as the relevant case study
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.
What is the general rule of discharge of contract through breaches
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.
What are the two conditions that allow a contract to be repudiated?
- Fundamental Breech (Behn V Burness)
2. Conditional Breech
How many breaches are there?
List them and their relevant case studies
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)
Explain the concept of Actual Breach of Condition
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.
Explain the concept of Breach of Innominate Terms
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.
Explain the concept of breach of warranty
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.
Explain the concept of breach of warranty
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.
