Chapter 9 Flashcards
Ending a Contract
Principal methods of discharging a contract
- Performance
- Breach
- Agreement between the parties
- Frustration
Performance
Contractual obligations are discharged when each party
satisfactorily completes its part of the bargain
Substantial performance
condition is breached in some minor way and subject to a claim for the loss caused by the shortfall
Tender of performance
An offer or attempt to do what is required under a
contract
* One party is ready, willing, and able and attempts to perform but
performance is refused by other party
Breach
Failure of a breaching party to properly perform its
contractual obligations
Two ways to breach:
1. Improper or incomplete performance; or
2. Refusal to perform
Conditions
terms essential to substantial performance
- Where breached, victim relieved of obligations
Warranties
minor terms of contract
- Where breached, performance still required
Exemption Clauses
Attempt to significantly limit or eliminate liability
Fundamental Breach
A breach of a fundamental aspect of the contract that is not covered
by an exclusion clause
Discharge by Agreement
Contracts can be modified or ended by agreement
- Bilateral or unilateral discharge
Bilateral Discharge
agreement by both sides to terminate the contract or to
disregard a term of the contract – both parties are relieved of
obligations and therefore there is consideration.
Unilateral Discharge
One party performs and allows the other to be relieved
of all or some obligations – may not be adequate
consideration and the contract may be enforceable.
Conditions precedent
contract is binding only if a pre-existing condition is met
Conditions subsequent
The contract ends when some event or condition takes place
A force majeure clause
spells out who bears the risk if certain events occur
- Consequences for catastrophic events
Frustration
An unexpected event (out of control of the parties) which:
1. Makes performance impossible
2. Changes the nature of the contract
Frustration Test
Frustration does not occur when:
There is a shared mistake
When one party is responsible for an act that frustrates a contract (just a breach)
Common Frustrating Events
- Destruction of the subject matter
- Cancellation of a critical event
- Change of the relevant laws
Krell v Henry
parties agreed to the rental of an apartment from which
the tenant could view the coronation of Edward VII. The coronation was postponed. It was still possible to occupy the flat, but to require the tenant to do so with no coronation parade to watch would be something essentially different from what the parties contracted for.
Damages
Most common remedy for breach of contract is damages
- In a breach of contract damages look forward in time
- court asks what loss has been suffered by the plaintiff and compensates for those
losses - Tort damages look backward
Equitable Remedies
Equitable remedies are discretionary and will be granted only when
the judge thinks it right and fair to do so – special situations where
the ordinary remedy of damages would not be adequate.
Recession
returning parties to their original position
Rectification
court interprets and corrects wording of a document to
reflect agreement of parties
Specific performance
Court orders defaulting party to perform its
obligations if damages are not suitable or adequate
Injunction
an order to prevent a party from breaching a contract
Accounting
court may order breaching party to disclose all financial
dealings and records and pay profits
Quantum meruit
court may order payment for part performance
