Contract 6 - Termination

Question 1

Right to terminate future performance?

Answer 1

Serious breach of an innominate term
-affirm the contract
-discharge the contract

Question 2

Mitigate loss

Answer 2

Still a duty to mitigate loss - e.g. getting other quote etc..

Question 3

Frustration?

Answer 3

Supervening event or circumstances must-
-make performance of the contract impossible, or radically different.
-be something beyond the ordinary risks that parties can be treated as having taken on board
-be something that was beyond the control of either party

Question 4

‘Radically different’

Answer 4

• Government intervention
  -Unavailability of a specific person crucial to the contract
• illegality
  -destruction of the subject matter
  -non-occurrence of a fundamental event.
  In all cases; a question of degree.

Question 5

Delay?

Answer 5

-whether there are contractual provisions for delay
-the likely length of delay relative to the duration of the contract
-any time set in the contract for the obligations to be performed
-whether the performance resumed is radically different from the contract

Question 6

Examples?

Answer 6

-Suez canal (unless it specified that route not frustrated.
-Metropolitan Water Board v Dick Kerr (1918) - first world war.

Question 7

‘Force majeure’ clause

Answer 7

No need for doctrine of frustration- when parties specified an exceptional circumstance

Question 8

Something beyond the control of either party.

Answer 8

Cannot be either parties fault.
The Super Servant Two (1990)-
parties own actions of choosing a specific oil rig.

Question 9

Consequences of frustration

Answer 9

Contract terminated automatically. All parties released from their future obligations.

Question 10

Recovering money already paid?

Answer 10

Law reform (Frustrated Contracts) Acts 1943-
-money paid before the event can be recovered
-money that should have been paid before the event need not be paid.
-At the court’s discretion expenses incurred by the payee can be recovered out of the total sums paid/payable before the event.

Question 11

One party conferred a benefit?

Answer 11

Court may order a just sum to be paid

Question 12

Discharge by performance

Answer 12

Doctrine of complete performance - pay when performance is completed fully and exactly.

Question 13

Exceptions

Answer 13

-Divisible obligations
-Substantial performance
-Wrongful prevention
-Voluntary acceptance of part peformance

Question 14

Divisible obligations

Answer 14

Agreed to specific payment for each distinct part of stage of the contract. Each part treated like a separate contract.

Question 15

Substantial performance

Answer 15

Cost of rectifying not more than 1/14 of the contract price a court is likely to accept the work that has been substantially performed.
Completed the work but slightly defective

Question 16

Wrongful prevention

Answer 16

Party wrongfully prevented from completing their contractual obligations they will be entitled to damages or a reasonable sum in restitution.
If terminated falling short of a serious breach.

Question 17

Remember!

Answer 17

S13 SGSA 1982 - business to business work will be carried out with reasonable care and skill (innominate term).

Question 18

Voluntary acceptance of part performance

Answer 18

If other party voluntarily accepts party carrying out work is entitled to a reasonable sum for what they have done.
Other party must have a genuine choice.

Question 19

Sumpter v Hedges (1898)

Answer 19

Defendant did not have a choice other than to finish building work. Builders claim for reasonable sum failed.