Contract 6 - Termination Flashcards
Right to terminate future performance?
Serious breach of an innominate term
-affirm the contract
-discharge the contract
Mitigate loss
Still a duty to mitigate loss - e.g. getting other quote etc..
Frustration?
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
‘Radically different’
- 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.
Delay?
-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
Examples?
-Suez canal (unless it specified that route not frustrated.
-Metropolitan Water Board v Dick Kerr (1918) - first world war.
‘Force majeure’ clause
No need for doctrine of frustration- when parties specified an exceptional circumstance
Something beyond the control of either party.
Cannot be either parties fault.
The Super Servant Two (1990)-
parties own actions of choosing a specific oil rig.
Consequences of frustration
Contract terminated automatically. All parties released from their future obligations.
Recovering money already paid?
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.
One party conferred a benefit?
Court may order a just sum to be paid
Discharge by performance
Doctrine of complete performance - pay when performance is completed fully and exactly.
Exceptions
-Divisible obligations
-Substantial performance
-Wrongful prevention
-Voluntary acceptance of part peformance
Divisible obligations
Agreed to specific payment for each distinct part of stage of the contract. Each part treated like a separate contract.
Substantial performance
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
Wrongful prevention
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.
Remember!
S13 SGSA 1982 - business to business work will be carried out with reasonable care and skill (innominate term).
Voluntary acceptance of part performance
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.
Sumpter v Hedges (1898)
Defendant did not have a choice other than to finish building work. Builders claim for reasonable sum failed.
