Contract 9 - Discharge Flashcards
What are 4 methods of discharging a contract?
- Performance ๐บ
- Agreement ๐ค
- Frustration ๐ฐ
- Breach ๐ฅ
What is the general rule as to discharge by performance and 4 exceptions?
๐บ
Complete performance of obligations - a promisor who performs part doesnโt discharge ๐ซ๐ฒ
1. Acceptance of Partial Performance: defaulting party paid on quantum merit basis ๐ท๐ ๐งฑ
2. Substantial Performance: defaulting party obtains contract price with deduction to reflect cost of remedying defect๐ซ
3. Stage payments: performing party paid for each part performed๐งฑ
4. Wrongful Prevention of Performance by Other Party ๐ฟ: entitled to payment despite not completed; innocent party can sue for damages or claim a quantum meruit
What is the meaning of acceptance of partial performance?
must be freely given,
- not possible for half built building but was for bricks left on land ๐ท๐ ๐งฑ
- may get quatum merrit if part performance voluntarily accepted
What is the meaning of โsubstantial performanceโ?
๐ซ
Does defect go to root of the contract?
๐ณ
- Small defects did not prevent decorator from being paid ๐จโ๐จ
- Central heating installed but didnโt work, not substantial performance โจ๏ธ
What is the defence for failure to perform?
๐คบ
Tender of Performance:
- unconditionally offered to perform their obligations in line with contract terms but ๐
- promisee refused ๐คฌ
Doesnโt discharge but creditor canโt claim interest/damages ๐ช๐ต
How can a contract be discharged by agreement?
๐ค
- By operation of an original contract term:
a) condition precedent ๐or
B) subsequent ๐ฎ - By a subsequent binding contract between the parties: requires
a) agreement obligation is released (accord); ๐ค
b) consideration for promise to release (satisfaction) ๐
Where one party has completed its obligations but other hasnโt, what can be done for discharge by agreement by subsequent binding contract?
Completed party can release otherโs obligations
- under deed๐งพ
OR
- accept something else in place of former obligation ๐
What is the meaning of a condition precedent?
Condition which must be satisfied before any rights come into existence - contract suspended until condition satisfied
๐
What is the meaning of a condition subsequent?
Term providing for the termination of a contract in event of specified occurrence
๐ฎ
What remedies are there for breach of contract?
- Compensatory damages ๐ต
- Specific Performance ๐ซต
- Injunction โ
What are the 2 types of breach?
- Anticipatory Breach ๐งจ: party indicates they wonโt perform obligations in advance
- innocent party has automatic right to โacceptโ the renunciation and treat contract as terminated.
- Repudiatory Breach ๐ฅ: breach of condition (or innominate treated as such) entitling other to treat contract as terminated party can either
- affirm & claim damages, or
- terminate & claim damages
What must be shown to treat contract as terminated for an anticipatory breach?
๐งจ
That if breach occurred at time performance was due, it would have been repudiatory (I.e. a term rather than a condition)
What are the risks of wrongful termination?
Court could, after termination for repudiation, later find term was a warranty/treated as one which means they wouldโve had no right to terminate = wrongful termination
Wrongful notice seen as serious breach
Risk particularly high for terms not defined as conditions and depending on test
What are benefits of affirming a contract?
- Contract survives & rights of innocent party preserved
- Commercial reasons
- Innocent party doesnโt sacrifice opportunity to claim for damages
How can one affirm?
Must be evidence of a very clear and unequivocal commitment to continuing the contract
What limitations are there for the right to affirm?
- Cooperation of breaching party required for continued performance ๐ค
- Innocent party must have a legitimate interest financial or otherwise, in affirming and continuing ๐ค
What is frustration and whatโs its effect?
๐ฐ
Events:
- that occur after formation of the contract, and ๐ฐ๏ธ
- are beyond control of either party ๐งโโ๏ธ and
- render performance radically different ๐ดโก๏ธ๐ฆ
Effect: relieves a party from further obligations under the contract - contract ends automatically ๐ฎโ๐จ
How may performance be rendered radically different?
๐ดโก๏ธ๐ฆ
Performance is
- impossible, ๐ช
- unavailable ๐ซฅ
- illegal ๐ฎ
- common purpose is frustrated i.e. canโt be carried out ๐ฏโโ๏ธ๐ญ
What is not a frustrating event?
- Merely an increase in expense/onerousness ๐ฐ๐ฐ๐ฐ๐ฉ
- One which parties couldโve reasonably foreseen ๐ง
- Provided for in the contract i.e. force majeure clause ๐
- Caused by partyโs default ๐
What happens to obligations arising to frustrating event?
- Money paid before can be recovered & money that shouldโve been paid no longer need to be โณ๐ต
- Expenses of payee can be recovered at discretion of the court ๐งโโ๏ธ๐ต
- Where benefit was non-monetary, a party who received it may be required to pay a just sum for it ๐๐ โ๏ธ๐ต
What is the case on acceptance of partial performance?
๐ท
Builder went broke halfway through project.
- No payment for part completed building as C couldnโt reject. ๐
- Payment for building materials left on land s could have returned ๐งฑ
What is Wrongful prevention of performance and what are the remedies
๐
Party prevented from completing work due to fault of other party.
- sue for damages ๐ต
OR
- claim quantum meruit ๐งฑ๐ต
What are the cases on frustration?
Impossibility ๐ช
Unavailability ๐ซฅ
Illegality ๐ฎ
๐ช
- Music hall destroyed=frustrated ๐ผ๐ฅ
- Install Machinery in a factory but factory destroyed=frustrated โ๏ธ๐ญ๐ฅ
๐ซฅ
- Ill drummer=frustrated ๐ฅ๐คฎ
- ship requisitioned 5 months = frustrated ๐ข๐ฎ๐ด but 5 years not (itโll be done soon).
๐ฎ
- war made deliveries to Poland illegal ๐ข๐ต๐ฑโ
What are the cases on frustration of common Purpose?
๐ฏโโ๏ธ๐ญ
Must be purpose of both parties
- Hired room to watch coronation that was cancelled = frustration
๐๐คฎ๐ข - hired boat to watch Navy show which was cancelled. Still have a boat = not frustrated ๐ฅ๏ธ๐ขโ
- lease of office no longer needed due to brexit = not frustrated ๐ข๐ช๐บ๐ฅโ
What are the cases on frustration
- Difficult or expensive? ๐ฐ๐ฐ๐ฐ๐ญ
- Self-induced ๐คช
- Foreseeable ๐ง
๐ฐ๐ฐ๐ฐ๐ญ
- Built houses cost more than expected = not frustrated ๐๏ธ๐ฐ๐ญ
๐คช
- rig moving boat 1 sunk, rig boat 2 leased = not frustrated as choice to lease rig boat 2 ๐ขโ๐ขโ
๐ญ
๐ง
- Contract signed during civil unrest, got worse = not frustrated as foreseeable
๐ฌ๐ท๐ผ๐ฅโก๏ธ๐ฅโ
- No frustration of force majeure clause in contract.
What are the consequences of frustration?
- money paid before event can be recovered ๐ต๐ฅ๐
- money should have been paid before frustrating event need not be paid ๐ค๐ฅ๐
- expenses by supplier can be recovered out of sums paid/payable before event๐ทโโ๏ธ๐งฑ๐ท
- all future obligations cancelled ๐ฎ๐ฎโ๐จ
Whatโs the case on the amount of expenses payable to the supplier and frustration?
Value of benefit payable to supplier is benefit received not costs of supplier
Libyan Oilfield case
๐BP๐ข๏ธ๐จโ๐ฌ ๐๏ธ๐ง๐ฝโโ๏ธ๐ญ๐ข
-๐ข๏ธ๐จโ๐ฌ โ
- ๐ข โ