Contract 9 - Discharge Flashcards
What are 4 methods of discharging a contract?
- Performance 🕺
- Agreement 🤝
- Frustration 😰
- Breach 💥
What is the general rule as to discharge by performance and 4 exceptions?
🕺
Complete performance of obligations - a promisor who performs part doesn’t discharge 🚫🎲
1. Acceptance of Partial Performance: defaulting party paid on quantum merit basis 👷🏠🧱
2. Substantial Performance: defaulting party obtains contract price with deduction to reflect cost of remedying defect🫠
3. Stage payments: performing party paid for each part performed🧱
4. Wrongful Prevention of Performance by Other Party 👿: 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 👷🏠🧱
- may get quatum merrit if part performance voluntarily accepted
What is the meaning of ‘substantial performance’?
🫠
Does defect go to root of the contract?
🌳
- Small defects did not prevent decorator from being paid 👨🎨
- Central heating installed but didn’t work, not substantial performance ♨️
What is the defence for failure to perform?
🤺
Tender of Performance:
- unconditionally offered to perform their obligations in line with contract terms but 🍆
- promisee refused 🤬
Doesn’t discharge but creditor can’t claim interest/damages 🪙💵
How can a contract be discharged by agreement?
🤝
- By operation of an original contract term:
a) condition precedent 👈or
B) subsequent 🔮 - By a subsequent binding contract between the parties: requires
a) agreement obligation is released (accord); 🤝
b) consideration for promise to release (satisfaction) 🎁
Where one party has completed its obligations but other hasn’t, what can be done for discharge by agreement by subsequent binding contract?
Completed party can release other’s obligations
- under deed🧾
OR
- accept something else in place of former obligation 🎁
What is the meaning of a condition precedent?
Condition which must be satisfied before any rights come into existence - contract suspended until condition satisfied
🏁
What is the meaning of a condition subsequent?
Term providing for the termination of a contract in event of specified occurrence
🔮
What remedies are there for breach of contract?
- Compensatory damages 💵
- Specific Performance 🫵
- Injunction ✋
What are the 2 types of breach?
- Anticipatory Breach 🧨: party indicates they won’t perform obligations in advance
- innocent party has automatic right to ‘accept’ the renunciation and treat contract as terminated.
- Repudiatory Breach 💥: 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?
🧨
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 would’ve 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 doesn’t sacrifice opportunity to claim for damages
How can one affirm?
Must be evidence of a very clear and unequivocal commitment to continuing the contract
