Contract - Discharge of Contract Flashcards
What are the 4 ways a contract can be discharged?
- Performance
- Agreement
- Frustration
- Breach
Performance (Cutter v Powell)
Parties must perform the requirements laid down for them completely
Exceptions to entire performance rule
- Substantial performance
- Severable/divisible contracts
- Voluntary acceptance of a partial performance
- Prevention of performance
Substantial performance (incl. 2 cases)
Only minor defects to claim the price of the work done (Hoenig v Isaacs; Bolton v Mahadeva)
Severable/divisible contracts (incl. case)
Payment becomes due at various stages rather in one lump sum (Ritchie v Atkinson)
Voluntary acceptance of a partial performance (incl. case)
Must be freely accepted and had a genuine choice (Sumpter v Hedges)
Prevention of performance (incl. case)
By some fault of the other party (Planche v Colburn)
Agreement
- Parties simply agree to terminate the contract
- Distinction made between bilateral discharge and unilateral discharge
Frustration
After a contract is made, through no fault of either party, a change in circumstances may make the contract either:
- impossible to perform
- illegal to perform
- radically different from what the parties contemplated
In order to frustrate the contract, the event must be… (incl. 2 cases)
- Supervening
- Unforeseeable (Amalgamated Investment v John Walker)
- neither party’s fault (the Eugenia)
Impossible to perform (Taylor v Caldwell)
Destruction or unavailability of something essential/fundamental for contract’s performance
Illegal to perform (Fibrosa v Fairbairn Lawson)
After the contract is formed a change in law makes performance illegal
A drastic change in circumstances (incl. case)
It should make the contract radically different or pointless (Krell v Henry)
Categories of Frustration
- Destruction of matter (Taylor v Caldwell)
- Unavailability or delay
- Frustration of purpose (Krell v Henry)
- Supervening illegal/government intervention (Fibrosa v Fairbairn)
The Sea Angel
Test: whether the purpose of the contract has been frustrated
Limits to frustration
- Frustrating event occurs before the contract is made (Taylor v Caldwell)
- The contract makes provision for such an event
- The event merely renders the contract more onerous to perform (Davis Contractors v Fareham)
- It was foreseen/foreseeable
- Self induced (Maritime National Fish Ltd v Ocean Trawlers)
Legal consequences of frustration
- Contract is automatically terminated from the point at which the frustrating event occurred
- Obligations which would have arisen no longer exist - but acts done before the frustrating event may have legal consequences
Similarities between frustration and mistake
- Both concerned with allocation of risk of an unforeseeable event that makes the contractual performance either impossible or radically different
- The finding of both mistake and frustration depends on the construction/interpretation of the contract
Differences between frustration and mistake
- Timing
- Scope
- Legal effect
What are the two types of breach?
- Actual
- Anticipatory
What is an actual breach?
If the contract is completed but has not fulfilled the criteria of the terms/goes against the contents of the contract
What is an anticipatory breach?
If one party can see that the performing party is planning on breaching the contract.
What is the effect of an anticipatory breach? (incl. case)
Hochster v de la Tour - can immediately sue
What is an innominate term (incl. case)?
Hong Kong Fir Shipping - a term which is neither a condition or a warranty; you find out upon breach of the term whether it should allow for damages to be rewarded as if it was a condition or warranty
