Contract - Discharge of Contract

Question 1

What are the 4 ways a contract can be discharged?

Answer 1

• Performance
• Agreement
• Frustration
• Breach

Question 2

Performance (Cutter v Powell)

Answer 2

Parties must perform the requirements laid down for them completely

Question 3

Exceptions to entire performance rule

Answer 3

• Substantial performance
• Severable/divisible contracts
• Voluntary acceptance of a partial performance
• Prevention of performance

Question 4

Substantial performance (incl. 2 cases)

Answer 4

Only minor defects to claim the price of the work done (Hoenig v Isaacs; Bolton v Mahadeva)

Question 5

Severable/divisible contracts (incl. case)

Answer 5

Payment becomes due at various stages rather in one lump sum (Ritchie v Atkinson)

Question 6

Voluntary acceptance of a partial performance (incl. case)

Answer 6

Must be freely accepted and had a genuine choice (Sumpter v Hedges)

Question 7

Prevention of performance (incl. case)

Answer 7

By some fault of the other party (Planche v Colburn)

Question 8

Agreement

Answer 8

• Parties simply agree to terminate the contract
• Distinction made between bilateral discharge and unilateral discharge

Question 9

Frustration

Answer 9

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

Question 10

In order to frustrate the contract, the event must be… (incl. 2 cases)

Answer 10

• Supervening
• Unforeseeable (Amalgamated Investment v John Walker)
• neither party’s fault (the Eugenia)

Question 11

Impossible to perform (Taylor v Caldwell)

Answer 11

Destruction or unavailability of something essential/fundamental for contract’s performance

Question 12

Illegal to perform (Fibrosa v Fairbairn Lawson)

Answer 12

After the contract is formed a change in law makes performance illegal

Question 13

A drastic change in circumstances (incl. case)

Answer 13

It should make the contract radically different or pointless (Krell v Henry)

Question 14

Categories of Frustration

Answer 14

• Destruction of matter (Taylor v Caldwell)
• Unavailability or delay
• Frustration of purpose (Krell v Henry)
• Supervening illegal/government intervention (Fibrosa v Fairbairn)

Question 15

The Sea Angel

Answer 15

Test: whether the purpose of the contract has been frustrated

Question 16

Limits to frustration

Answer 16

• 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)

Question 17

Legal consequences of frustration

Answer 17

• 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

Question 18

Similarities between frustration and mistake

Answer 18

• 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

Question 19

Differences between frustration and mistake

Answer 19

• Timing
• Scope
• Legal effect

Question 20

What are the two types of breach?

Answer 20

1. Actual
2. Anticipatory

Question 21

What is an actual breach?

Answer 21

If the contract is completed but has not fulfilled the criteria of the terms/goes against the contents of the contract

Question 22

What is an anticipatory breach?

Answer 22

If one party can see that the performing party is planning on breaching the contract.

Question 23

What is the effect of an anticipatory breach? (incl. case)

Answer 23

Hochster v de la Tour - can immediately sue

Question 24

What is an innominate term (incl. case)?

Answer 24

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

Question 25

What is the effect of a breach of condition (incl. case)?

Answer 25

Can claim for damages and treat the contract as repudiated (i.e. terminated/discharged) e.g. Poussard v Spiers

Question 26

What is the effect of breach of warranty?

Answer 26

Can claim for damage for loss suffered but must continue with the contract e.g. Bettini v Gye

Question 27

What is the effect of breach of an innominate term?

Answer 27

depending on how serious the breach is:
- major consequences - treat as a breach of condition
- minor consequences - treat as a breach of warranty

Question 28

Charles v Oppenheim (breach)

Answer 28

Late performance will always amount to a breach of contract giving right to damages; or if the time was ‘part of the essence’ of the contract