Contract Law: Discharge of a contract

Question 1

What are the 3 ways to discharge a contract?

Answer 1

• Performance
• Breach
• Frustration

Question 2

Describe discharge by performance?

Answer 2

• Performance must be complete and exact as shown in Cutter v Powell 1795.

Question 3

What are the 4 ways the performance rule has been moderated?

Answer 3

• Divisible contracts- where the contract can be seen as separate parts, non completion of ones part is not a breach of the contract as shown in Richie v Atkinson.
• Substantial performance- where a party has fine substantially what is required then there must be a payment of what is appropriate to what has been done as shown in Dakin and Co. v Lee 1916.
• Prevention of full performance- where one party prevents another from carrying out his contract then the innocent party can claim to be paid on a Quantum Meruit basis as shown in Planche v Colburn 1831.
• Acceptance of part performance- where one party has agreed the other party need not complete the entire contract then the contract must be paid for on a Quantum Meruit basis as shown in Sumpter v Hedges 1898.

Question 4

What is the effect of a term as to time performance of a contract?

Answer 4

• A term for time performance is important when an item is needed at a particular time.

The court regards time as a condition if:
- the parties have expressly stated in the contract that time is of the essence of the contract.
- one party has failed to perform on time and the other has insisted on a new date for completion of the contract.
- if none of the above apply, then the time performance is treated as a warranty, other than a condition.

Question 5

Describe time and the Consumer Rights Act 2015?

Answer 5

• s52 deals with the time for performance of a contract to which the act applies
• If the trader is in breach of what the contract requires under s52, the consumer has the right to a price reduction under s54 by an appropriate amount.

Question 6

What is a discharge by actual breach?

Answer 6

• When a party fails to perform their obligations under a contract, the party must be sued for breach of contract.
• Three circumstances giving rise to a breach of contract:
• Renunciation (refusal) by party of their liabilities under it
• Impossibility created by their own act
• Total or partial failure of performance

Question 7

What is repudiatory breach of contract?

Answer 7

Can occur in 3 ways:
- breach of contract
- a refusal to perform the contract
- a sufficiently serious breach of an innominate term.

If a repudiatory breach is established the other party who is not in breach may terminate the contract and claim damages or continue the contract and claim damages.

Question 8

What is an anticiption breach?

Answer 8

• Occurs when a party to a contract gives notice in advance to the party that they will not be performing or completing the contract as shown in Hochster v de la Tour 1853.

Question 9

What are the remedies for breach?

Answer 9

• For anticipatory breach, the victim can claim damages which are assessed at the time when performance should occur and the loss might increase due to change in market factors.
• The victim may also repudiate the contract under anticipatory breach, the victim is no longer bound to perform any obligations under the contract.

Question 10

What is a discharge by frustration?

Answer 10

When a party to the contract is prevented from keeping the promise because of an unforeseeable, intervening event, so they would not be liable by a breach of contract as shown in Taylor v Caldwell 1863

Question 11

What is majeure clause?

Answer 11

Found in commercial contracts excluding liability for the parties for delaying performance of non performance if there are extraordinary events.

Question 12

What is frustration - impossibility of performance?

Answer 12

A contract may be frustrated as a result of a change in the law that makes the contract illegal to perform.

Question 13

When can frustration not apply?

Answer 13

• Self- induced frustration- when the frustrating event is within the control of one party.
• The contract becomes less profitable which is not a reason for the frustration of that contract.
• The event being a foreseeable risk or the event was mentioned in the contract- the courts are reluctant to find that there has been frustration of contract.

Question 14

What are the remedies of frustration?

Answer 14

• The frustrating event automatically terminates the contract at the time of the event.
• Under the Law Reform (frustrated contracts) Act 1943 s1 states that money already paid is recoverable and money due under the contract is not payable.
  
  • the court can order compensation to be paid for work done and expenses incurred.