CONTRACT LAW PT.2 (CONTENT, DISCHARGE, REMEDIES) Flashcards
CONTENT OF CONTRACT
Consist of “terms” :
Terms are stipulation (condition that give effect of the intention of the parties. The terms in a contract is determined by the parties of the contract.
2 classification of contractual terms:
- EXPRESS TERM
- if it has been specifically agreed upon by parties to a contract.
- it has been documented
- if there is no document, look back at the negotiating stage
- wholly oral
- wholly in writing
- partly oral, partly writing
- IMPLIED TERM
- stipulation read or implied into a contract either by the statute or court
- for acceptable practice
- necessity to give business efficacy to the contract
- conduct of parties
CONDITION (EXPRESS OR IMPLIED TERM)
Condition is a term of the contract which is very important/ essential to the contract.
Under Sale of Goods Act 1957, a condition is a stipulation essential to the main purpose of the contract, the breach of which gives rise to the right to treat the contract as repudiated.
If the statement of facts proves untrue or the promise is not fulfilled
- innocent party may treat the breach as a repudiation of the contract
- which discharge him from further performance of the contract
In other word, if one party breaches the condition, the breach allowed the innocent party to treat the contract as discharged. They can also claim damages for the losses caused by the not promised not fulfilled.
WARRANTY (EXPRESS OR IMPLIED TERM)
Under Sale of Goods Act 1957, a warranty is a stipulation collateral to the main purpose of the contract, the breach of which gives rise to claim for damages but not right to reject the goods and not right to treat the contract as repudiated.
A warranty is said to be a term of the contract which is not so important to the main purpose of the contract.
A breach of the warranty will entitled the innocent party to claim damages only but not a right to treat the contract as repudiated
INTERMEDIATE TERM/ INNOMINATE TERM (EXPRESS OR IMPLIED TERM)
Terms which are too complex to be classified either as a condition or a warranty, and lie between a condition and a warranty.
The court will determine the seriousness of the breach. Will decide whether plaintiff is entitle the right to terminate the contract or merely claim the damages
In deciding whether a statement is a term or representation, court will look at 4 factors:
- The parole evidence rule
- prevent any party from introducing evidence from when before/during the agreement is made, in order to alter the terms of the existing contract - Relatives expertise of the parties
- Importance of the statement
- Time
EXEMPTION/ EXCLUSION/ LIMITATION CLAUSE
A term of a contract that seeks to exclude or limit the liability of a party to a contract.
Generally court will not interfere with the terms that the parties to a contract freely agreed upon.
CONTRA PROFERENTUM RULE (RULE OF CONSTURCTION)
court will intervene if the term of the exclusion clause are ambiguous or capable of more than one meaning.
- court will construe the meaning of the Exclusion Clause against the party asserting it.
DISCHARGE OF CONTRACT
Refer to the come to the end of a contract.
4 types of discharge:
- BY AGREEMENT
- contracting parties may by agreement terminate the contract - BY PERFORMANCE
- performance must be complete, precise and exact for it to come to an end.
- if performance is incomplete, the other party need not have to perform his part of obligation - BY BREACH
- BY FRUSTRATION/ IMPOSSIBILITY
- where the promise of the contract is impossible to be performed
- comes to an abrupt an automatic end
- terminated for future performance only
- BY AGREEMENT (DISCHARGE)
Contracting parties may by agreement terminate the contract
“If the parties to the contract agree to substitute a new contract for it, or to rescind or to alter, the original contracts need not be performed.”
- BY PERFORMANCE (DISCHARGE)
Performance must be complete, precise and exact for it to come to an end.
If performance is incomplete, the other party need not have to perform his part of obligation
- BY BREACH (DISCHARGE)
“When a party to a contract has refused to perform, or disabled himself from performing, his promise entirely, the promise may put an end to the contract, unless he has signifies his consent to its continuance”
- BY FRUSTRATION (DISCHARGE)
Where the promise of the contract is impossible to be performed. (TSCD)
- comes to an abrupt an automatic end
- terminated for future performance only
- total destruction of subject matter
- purpose/ object of the contract has been defeated by supervening event
- changes in the law that render the contract as unlawful
-contracting party dies or suffer an incapability
Void from the occurance of the supervening event
5 TYPES OF REMEDIES:
1) RECISSION
- one party to the contract has the right to put an end to the contract due to breach
2) DAMAGES
3) SPECIFIC PERFORMANCE
4) INJUNCTION
5) QUANTUM MERUIT
RECISSION (REMEDIES)
One party put the contract to an end due to breach of contract from another party
Law:
s.40 CA
when a party to a contract has refused or disabled himself from performing his promises entirely, the other party may put an end to the contract, unless he has signifies his consent in its continuance
s.76 CA
person who rightly rescind a contract is entitles to compensation for any damage he has sustained due to the breach of contract
s.66 CA
when an agreement is void, any person who has received any benefits thereunder is bound to restore the benefits to the person from whom it is received
2.65 CA
when a person whose option a contract is voidable rescind it, the other party need not perform any promise therein
DAMAGES (REMEDIES)
Monetary compensation payable by the party that breach the contract to the innocent party.
s.74(1) CA
Plaintiff may claim from:
- damages that naturally arose in the usual course of things from the breach
- damages that the party knew would happened if there’s a breach
- no compensation is given for any remote and indirect damages
Note: the law imposed a duty to the innocent party to mitigate (reduce) his loss
SPECIFIC PERFORMANCE (REMEDIES)
Order from the court requiring the party that breach the contract to perform his part of the contract exactly as he has promise
s.11(1) SPECIFIC RELIEF ACT
- when monetary compensation cannot afford adequate relief
- when the act agreed to be done is in the performance of a trust
- where there’s no standard for ascertaining the actual damages
s.20 SPECIFIC RELIEF ACT
contract can’t be specifically enforced when:
- monetary compensation is an adequate relief
- contract is so dependent on the personal qualifications of the parties
- court can’t find reasonable certainty in the terms
- subject matter of the contract has ceased to exist
- contract made by trustee in breach of their trust
- involves the performance of longer period than 3 years
