Discharge

Question 1

What is discharge?

Answer 1

Where an obligation is discharged, the corresponding right of the other party is extinguished.

Question 2

How can a contract be discharged - 1?

Answer 2

Performance
- Entire obligations rule – ONLY COMPLETE PERFORMANCE

EXCEPTIONS TO ENTIRE OBLIGATION

Acceptance of partial performance
- 1. Party may accept part of the performance. Its at discretion of that party though. Then entitled to payment on a quantum meriut basis, as much as deserved. REMEDY IS UNJUST ENRICHMENT
2. - Substantial performance - contract price subject to a deduction of the cost of remedying the defect
3.- Divisible obligations
4.- Wrongful prevention of performance

Question 3

How else can a contract be discharged 2.?

Answer 3

Expiry
Agreement - dishcarge by binding contract - or by mutual waiver
- - Condition precedent – condition which must be satisfied before any rights come into existence –
- Condition subsequent – if satisfied releases party from obligations

Question 4

How can breach effect discharge of a contract?

Answer 4

Breach - repudiatory breach breached a condition or an innominate term treated like a condition. Party has choice to either affirm contract or terminate it.

If there’s a breach categories it
- if breach of warranty - then only damages
- if breach of condition - then damages PLUS THE RIGHT OF ELECTION

IF there is an anticipatory breach then this called intention to renounce and the party can accept the renunciation. .

• Effect of terminating a contract for repudiatory breach – puts an end to all primary obligations. Innocent party can claim damages.
• But will only be so FOR A CONDITION NOT A WARRANTY.
• Right of election-
  1. where there has been repudiatory breach of contract – aggrieved party makes the election to treat the breach as repudiating the contract or affirm.
  2. Commercial reasons for affirming the contract – must be clear and unequivocal commitment to continue the contract.
• CANNOT AFFIRM IS
  Cooperation of breaching party is required OR the innocent party has no legitimate interest in affirming the contract.

Question 5

How can frustration discharge a contract?

Answer 5

• Where without default of either party a contractual obligation has become incapable of being performed because the circumstances would render a thing radically different.

FUTURE OBLIGATIONS ARE DISCHARGED.
OBLIGATIONS BEFORE THE FRUSTRATING EVENT ARE NOT DISCHARGED.

MUST BE RADICALLY DIFFERENT.
1. Performance is impossible
2. Performance is illegal
3. Common purpose of contract is frustrated

Question 6

Consequences of frustration?

Answer 6

• Future obligations are automatically discharged
• Act – makes money paid before frustrating event recoverable at courts discretion.
• advance payments can be recovered. EXPENSES OF OTHER SIDE may be set off against the advance payment. BUT NO MORE THAN THE ADVANCE PAYMENT MAT BE RECOVERED IN EXPENSES.