Discharge Flashcards
How may a contract be discharged?
Performance;
Expiry;
Agreement;
Breach; or
Frustration.
How may a contract be discharged by expiry?
- term incorporating end date
- occurrence of an event
What is the entire obligations rule?
Contractual obligation is discharged by a complete performance of the obligation
What are the exceptions to the entire obligations rule?
- Acceptance of partial performance
- Substantial performance
- Divisible obligations
- Wrongful prevention of performance
What is the effect if there is acceptance of partial performance?
Claimant entitled to reasonable sum so Defendant is not unjustly enriched
What is considered when deciding if there has been substantial performance?
Whether defect goes to root of the contract
What are the innocent party’s options where there has been wrongful prevention of performance?
Can sue for damages for breach of contract or
Claim a quantum meruit
What is a defence to the entire obligations rule?
Tender of performance
What is tender of performance?
Promisor unconditionally offered to perform obligations but promise refused to accept
How may a contract be discharged by agreement?
subsequent binding contract
operation of term in original contract
What is required to discharge a contract where there is a subsequent binding contract?
accord (agreeement to realease) +
satisfaction (consideration)
How can a contract be discharged by subsequent binding contract where there was no consideration?
made by deed
How may a contract be discharged by the operation of a term in the original contract?
- condition precedent
- condition subsequent
What is a repudiatory breach?
Breach of term that is a condition or innominate term
What is anticipatory breach?
Party indicates they will not perform obligation in advance of performance date
What are the innocent party’s options for an anticipatory breach?
has right to accept renunciation and treat contract as terminated
Which rights/obligations are extinguished when terminating a contract for repudiatory breach?
Primary
prospective
What is the biggest risk when terminating a contract for breach?
Wrongful termination
What is the right of election?
Innocent party of repudiatory breach can choose to terminate
What is required for the right to elect?
Innocent party must make decision known to defaulting party
Can an innocent party still claim damages for breach if it affirms the contract?
Yes
How is a contract affirmed?
clear and unequivocal commitment to continue contract
What are the limitations to affirming a contract?
a) Cooperation of breach party is required or
b) Innocent party has no legitimate interest, financial or otherwise in affirming.
How can a defendant show that the claimant has no legitimate interest in affirming a contract?
i. Damages would be an adequate remedy for C
ii. Election to keep contract alive would be unreasonable
What is frustration?
- Beyond the control of either party
- After formation of contract
- Renders performance radically different to what was agreed.
What might render the contract as radically different?
- Performance is impossible
- Performance is illegal
- Common purpose of contract is frustrated
What might make performance impossible?
total/partial destruction of some object necessary to perform
Death or illness
Unavailability/temporary unavailability
What are the limits on frustration?
- Self-induced frustration
- Foreseeable events
- Express contractual provision
What is the effect of frustration according to the law reform act?
- Money paid before frustrating event can be recovered
- Money that should have been paid before the frustrating event no longer needs to be paid
- Expenses incurred by payee can be recovered out of total sum paid/payable before event
When recovering expenses incurred for frustration, what is the cap?
Actual expenses incurred
Amount paid/payable prior to event
Just
What does s1(3) of the law reform act say about recovering money where the benefit conferred by the contract was non-monetary?
Party who has gained valuable benefit under contract before frustrating event may be required to pay just sum for it
