Discharge Flashcards
What is discharge?
The termination of a contract, so you are no longer bound by the terms
What are the three types of discharge?
-Performance
-Breach
-Frustration
What is discharge by performance?
If both parties have completed their duties then the contract will naturally complete and end
What is the general rule for discharge by performance?
Originally a strict rule, must be complete and exact (Cutter v Powell)
What are the four exceptions under discharge by performance?
Only apply relevant:
-Prevention of full performance
-Acceptance of part performance
-Divisible contracts
-Substantial performance
What is prevention of full performance?
If one party prevents the other from carrying out contract, can claim on quantum meruit (work done), (Planche v Colburn)
What is acceptance of part performance?
Both parties must agree to allow, with free from pressure - not considered consent if no option but to agree (Sumpter v Hedges)
What are divisible contracts?
If contract has seperate parts then can be clearly divided, non-completion of one part doesnt breach entire contract (Richie v Atkinson)
What is substantial performance?
When party has done substantial requirements, payment can be given for appropriate amount - will not apply in single transactions (Hoenig v Isaacs)
What is the side rule for discharge by performance?
Time is of the essence - contract can be repudiated if parties expressly stated time is importance, and if the completion time is critical (Union Eagle v Golden Achievement)
Discharge by breach stages
Full layout in breach deck
-Type of breach
-Type of terms
-Remedies (Compensatory/Equitable)
What is discharge of a contract by frustration?
Frustration requires performance as envisaged in the contract to become impossible as a result of outside events beyond the control and contemplation of the parties
What is the general rule for discharge by frustration?
Strict rule - parties are bound by the contract regardless of outside events (Paradine v Jane) - make sure to apply to scenario
What is stage one of frustration?
Type of frustrating event (Only apply relevant):
-Impossibility of performance
-Subsequent illegality
-Radical change of circumstances
What is impossibility of performance under frustration?
Subject matter has been destroyed, become unavailable (Taylor v Caldwell) or person is no longer available (Robinson v Davidson)
What is subsequent illegality under frustration?
If to perform the contract is to commit an illegal act then it must be frustrated (Denny, Mott & Dickson Ltd)
What is a radical change of circumstances in frustration?
The essential commercial purpose cannot be achieved (Krell v Henry) - contract now pointless
What is stage two of frustration?
Counter-arguments:
-Self-induced frustration
-Contract less profitable
-Event is foreseeable risk
What is self-induced frustration in stage two?
event is within the control of one party - cannot be frustrated (Maritime National Fish Ltd v Ocean Trawlers Ltd)
What is the rule for less profitability in frustration?
Less profitability or contract being more difficult to complete is not grounds for frustration (Davis Contractors Ltd)
What is the rule on forseeable risk in frustration?
The frustrating event being a foreseeable risk is not grounds for frustration (Amalgamated Investment & Property Co. Ltd v John Walker)
What are the remedies for frustration?
Common law - contract ended
Law Reform Act 1943:
S1(2)- money paid is recoverable but money due is not
S1(2) - Compensation to pay for work done and expenses inccured (only up to amount spent by party claiming frustration)
S1(3) - Compensation for any valuable benefit (non monetary)
