Discharge Flashcards
Discharge by performance
The general rule as set out in Cutter v Powell is that performance must be complete and exact
What are the 4 exceptions to Cutter v Powell
Divisible Contracts: If contract contains divisible elements, non-completion of one part doesn’t breach whole contract - Ritchie v atkinson
Substantial Performance: Party has done substantially what is required (quantum meruit payment) - Hoenig v Issacs
Prevention of full performance: one party prevents the other from carrying out the contract (innocent party has quantum meruit claim) - Planche v Colburne
Acceptance of Part Performance: One party has agreed to accept part performance and will pay quantum meruit. Requires specific acknowledgment made voluntarily and w/o undue pressure - Sumpter v Hedges
Inclusion of specific time term for performance
Time is a warranty (Charles Rickards v Oppenheim) unless;
a. Expressly stated in contract that time is of the essence; or
b. In the circumstances, time is critical; or
c. A party has failed to complete on time, so a new time limit has been placed (new condition)
Discharge by breach - Repudiatory Breaches
Breach of any term allows for damages claim, but only breaches of condition or sufficiently serious innominate term allow for repudiation of contract.
Repudiatory Breach = Breach of condition, Sufficiently serious breach of innominate term, Refusal to perform
if repudiatory breach is established, innocent party can terminate contract and claim damages OR continue it and claim damages
Discharge by breach - Non-Repudiatory Breaches
Non-repudiatory Breach = Renunciation of liabilities, Impossibility created by own act, Total or partial failure of performance
Actual or Anticipatory breach?
Actual Breach = Breach which occurs at time of or during performance
Anticipatory Breach = Where party gives notice in advance that he will not be performing/ completing contract
-Can be express or implied if it led other party to reasonable conclusion
-Uncertainty or unlikelihood not allowed
Courses of action after anticipatory breach
(Hochester v de la Tour)
a. Sue immediately for breach of condition
-must take reasonable steps to mitigate loss
b. Wait for time of performance and sue for actual breach
-loss may increase, but carries risk of frustration
Discharge by Frustration
= contract prevented by event outside of parties’ control (National Carriers v Panalpina)
1. Impossibility of performance
2. Radical change of circumstances so purpose cannot be achieved
3. Contract becomes illegal to perform
When frustration doesn’t apply
- Self induced frustration/ within control of party - Maritime National Fish v Ocean Trawlers
- Contract becomes less profitable - Davis Contractors v Fareham
- Foreseeable risk - Amalgamated Investment v John Walker and sons
Remedies for frustration
Common law = automatic termination at moment of frustration
= obligations up to frustration to be completed
Law Reform (Frustrated Contracts) Act 1943:
- s1(2) = money paid and payable before event are recoverable
= future payment obligations end
- s1(3) = party obtaining valuable benefit must pay its value as just
- s1(4) = payment of expenses and overheads as reasonable
Cutter v Powell
In entire contracts, partial performance does not entitle a party to payment unless the contract explicitly allows for it.
Ritchie v Atkinson
Contract can be considered divisible if it specifies payment per unit (e.g., per ton), allowing for payment for the portion of the contract that has been fulfilled, while also permitting the other party to claim damages for the unfulfilled portion
Hoenig v Isaacs
If a contractor substantially performs their obligations under the contract, they are entitled to payment of the contract price, minus any damages for defects or incomplete work.
Planche v Colburne
A party who has been prevented from completing a contract due to the other party’s breach may recover damages on a quantum meruit basis for the work already done.
Sumpter v Hedges
Concerned the concept of entire contracts and the recovery of payment for partial performance
Hochester v de la tour
a party can sue for anticipatory breach of contract as soon as the other party repudiates the contract, even before the date of performance.
Maritime National Fish v Ocean Trawlers
Contract cannot be frustrated if the frustrating event is self-induced or foreseeable by the party seeking to rely on it.
Davis Contractors v Fareham
Contract is not frustrated merely because its performance becomes more expensive due to unforeseen circumstances
Amalgamated Investment v John Walker and sons
Court dismissed the appeal as they assumed the risk when making the contract
