Discharge and Variation

Question 1

What is discharge of contract?

Answer 1

Bringing it to an end

Question 2

When is a contract discharged?

Answer 2

1. Fixed term ends
2. Specifies an event ending it
3. Full performance
4. Frustration

Question 3

How does discharge vary from rescission?

Answer 3

Discharge = rights and obligations accrued before termination remain in place after discharge but rescission destroys all rights

Question 4

Can a contract be discharged before full performance?

Answer 4

Yes by agreement between the parties

Question 5

Agreement to discharge a contract before full performance is effectively a new contract requiring….

Answer 5

Consideration

Question 6

If all parties have unperformed obligations and agree to end the contract early, is consideration needed?

Answer 6

Yes but them giving up the benefits they would receive is consideration enough

Question 7

If one party has performed their obligations in full, how will the agreement to end it be structured?

Answer 7

Either as a deed of termination or with some consideration

Question 8

What is required for variation of a contract?

Answer 8

Agreement between the parties

Question 9

If all parties give up rights under the new contract, is the requirement for consideration met?

Answer 9

Yes

Question 10

What is the equitable doctrine of waiver?

Answer 10

Promise by one party not to enforce the other party’s obligations under contract

Question 11

Why is the doctrine of waiver limited?

Answer 11

Because the party giving up rights can re-instate them by giving reasonable notice

Question 12

What is it called if parties don’t say anything but act in a way that a contract is varied or waived?

Answer 12

Implied variation or waiver

Question 13

If there is no consideration for an implied variation, what can a party rely on?

Answer 13

Implied waiver

Question 14

What is the “entire obligations” rule?

Answer 14

Only full (exact and precise) performance will discharge the contract

Question 15

Does partial performance discharge a contract?

Answer 15

No

Question 16

Can substantial but imprecise performance discharge a contract?

Answer 16

Yes, depending on the circumstances if substantial performance is a condition then minor breaches will be treated as a warranty breach

Question 17

In a divisible contract, will failure to perform one part of the contract prevent you from enforcing another part?

Answer 17

No

Question 18

If parties agree on partial performance, what is this and what is required?

Answer 18

Variation and consideration

Question 19

How is consideration usually fulfilled in an agreement to vary for partial performance?

Answer 19

Reduced price and reduced obligations

Question 20

If partial performance is agreed but there is no revised price, how is the amount due calcualted?

Answer 20

Quantum Meruit - amount payable = work completed = reasonable remuneration

Question 21

What happens is one party prevents the other party from performing?

Answer 21

Breach of a condition - innocent party can terminate and claim damages

Question 22

What is the effect of a termination for breach?

Answer 22

Rights and obligations accruing before termination remain in place, and innocent party may claim for damages

Question 23

If goods are delivered and a contract is terminated for breach what must happen?

Answer 23

1. Buyer does not need to pay for goods
2. Buyer must return goods
3. Buyer can claim damage for failure to supply goods in conformity with contract

Question 24

What is the effect of rescission of a voidable contract compared to termination for breach?

Answer 24

Rescission is as if the contract was never effective

Question 25

If there is a terminable breach and the innocent party affirms the contract, can they still terminate?

Answer 25

No

Question 26

What is anticipatory breach?

Answer 26

One party expressly or impliedly indicates they will not fulfil their obligations under contract

Question 27

If anticipatory breach is of a condition, can the innocent party terminate before performance?

Answer 27

Yes

Question 28

What is frustration?

Answer 28

When a contract cannot be performed due to no fault of any party after formation of contract but before performance

Question 29

What does frustration require?

Answer 29

Impossibility
Illegality
Radically different from what was envisaged

Question 30

What is impossibility?

Answer 30

Thing no longer exists/destroyed/unavailable without fault of any party

Question 31

What is supervening illegality?

Answer 31

Law changes making the contract illegal

Question 32

What is “radically different” for frustration?

Answer 32

Performance is radically different from what was envisaged

Question 33

What is NOT frustration?

Answer 33

1. More difficult or expensive to perform
2. Self-induced frustration
3. Event that could be forseen

Question 34

Who needs to prove that frustration was self-induced?

Answer 34

The party alleging frustration must show it was not self-induced

Question 35

What is the effect of frustration?

Answer 35

Releases parties from further liability to each other and contract is discharged from moment of frustration

Question 36

The effect of frustration can be unfair if one party performed, how does the Law Reform (Frustrated Contracts) Act ameliorate this?

Answer 36

All sums paid before discharge = recoverable
All sums payable before discharge = not payable
Expenses incurred previously = recoverable if reasonable
Any non-monetary benefit must be paid for

Question 37

When does the Law Reform (Frustrated Contracts) Act NOT apply?

Answer 37

1. When excluded by contract
2. Charterparties (contract for hire of ship etc)
3. Insurance
4. Sale of goods where frustration is because goods perished