Discharge and Variation Flashcards
What is discharge of contract?
Bringing it to an end
When is a contract discharged?
- Fixed term ends
- Specifies an event ending it
- Full performance
- Frustration
How does discharge vary from rescission?
Discharge = rights and obligations accrued before termination remain in place after discharge but rescission destroys all rights
Can a contract be discharged before full performance?
Yes by agreement between the parties
Agreement to discharge a contract before full performance is effectively a new contract requiring….
Consideration
If all parties have unperformed obligations and agree to end the contract early, is consideration needed?
Yes but them giving up the benefits they would receive is consideration enough
If one party has performed their obligations in full, how will the agreement to end it be structured?
Either as a deed of termination or with some consideration
What is required for variation of a contract?
Agreement between the parties
If all parties give up rights under the new contract, is the requirement for consideration met?
Yes
What is the equitable doctrine of waiver?
Promise by one party not to enforce the other party’s obligations under contract
Why is the doctrine of waiver limited?
Because the party giving up rights can re-instate them by giving reasonable notice
What is it called if parties don’t say anything but act in a way that a contract is varied or waived?
Implied variation or waiver
If there is no consideration for an implied variation, what can a party rely on?
Implied waiver
What is the “entire obligations” rule?
Only full (exact and precise) performance will discharge the contract
Does partial performance discharge a contract?
No
Can substantial but imprecise performance discharge a contract?
Yes, depending on the circumstances if substantial performance is a condition then minor breaches will be treated as a warranty breach
In a divisible contract, will failure to perform one part of the contract prevent you from enforcing another part?
No
If parties agree on partial performance, what is this and what is required?
Variation and consideration
How is consideration usually fulfilled in an agreement to vary for partial performance?
Reduced price and reduced obligations
If partial performance is agreed but there is no revised price, how is the amount due calcualted?
Quantum Meruit - amount payable = work completed = reasonable remuneration
What happens is one party prevents the other party from performing?
Breach of a condition - innocent party can terminate and claim damages
What is the effect of a termination for breach?
Rights and obligations accruing before termination remain in place, and innocent party may claim for damages
If goods are delivered and a contract is terminated for breach what must happen?
- Buyer does not need to pay for goods
- Buyer must return goods
- Buyer can claim damage for failure to supply goods in conformity with contract
What is the effect of rescission of a voidable contract compared to termination for breach?
Rescission is as if the contract was never effective
If there is a terminable breach and the innocent party affirms the contract, can they still terminate?
No
What is anticipatory breach?
One party expressly or impliedly indicates they will not fulfil their obligations under contract
If anticipatory breach is of a condition, can the innocent party terminate before performance?
Yes
What is frustration?
When a contract cannot be performed due to no fault of any party after formation of contract but before performance
What does frustration require?
Impossibility
Illegality
Radically different from what was envisaged
What is impossibility?
Thing no longer exists/destroyed/unavailable without fault of any party
What is supervening illegality?
Law changes making the contract illegal
What is “radically different” for frustration?
Performance is radically different from what was envisaged
What is NOT frustration?
- More difficult or expensive to perform
- Self-induced frustration
- Event that could be forseen
Who needs to prove that frustration was self-induced?
The party alleging frustration must show it was not self-induced
What is the effect of frustration?
Releases parties from further liability to each other and contract is discharged from moment of frustration
The effect of frustration can be unfair if one party performed, how does the Law Reform (Frustrated Contracts) Act ameliorate this?
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
When does the Law Reform (Frustrated Contracts) Act NOT apply?
- When excluded by contract
- Charterparties (contract for hire of ship etc)
- Insurance
- Sale of goods where frustration is because goods perished
