Discharge and Variation of Contract

Question 1

What is the difference between a contract being discharged and a contract being rescinded

Answer 1

Rescinded: Treats the contract as never having existed and the parties are returned to the positions they were in before the contract.

Discharged: The rights and obligations that have accrued before termination remain in place after discharge.

Question 2

How do you discharge or vary an agreement when both parties still have unperformed obligations?

Answer 2

Enter into an agreement to end/vary the contract. No issue with consideration here since both side’s are suffering a legal detriment (i.e., giving up their remaining rights in the contract)

Question 3

How do you discharge/vary an agreement when only one party still has unperformed obligations?

Answer 3

They can only enter into an agreement to end/vary the contract if new consideration is given (otherwise, the agreement to end would not be binding)

OR

Agreement to end by deed (no consideration required)

Question 4

Can one party waive their remaining rights under a contract?

Answer 4

Yes, but it is limited since the waiving party can reinstate their rights by giving reasonable notice.

Question 5

What is the “Entire Obligations Rule”

Answer 5

Only full performance will discharge the contract.

Note: This is only the general rule. Contract can still be discharged by agreement.

Question 6

Exceptions to the Entire Obligations Rule

Answer 6

Substantial Performance (i.e., only breaches of warranties) is sufficient to discharge a contract obligations

Divisible Contracts can be subdivided by the courts (e.g., delivering goods in installments)

Partial performance accepted by other party (requires new consideration, like a new price or earlier payment)

Performance is prevented by other party (means you can terminate and sue for damages)