Discharge by Performance or Breach

Question 1

Sumpter v Hedges, 1898
(Establishes the Concept of an Agreement/Entire Contract)

Answer 1

• The case developed the idea of entire agreements or entire contracts.
• Idea of entire agreements/contracts — in circumstances where a party promises to pay for the other party to do a specific job, and the party doesn’t do that thing to its completion, then the innocent party can simply walk away, terminate the contract, and not have to pay anything at all.
  
  • If a party does not perform their entire obligation, then the innocent party will not have to pay anything.
  • The agreement had a defied set amount of money for the entire completion of the shed, not partial performance.
  • If the contract stipulated for $500 vs $1,000 then the entire agreement/contract rule does not apply since the $500 could be paid for half of the job complete instead of $1,000 for the entire job complete.
  • This rule incentivizes people to complete their jobs to the fullest for payment.
    In situations of where money is offered for a thing and the contract is silent on issues of part-performance; in these circumstances we presume that full payment for full completion is the deal.

Question 1

Fairbanks Soap Co. v Sheppard, 1953
(Doctrine of Substantial Completion - Modifies Sumpter v Hedges)

Answer 1

• This decision mitigated the harshness of the entire agreement/entire contract rule through the doctrine of substantial completion from Sumpter v Hedges.
• The doctrine of substantial completion has a two phased approach:
  o (1) the starting point is that a job is an entire contract (Sumpter v Hedge), however, if the defendant can avail themself with the substantial completion doctrine, then the innocent party still has to pay a pro rata (partial) amount for the work already done and Sumpter v Hedges does not apply.
  o (2) the breacher of the contract can avail themself with the substantial completion doctrine, which prevents the innocent party from invoking the entire contract rule if the breacher of the contract can show that:
  - the job was substantially completed (although not fully completed); and (what is left undone is trivial, basically trivial 99% done)
  - the breacher abandoned the project for a reason beyond their control, then. In this case, the innocent party would still have to pay for the proportion of the job done.
  - If the defendant abandoned the job for no reason then the substantial completion rule does not apply. It’s one thing for the project to be substantially completed (maybe craply) and another to refuse/abandon the contract for no reason other than wanting more money.