Discharge of a Contract Flashcards
What are the 3 ways a contract can be discharged?
1) Performance
2) Breach
3) Frustration
What does Performance mean?
If both parties perform the contract, then it will naturally be complete and come to an end
What is the strict rule of performance?
Performance must be complete and exact, so if a party hadn’t fulfilled their exact obligations under the agreement, the other party didn’t have to fulfil their obligations either
Which case illustrates the strict rule of performance?
Cutter v Powell
What are the four ways in which the strict rule of performance can be avoided?
1) Prevention of full performance
2) Acceptance of part performance
3) Divisible contracts
4) Substantial performance
What does prevention of full performance mean?
If one party prevents the other from carrying out the contract, the innocent party can claim the money back on a quantum meruit basis
In which case was an author able to recover a quantum meruit fee for work completed after the published prevented full performance?
Planche v Colburn
What are the rules regarding acceptance of part performance?
There has to be consent for it to apply and the consent has to be free from pressure
Which case demonstrated acceptance of part performance?
Sumpter v Hedges
What is a divisible contract?
One which has separate parts, and the contract must be clearly divided
What does substantial performance mean?
When a party has done ‘substantially’ what is required under the contract, so the court believes they have done enough
Under what circumstances is time of performance seen as a condition?
The parties expressly stated in the contract that ‘time is of the essence’ or if time of completion is critical for the contract
What does breach of contract mean?
If one party has broken the terms of the contract
What does frustration mean?
Where the contract becomes impossible to perform due a frustrating event
Which case illustrated the strict rule of frustration?
Paradine v Jane
What is the first stage of a frustration claim?
You must identify the grounds for frustration
What are the three possible grounds for frustration?
1) Impossibility of performance (Taylor v Caldwell)
2) Subsequent Illegality (Denny, Mott & Dickson)
3) Radical change of circumstances (Krell v Henry)
What is the second stage of a frustration claim?
You must identify the possible counter arguments for frustration
What are the possible counter arguments for frustration categorised as?
1) Self-induced frustration
2) Contract becoming less profitable
3) Foreseeable risk or event was mentioned in the contract
What is the third stage of a frustration claim?
You must consider the remedies available for frustration
Which Act of Parliament sets out the remedies for frustration?
Law Reform (Frustrated Contracts) Act 1943
What will happen if the court decides the contract has not been frustrated?
There may be a possible argument of breach of contract
