Discharge of a Contract

Question 1

No action to recover payment may be maintained until performance of obligations is complete

Answer 1

Cutter v Powell

Question 2

Acceptance of partial performance must be voluntary

Answer 2

Sumpter v Hedges

Question 3

Substantial performance = contract price - cost of remedy

Answer 3

Bolton v Mahedeva (£560/£174 - not available)

Hoenig v Isaacs (£750/£55 - entitled to £695)

Question 4

Divisible obligations

Answer 4

Rose & Frank v Crompton Bros

Question 5

Wrongful prevention of performance

Answer 5

Where one party is prevented from completing the rest of his obligations by some fault of the other party, the innocent party can sue for damages or claim a quantum meruit

Question 6

Defences to entire obligation rule

Answer 6

Tender of performance

Performance by 3rd party - British Waggon Co - delegation allowed (contrast Robson & Sharpe v Drummond)

Question 7

Discharge by agreement - where both parties have unperformed obligations, discharge by subsequent binding contract: agreement to waive old obligation is consideration for waiver

Answer 7

The Hannah Blumenthal

Question 8

Discharge by agreement: where only one party has unperformed, party to whom obligation is owed may agree to accept something different in the place of the former obligation - accord and satisfaction

Answer 8

Pinnel’s Case

Question 9

Accord and satisfaction will not be valid if obtained under duress

Answer 9

D&C Builders v Rees

Question 10

Waiver unsupported by consideration may be enforced by equity subject to proper notice being given of the resumption of the strict contractual provisions

Answer 10

Birmingham and District Land Co

Question 11

Discharge by a term in the contract - condition precedent

Answer 11

Contract suspended if condition not fulfilled; no true discharge
Pym v Campbell

Question 12

Discharge by condition subsequent

Answer 12

Head v Tattersall

Question 13

Discharge by breach

Answer 13

Where there is a breach of a condition/innominate term with serious consequence, innocent party has right of election - to affirm or treat contract as repudiated

Question 14

Innocent party must make decision to terminate known to party in default

Answer 14

The Santa Clara

Question 15

Party will only be bound by course taken following right of election, if he was aware of facts giving rise to right and that the right existed in the first place

Answer 15

Penman v Lanjani

Question 16

Anticipatory Breach - immediate right of election accrues

Answer 16

Hochster v De la Tour

Question 17

Anticipatory breach may be implied by words or conduct

Answer 17

Frost v Knight

Question 18

If breach is of warranty, and innocent party wrongfully terminates, repudiation will be a serious breach of condition and gives the other party a right of election

Answer 18

Hong Kong Fir Shipping

Question 19

Innocent party is allowed a period of time to decide whether to affirm or terminate

Answer 19

Stocznia Gdanska SA
obiter (supported by Treitel) if party in breach continues to refuse to perform after affirmation, innocent party should not be precluded from terminating contract

Question 20

There must be evidence of a very clear and unequivocal commitment to continuing with the contract for affirmation

Answer 20

Yukong Line v Rendsburg

Question 21

No duty on innocent party to change terms, he can carry out his obligations under the contract if he elects to affirm and sue once the date for performance has passed

Answer 21

White and Carter v McGregor

Criticised as encourages wasteful performance and undue hardship on other party as no mitigation required

Question 22

Claimant cannot affirm if no legitimate interest, financial or otherwise in affirmation

Answer 22

White and Carter v McGregor

Applied in the Alaskan Trader

Question 23

Only extreme cases where innocent party will not have legitimate interest

• burden on contract breaker to show no interest
• burden not discharged simply by showing benefit to other party is small
• only where damages adequate and affirmation would be unreasonable

Answer 23

The Dynamic

Question 24

Landlord had legitimate expectation in affirming

Answer 24

Reichman v Beveridge

Question 25

Need for co-operation of other party for innocent party to fulfil their obligations will prevent affirmation

Answer 25

White and Carter v McGregor

Question 26

Co-operation may be passive or active

Answer 26

Hounslow v Twickenham Garden

Question 27

Risks of affirmation

Answer 27

Frustration - Avery v Bowden

Subsequent breach - The Simona