discharge of a contract by performance and breach Flashcards
when a party terminate a contract?
the right arises in two circumstances: when a condition is broken or a serious breach of an inominate term
what are repudiatory breaches?
breaches that allow the non-defaulting party to treat the breach as having brought the contract to an end- the innocent party has choice of either affirming or discharging the contract
when might the type of term that had been breached be irrelevant?
if the innocent party wants to go for another remedy by affirming the contract
what is the right of election of an innocent party?
if a contract has been fully performed by both parties it won’t be possible to terminate (but there are special rules which apply to sale of goods contracts)
what is the effect of termination?
future obligations discharged, innocent party can sue for damages for any loss suffered- decision to terminate must normally be communicated to the other party
effect of affirmation
if the innocent party affirms the contract then the contract is not over and both parties should continue to perform their obligations- innocent party must make clear they are continuing and can still claim damages
what are the special rules for sale of goods contracts?
usually if a contract has been fully performed it is not possible to terminate BUT if seller breaches s9-1 CRA or s13-14 of SGA the buyer might be entitled to reject the goods so even though contract has been performed, buyer can return and get a refund BUT buyer might lose right to reject- if buyer has ‘accepted’ the goods or otherwise if the breach is so slight it would be unreasonable to reject
what is anticipatory breach?
a breach where a party gives advance warning that they aren’t going to perform their contractual obligations when they are due
what can the innocent party do in the event of an anticipatory breach?
terminate the contract and sue for damages immediately, or treat the contract as continuing and wait until the time fixed for performance in the hope that the party in breach will change their mind and perform the contract
what is the equitable remedy of specific performance?
order of the court which requires a party to perform its contractual obligations
can damages be used as a remedy as well as SP?
yes
what are the restrictions on the availability of specific performance?
is damages is an adequate remedy, if contract requires continuous supervision by the court, contract involves services, and only if it is equitable to use SP
what is an injunction?
can be prohibitory or mandatory- mandatory requires a person to put right a breach of contract
when will an injunction not be granted?
if the effect would be to compel the defendants to do acts which the defendant could not have been ordered to do by specific performance- not for contracts of services
what is a claim in restitution?
to prevent one party being unjustly enriched at teh expense of teh other BUT is not available in ever case where there has been an element of unjust enrichment
what are the situations where a restitution claim may arise?
money has been paid by one party to another under a contract and there has bee a complete failure of consideration and where one party has done work for the other or supplied goods to the other and wants to be compensated for the work done or goods delivered
can someone recover money which has been paid where there has been lack of consideration?
yes
how can someone claim compensation for work done or goods supplied?
if the contract was never formed (British Steel Corp v Cleveland Bridge) or if the contract has been broken
what are restitutionary damages?
Damages which aim to strip from a wrongdoer gains made by committing a wrong or breaching a contract
what are guarantees?
one person guarantees that is the debtor does not pay back money owed then the guarantor will pay the money instead- the guarantor agrres not to discharge the debt in any event unless the debtor defaults
how must contracts of guarantee be evidenced?
in writing- if not they are void- there must be written evidence of the transaction
what are indemnities?
creates a primary obligation- one party promises to reimburse pound for pound the other party in respect of a particular loss arising under the contract- don’t need to be evidenced in writing
what is order of performance?
parties may state in their contract when each party must perform their contractual obligations e.g. buyer paying on delivery, in advance etc
what is the doctrine of complete performance?
the performance of contractual obligations must be precise and exact- if one party has to pay only after the other has performed their obligations and if performance is not precise and exact, the payer doe snot have to pay ant part of the price
what are the exceptions to the doctrine of complete performance?
divisible obligations, substantial performance, wrongful prevention, voluntary acceptance of part performance
expand on the exception of wrongful prevention
e.g. someone decides they don’t want the rest of the contract being performed they would be in breach of contract and person doing work could claim for damages of loss of profit or a quantum meruit
expand on the exception of voluntary acceptance of part performance
where a trader delivers to a consumer a quantity of goods less than teh trader contracted to supply, if the consumer decides to accept them then the consumer must pay for them at the contract rate
expand on the exception of substantial performance
a party who substantially performs their obligations may be able to claim some money for the work- work must be finished but slightly defective
expand on the exception of divisible obligations
if obligations are divisible- they agreed to payments for a distinct part r stage of the work so each part is treated as a separate contract
what is discharge by agreement?
parties to a contract may release each other from outstanding obligations but in order to bind the parties the agreement to end a contract must itself contain all the elements of a contract so there must be offer, acceptance, consideration and contractual intention
