Discharge of a contract-Performance

Question 1

3 ways in which a contract can be discharged.

Answer 1

1. Performance of the contract by both parties
2. A frustrating event
3. Breach (where V then decides to end the contract)

Question 2

What is ‘discharge’ of a contract?

Answer 2

When the contract comes to an end

Question 3

What is the ‘strict rule’ of performance?

Answer 3

Holds that a party is not due any payment if he has not performed his side of the contract in full

Question 4

Case for ‘strict rule’.

Answer 4

Cutter v Powell (1795)

Question 5

Facts of Cutter

Answer 5

Cutter agreed to work as a second mate on a voyage for a FIXED fee.
Unfortunately, he died at sea near the end of the voyage.
His widow sued for for a proportion of his fee.
She was entitled to nothing as he had agreed to the entire voyage and had not done so.

Question 6

As the strict rule can seem harsh, what are the exceptions the courts have developed?

Answer 6

1. Divisibility
2. Substantial or part performance
3. Prevention of full performance
4. Acceptance of part performance

Question 7

Exception of strict rule regarding divisibility.

Answer 7

If a contract can be seen as compromising separate parts, then non-completion on one part is not a breach of the whole contract.

Question 8

Case for divisibility exception.

Answer 8

Ritchie v Atkinson (1808)

Question 9

Facts of Ritchie

Answer 9

Ship owner agreed to carry cargo at an agreed rate PER TON.
Carried only apart of the cargo
Ship owner entitled to be paid for part of cargo he had carried at agreed price PER TON.
But, was liable for breach on contract for not carrying the whole cargo.

Question 10

Exception of strict rule regarding substantial or part performance.

Answer 10

Where a ‘substantial’ proportion of the work has been done then the party will be entitled to a proportion of the payment based on quantum meruit (the amount earned).

Question 11

Cases for substantial or part performance exception.

Answer 11

Hoenig v Isaacs (1952)
Bolton v Mahadeva (1972)

Question 12

Facts of Hoenig.

Answer 12

Decorator contracted to decorate and furnish room for £750.
Some of furniture was defective but could be repaired for £55.
Court decided contract was substantially completed on a financial basis.
Decorator entitled to be paid for what he had done on a quantum meruit basis.

Question 13

Facts of Bolton v Mahadeva.

Answer 13

Builder agreed to install a central heating system for £560.
However, installation was defective as system gave off fumes and did not work properly.
Repairs cost £170.
Court decided builder was entitled to nothing, as there had not been substantial performance of the contract.

Question 14

Exception of strict rule regarding prevention of full performance.

Answer 14

If one party prevents the other from carrying out his contract, then the innocent party can claim to be paid on a quantum meruit basis.

Question 15

Case for prevention of full performance exception.

Answer 15

Planche v Colburn (1831)

Question 16

Facts of Planche.

Answer 16

Publisher hired an author to write one of a series of books.
When the publisher decided to abandon whole series, author was prevented from completing the work through no fault of his own.
Author entitled to recover a fee for his wasted work.

Question 17

Exception of strict rule regarding acceptance of part performance.

Answer 17

The wronged party may agree to make a part payment based on part completion of the work, however this consent must be based on choice.

Question 18

Case for acceptance of part performance exception.

Answer 18

Sumpter v Hedges (1898)

Question 19

Facts of Sumpter.

Answer 19

C agreed to build 2 houses for D with £565 payable on completion.
C completed about half work then ran out of money and was unable to complete.
D finished the building.
C sought to recover £333 representing value of work he had completed.
Argued that in completing the work himself, D had accepted partial performance.
C’s action failed but D had no choice but to accept partial performance as otherwise he would be left with a half-built house on his land.

Question 20

If the court regard time of performance as a condition (known as making ‘time of the essence’), what will it allow the V to claim?

Answer 20

Can claim the contract is repudiated (terminated) as well as claim damages

Question 21

In what 3 situations will courts only regard time as a condition?

Answer 21

1. Parties have expressly stated in the contract that time is of the essence.
2. In the circumstances, time for completion is critical
3. One party has failed to perform on time and the other has insisted a new date for completion as time is of the essence

Question 22

If the none of the 3 situations for time of performance apply, what will time of performance be treated as?

Answer 22

A warranty

Question 23

Cases for time of performance.

Answer 23

Union Eagle Ltd v Golden Achievement Ltd (1997)

Charles Rickards Ltd v Oppenheim (1950)

Question 24

Facts of Union Eagle Ltd.

Answer 24

In a contract for sale of flat. time for completion of contract had been specified as 5:00pm and time was expressly stated to be ‘of the essence’.
Purchaser delivered the purchase price at 5:10pm and the seller repudiated the contract.
Court decided seller was entitled to repudiate contract as time for completion was a condition of the contract.

Question 25

Facts of Charles Rickards Ltd.

Answer 25

Original agreed date (date 1) for supply of car was not of the essence but parties agreed to extend the date.
Purchaser then became impatient with the continuing delay and gave 28 days notice of a new date for completion (date 2).
Supplier had failed to meet date 2.
Court held date 2 had been made of the essence and the purchaser was entitled to reject the car when it was delivered after this date.

Question 26

Which section in the CRA 2015 talks about time of performance?

Answer 26

s.52

Question 27

What does s.52 of the CRA 2015 say about time of performance?

Answer 27

If the contract does not expressly fix a time for the service to be performed then the contract is to be treated as including a term that the trader must perform the service within a reasonable time.

Question 28

What does the consumer have the right to claim if the trader is in breach of what the contract requires under s.52 of the CRA 2015?

Answer 28

Consumer has right to a price reduction under s.54