Discharge of Contract

Question 1

What are the 4 ways to discharge a contract?

Answer 1

1. Performance
2. Breach
3. Agreement
4. Frustration

Question 2

What is the general rule for discharge of contract through performance?

Answer 2

For a contract to be discharged through performance, the parties must perform their obligations fully and precisely. The contract must be one of precise performance as well (PPK).

Question 3

What are the exceptions to the general rule?

Answer 3

1. De Minimis Rule: Microscopic deviations in performance will be ignored, performance will be regarded as perfect. (Arcos Ltd v Ronaasen)
2. Divisible Contract: By intention of both parties, there are separate and independent obligations which are deemed as severable sub-contracts, which may be discharged and remunerated separately. (usually sequential events e.g., building contracts, construction, renovation, etc)
3. Substantial Performance: If performer executed imperfect performance but it is substantial, he can claim the agreed amount less the sum required to rectify the defect (Hoenig v Isaac)
4. Prevented Performance: If performer has performed part of his obligations but is prevented by the other party from continuing to perform the remaining obligations, he is able to sue for breach of contract/more commonly claim damages on the basis of quantum merit (Planche v Colburn)
5. Acceptance of Partial Performance: Party chooses to accept partial performance, performer is entitled to remunerations on the basis of quantum meruit. Party must have a clear choice to accept the partial work done. (Sumpter v Hedges)
6. Apportionment Act: Rents, Dividends, Periodic Income , etc

Question 4

What are the 2 steps to determine if a contract is dischargeable through breach?

Answer 4

Step 1:
Is there a term? (express/implied)
What is the scope of the term?
Is there failure to perform the term?
Step 2:
What type of breach?
Actual/Anticipatory?
Repudiatory/Non-repudiatory?