discharge of contract Flashcards
4 ways contractual obligations can end
performance - both parties perform their obligations
agreement - before performing obligations, parties agree and release themselves
frustration
breach - one party breaches agreement
performance
parties to a bilateral contract must fully carry out what is agreed or the other party does not pay
cutter v powell - C agreed to serve on ship from jamaica to liverpool, dies during - widow sued for wages up until death, courts = no as didnt complete entire performance
EXCEPTIONS:
substantial performance: allows a party who has only performed w/ minor defects to claim price of workminus defects
hoenig v isaac - painter agreed to decorat flat for £750, paid in advance 400 then refused to pay rest as claimed work = defective - court agreed but cost of putting defects right = 56 so had to pay £694
bolton v mahadeva - demonstrate limited availability of rule - B installed central heating system for 560 once done found didnt heat house right and emitted fumes, cost 174 to fix defects, calimed 364 but court rejected as proportion of contract price that required to put work =much greater and substantial perfomance not occurred and small domestic works req full performance or not entitled to pay
severable contracts:
seperate contracts into parts, payment due in various stages of performance - depends on express terms
ritchie v atkinson - captain agree to carry cargo of at £5 a ton, agreed on price and volume of hep, only transported part of hemp, court - as paying by ton must pay what was delivered
voluntary acceptance of parital performance:
other party = entitled to payment based on value of works or services - must be freely accepted
sumpter v hedges - builder contracted to build 2 houses for 565, completed 333 worth then abandoned and defendant built rest with builders materials - builder claimed needs to be paid 333 and money for material used - courts = not voluntarily accepted, def = no choice but to continue works
prevention of performance by other party:
a quantum merit can be used to claim cost of work done - claim value of work on basis of works/services done
planche v colburn - writer agreed to write book fro fee of 100 with publisher, writer started but publsihed abndoned book and cancelled - author able to recover 50 on QM basis
agreement
distinction made between bilateral discharge (both parties benefit from discharge) and unilateral discharge (only one party benefits) - problems made with unilateral discharge usually consideration
frustration
if after contract made through no fault of either party, a charge in circumstance may make contract either impossible to perform, illegal to perform, radically diff. from what parties contemplated then the contract is frustrated (discharged from point of frustrating event)
impossible to perform -
taylor v caldwell - C agreed to rent music hall for series of concerts over 4 days, signed contract but music hall destroyed in fire before concerts - courts = contract is frustrated
gamerco SA v ICM/ fair warning (agency) Ltd - claimant agreed to promote rock concert for guns and roses in stadium in Madrid, stadium declared unsafe and banned as use by spanish auths. and couldnt find other stadium to perform
illegal to perform (subsequent illegality) -
fibrosa spolka akcyjna v fairbairn lawson combe - fair = british firm who contracted with F (polish firm) = illegal as germany @ war w/ britain and they annexed poland - illegal to trade with business occupied by enemy in WW2
contract = radically different -
drastic change in circumstances than originally agreed
krell v henry - contract overlooking coronation in 1903, rented apartment for one day to watch coronation and sell tickets, coronation didnt occur as king = sick - court = agreed frustration as only got flat for coronation - no longer purpose
herne bay steam boat co v hutton - contract boat hire to watch coronation, cancelled but court = no frustration as to watch not fundamental to contract - could still have trips on boat
limitations to frustration
- time of frustrating event - must be after contract made - taylor v caldwell
- contract makes provisions for such event - parties make specific provisions for type of event which might otherwise frustrate contract - prov. labelled as force majeure clause - cover what occurs in certain scenarios - only doesnt count when becomes illegal
- event merely renders contract more onerous or expensive - not enough
- it was foreseen or foresseable - generally assumed they would shape terms accordingly
- due to fault of one of parties (self induced frustration) MUST be outside control of either party - maritime national fish ltd v ocean trawlers ltd e.g. getting drunk before event so cannot perform
legal consequences of frustration
when contract = discharged through frustration, contract auto terminated from point frustrating event occurred - regulated by law reform (frustrated contracts) act 1943 (for most commercial contracts)
money owed cease to be payable s.1(2)
money already paid = recovered inject to deduction of epenses incurred s.1(2)
if one party received valuable benefit (not money) because of something done by the other in performance of contract, party receiving benefit can be ordered to pay a just sum in return for it s.1(3)
frustration and common mistake - overlaps and differences
timing: if the parties common assumption is false at contract formation the law treats this as mistake, if after is frustration
scope of doctrines: scope of frustration = wider
legal effect on a contract: both bring contract to end, mistakes renders contract void but frustration automatically discharges contract
breach
actual breach: a contract is said to be breached when one party performs defectively from agreement or not at all
anticipatory breach: one party indicidates in advance they wont perfirm as agreed, other party can sue for breach straight away, not nec. to wait until performance falls due
hochester v de la tour
effect of breach
any breach of contract will entitle the innocent party to sue for damages, but not every breach allows wronged party to choose to discharge contract, if not discharged still need to be performed
- breach of condition - innocent party may treat contract as substantial failure to perform, there may then claim damages and regard the contract as discharged
- breach of warranty - the innocent party can claim damages for loss suffered but must continue contract
- serious breach of an innominate term - impact is same as breach of condition
conditions and warranties
conditions - a term = important, breach of = sig. consequences for innocent party
warranties - word waranty usually describes a contractual term which can be broken without highly important consequences
where a condition = breached the innocent party is entitled to regard the contract as repudiated and need not render any further performance and can sue for damages
where a warranty is breached the innocent party can claimant damages for loss suffered but must continue with performance of contract
conditions: poussard v spiers - performer = sick for first week of performances, hired substitute but then didnt want her services for rest of performances - court = producer = entitled to perform, performer breached as opening night = most important and didnt attend
bettini v gye - opera performer contracted to perform for 3 months, and before must train for 6 as a week, singer arrived 3 days later and missed some rehearsals, producer terminated and breach, court = breach of warranty not outmost importance
