Discharge of contract P3 Flashcards
What does Discharge of contract mean
The obligations of the contract have come to and end resulting in the end of a contract
What are the 4 ways to Discharge a contract
Agreement
Performance
Breach
Frustration
What is meant by Discharge of contract by Performance
Performance must be exact and complete for an ‘entire performance’
‘I’ve nearly finished the job, but not quite’
What are the two cases to show ‘Performance must be exact and complete’
Cutter V Powell (1795) - Sailor died before reaching contracted destination
Re Moore V landauer (1921) - Peaches order did not arrive in correct quantity listed
What are the four circumstances the courts accept to mitigate the harshness of Discharge by Performance
Substantial
Partial
Vicarious
time-based
What is Substantial performance
When work is almost finished and the court then orders the money to be paid, but deducts the amount needed to correct a minor defect
75%
Payment of amount appropriate to what was done
Only applies for breach of warranty (minor)
What case is used for Substantial performance
Hoeing V Isaacs (1852)
What is Partial performance
Some work has been done but degree of obligations have been done at a lesser standard to be classed as substantial performance
Paid on quantum merit basis (how much work has been done)
Must be consent in form of specific acknowledgement - default party entitled to pay for what they have done
if innocent party has no option but to take benefit of work done - not considered part-performance
Which case is used for Partial performance where D had no choice but to complete the work and C was entitled to only the cost of materials ussed by the D as D did not have to use these
Sumpter V hedges (1898)
What is meant by Vicarious performance
When a third party performs the contractual duty of another party
Other party cannot object this
What is the exception for Vicarious performance
Servcies contracted for rellies on skill or judgement of the party of the essence of the contract the other party can insist on personal performance
E.g if the purpose of the contract is to perform a gig, a third party cannot be contracted to do it
Which case shows Vicarious performance and why could the contract not be performed vicariously
Edwards V Newland (1950)
The personal skill and care of the warehouseman was ‘of the essence’. The transfer of work to anohter was not allowed
What is a Divisable contract
Contracts that are made up of various parts or obligations
Each part can be discharged seperately, but uncompletion of one does not breach the whole contract - sue for part of contract
Which case showed a Divisable contract and what was the contract split into
Taylor V Webb (1937)
1) Lease the premises and 2) Maintain and repair
Tenant still had to pay rent, didnt have to pay for landlord failure to cocmplete repairments
What is meant by a Discarge of contract by Breach
Failure to fulfill contractual obligations = breach of contract
When one part performs defectively or differently from what was agreed = actual breach
What are the two types of breach
Actual breach
Anticipatory breach
what is Anticipatory breach
When one party informs in advance that they will not be performing how they agreed
What did the case of Hochter V De La Tour (1853) establish for Anticipatory Breach
Anticipatory breach does not require C to waait untill the contract was due to start
Which case highlights that for Anticipatory breach you should sue as soon as you know someone is going to breach - dont wait
Avery V Bowden (1856)
What is Repudiatory breach of contract
Fundamental breach
When a party commits a breach of contract that is ssufficiently serious that it entitles the innocent party to repudiate
When does Repudiatory breach occur
When D:
Breaches a condition or
Refuses to perfomr the contract or
Sufficiently serious breach of innominate terms
What did both the cases of Clegg V Olle Anderson (2003) and Rogers V Parish LTD (1987) show for Repudiatory Breach
Repudiation must take place before C accepts the goods
What are the remedies for Anticipatory breach
‘Fast forwad’ damges and/or repudiation
What are the remedies for Actual breach
Actual breach of condition = ‘Fast forward remedies and/or repudiation (Poussard V Spiers)
Actual breach of warranty = C can only recover damages (Bettini V Gye)
What is meant by Discharge of contract by Frustration
Channge in circumstance where the contract is rendered impossible to perform by an event not due to either party who is apart of the contract
E.g natural disasters
What are the 3 ways Frustration occurs
Impossibility
Illegality
Radical change in circumstance
Which case showed the tradition of parties being bound by what they had signed saying ‘Parties are held to the agreements whatever the situation - the rules are strict and absolute’
Pardine V Jane
What is Impossibility as a way Frustration can occur
Where subject matter of contract become unavaliable through no fault of the contracting parties
Could be inavaliability of a party to perform due to illness
Which case involved the subject matter of a concert hall being burned down causing frustration
Taylor V Caldwell (1863)
Which case involved the person involved as the subject matter, and that he was conscripted into WW2 so was unavaliable to perform the contract - frustration
Morgan V Manser (1948)
Which casse involved the person involved as the subject matter, where he became ill so could not perform - frustration
Condor V Barron Knight (1966)
What is Illegality as a way Frustration can occur
Become frustrated due to change in the law that makes the contract illegal to perform
What is the case used for Illegality as a way Frustration occurs
Metropolitan Water Board V Dick Kerr (1918)
What is Radical change in circumstance as a way Frustration occurs
When a contract has become pointless or commercially sterile - argued it is not the same contract they set out to make
What did Krell V Henry (1903) show
A room overlooking an empty london street is radically different from a view of the king corrination procession
Although it was still frustsration in Herne Bay Steam Boat Co V Hutten (1903) why was the contract not commercially sterile
D could still enjoy the trip around the Bay even if that was not the sole purpose for booking it in the first place
How many limits are there to Frustration
3
What are the limits to Frustration
Not used if contract is more onerous
Cannot be self-induced
Cannot be used if the ‘frustrating’ event is foreseeable
What is meant by Onerous as a limit for Frustration
Not frustration simply because performance has become more onerous (difficult) or expensive than expected
Which case involved having to do an extra 5000 miles for there shipment route due to a war brreaking out - onerous
Tsakiroglou V Noblee Thorl (1961)
Which case involved a fixed price for building a house, but rising costs meant that the contract would cost more to perform
Davis Contractors V Fareham UDC (1956)
What is meant by Self-induced as a limit for Frustration
Frustration cannot be used when the frustrating paarty event is within the control of one party
What is the leading case for Onerous as a limitation to Frustration
Maritime National Fish Ltd V Ocean Trawlers Ltd (1935)
What is meant by Forseen and foreseeable event as a limit to Frustration
If it can be foreseen or parties foresaw the frustration - assumed that they made a contract with knowledge of what could happen
Frustration should have been shaped into their terms
In what case, did frustration not take place because the company should have been aware of the ‘listed status’ and factored it in
AIP V John Walkers & Sons LTD (1977)
Which case involved a business model propersal which back fired causing a contract to end resulting in C trying to end the contract with D for frustration - was not upheld
Armchair Answercall V People in mind (2016)
What are the common law effects of frustration
Frustration automatically terminates the contract at the time of the event
Obligations existingmust be completed and future obligations are terminated
Common law effect of frustration can lead to unfair outcomes, in what case do we see this
Changler V Webster - ‘losses lay where they fell’
What Act is used for Frustrated contracts
Law Reform (Frustrated contracts) Act 1943
What that the four things included under the Law Reform (Frustrated contracts) Act 1943
Money already paid is recoverable S1(2)
Money due is no longer payable S1(2)
A ‘just sum’ to be paid for work done/ express incurred on the bassis of quantum meruit S1(2)
A ‘just sum’ to bee paid for any valuable benefit one party may acquire under the contract S1(3)
What case is used to show the use of the Law Reform (Frustrated contracts) Act 1943
Gamerco SA V ICM (1995) - ordered a ‘just sum’ for the aim ‘to do justice’
