Discharge of contracts

Question 1

What is a discharge of contract?

Answer 1

The contract has been complete/come to an end. There is no need for either party to do anything else.

Question 2

What 3 ways can a contract been discharged?

Answer 2

• By performance
• By frustration
• By breach (depending on type of term)

Question 3

By performance

Answer 3

Both the parties have done exactly what they promised.
Cutter v Powell

Question 4

Cutter v Powell

Answer 4

• Cutter agreed to work as a second mate on a voyage for a fixed fee. He died at sea near the end of the voyage and his widow sued for a proportion of fee.
• C had not completed his side of the bargain so contract was discharged, D did not have to pay

Question 5

Exceptions to the rule of discharge by performance

Answer 5

• Divisible contracts
• Substantial performance
• Full performance prevented by D
• D accepted part- performance by C
• Late performance

Question 6

Divisible contracts

Answer 6

Where a contract can be seen as being separate parts, non-completion of one part is not a breach of the whole contract
Ritchie v Atkinson

Question 7

Ritchie v Atkinson

Answer 7

A ship owner agreed to carry a cargo at an agreed rate per tonne, he carried only one part of the cargo. He was entitled to be paid for the part of the cargo he had carried at the price per tonne.

Question 8

Substantial performance

Answer 8

If a party has done almost everything that was required under the contract, the doctrine of substantial performance may apply.
Dakin v Lee

Question 9

Dakin v Lee

Answer 9

Contract had been substantially performed. The fact that the work was done badly did not mean it had not been performed at all. The builder was entitled to be aid for the price, with a deduction for the defective work.

Question 10

Bolton v Mahadeva

Answer 10

Performance is not substantial if what has been done so far ‘removes the whole benefit of the contract or causes further damage’

Question 11

Full performance prevented by D

Answer 11

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

Question 12

Planche v Colburn

Answer 12

A publisher hired an author to write part of a series of books. The publisher decided to abandon the whole series, the author was prevented from completing. They were entitled to a fee for the wasted work.

Question 13

D accepted part performance by C

Answer 13

If one party has agreed the other party need not complete the entire contract, the contract must be paid for on a quantum meruit.
Sumpter v Hedges

Question 14

Sumpter v Hedges

Answer 14

D had no choice but to accept performance as he was left with half a completed house in his land. Builder was not entitled to be paid for what he had done but was awarded for the materials left behind.

Question 15

Late performance

Answer 15

Terms in a contract about the times for performance of contract
Charles Rickards v Oppenheim
Startup v Macdonald

Question 16

Charles Rickards v Oppenheim

Answer 16

C was entitled to cancel the contract as time had been made of the essence and that term had not been complied with.

Question 17

Startup v Macdonald

Answer 17

The claimant had tendered performance within the agreed contractual acceptance

Question 18

Contract discharged by frustration

Answer 18

If a contract is ‘frustrated’, this means it has been discharged due to unforeseeable circumstances. Neither party needs to do anything else.

Question 19

Force majeure clauses

Answer 19

A clause often found in commercial contract. It excludes liability for the parties for delay in performance or the non- performance if there are any extraordinary events.

Question 20

What if a contract does not contain a ‘force majeure’ clause?

Answer 20

A court might still decide that a contract was frustrated - so C’s claim that D breached the contract will fail.

Question 21

What must the defendant prove to say that a contract has been frustrated?

Answer 21

• Performance was impossible
• Performance would have been illegal
• Circumstances had radically changed

Question 22

Performance was impossible

Answer 22

Taylor v Caldwell

Question 23

Taylor v Caldwell

Answer 23

Music hall had burned down and so the contract was impossible to complete. It was frustrated and so ended the contract and there was no recompense for the wasted experience

Question 24

Contract is frustrated because it has become illegal to perform

Answer 24

Denny Mott v Dickson

Question 25

Denny Mott v Dickson

Answer 25

Court said for a contract to import certain goods would be frustrated if importing goods of that kind became illegal after the contract was made.

Question 26

Contract is frustrated due to a radical change in circumstances

Answer 26

Krell v Henry

Question 27

Krell v Henry

Answer 27

Man hired a hotel room to view the coronation of Edward VII. Prince became ill so coronation was postponed. Court said that the event was the main purpose of contract so contract was frustrated.

Question 28

Herne Bay Steamboat v Hutton

Answer 28

Hutton hired a boat to see the fleet when the King reviewed it as part of his coronation celebration and he was ill so did not attend. Contract was not frustrated as the contract still remained to view the fleet, it just lacked the Kings presence.

Question 29

If the frustration was self induced it will not count as a frustrated contract

Answer 29

Superservant 2 case

Question 30

Superservant 2 case

Answer 30

No frustration as the contract provided for another vessel to be used and so the sinking of the Superservant 2 did not frustrated it. No other vessel being available was self induced by D.

Question 31

It will not count as frustration if the frustrating event just made the contract less profitable but not impossible

Answer 31

Tsakiroglou v Noblee Thorl

Question 32

Tsakiroglou v Noblee Thorl

Answer 32

D could still have transported the peanuts within the contractually agreed time but this would have taken longer and costed more. Court held that the contract was not frustrated.

Question 33

The contract will not be seen as frustrated if the risk of the event happening was mentioned in the contract or was foreseeable

Answer 33

Amalgamated Investment and Property Co v John Walker

Question 34

Amalgamated Investment and Property Co v John Walker

Answer 34

Being given ‘listed’ status, is a foreseeable risk with old buildings so the contract was not frustrated.

Question 35

Remedies for a frustrated contract

Answer 35

Law Reform Act 1943

Question 36

Law Reform Act 1943

Answer 36

s1(2) Money already paid to the other party can be recovered.
s1(3) A sum can also be claimed if any work already done has unjustly enriched the other party

Question 37

Discharge of a contract due to a breach of contract

Answer 37

Breach - a total failure to perform OR
Failure to do exactly as agreed

Question 38

Anticipatory breach

Answer 38

Before performance is due - D tells C that s/he is not going to do what s/he promised under the contract.

Question 39

Actual breach

Answer 39

At the time performance was agreed to happen, D fails to do as agreed or does it differently.
If breach is anticipatory, C has a choice to sue for a breach of contract immediately or wait for them to breach the contract.
Hochster v de la Tour

Question 40

Hochster v de la Tour

Answer 40

Hochster agreed to work but the company told him they no longer require his services. In that situation, was entitled to sue immediately and didn’t have to wait until the actual breach of contract. He was entitled to sue immediately.

Question 41

Why might waiting for them to actually breach the contract be good?

Answer 41

The other party might be able to perform their part after all when the time comes BUT this carries the risk that something might happen to frustrated the contract - so the innocent party will lose their chance of compensation.