Discharge of obligations

Question 1

what is discharge by agreement

Answer 1

The parties to a contract may mutually agree that the contract should come to an end.
Friel points out that, “ … in some senses it could be viewed as a contract to nullify the original
contract.”’

Question 2

what is accord?

Answer 2

For a contract to be terminated there must be a mutual agreement to do so. This concept of
mutual agreement is known as accord.

Question 3

explain bilateral contract termination

Answer 3

For a bilateral agreement to terminate, the consideration is that in exchange for surrendering their rights, they forego the entitlements.

Question 4

explain unilateral contract termination

Answer 4

For a unilateral contract to terminate, one party has already performed their obligation. Thus need fresh consideration

Question 5

explain discharge by performance

Answer 5

For a contract to be discharged by its performance, It
must be shown that the performance complies entirely with the terms of the contract. A breach, which is trivial, can be excused, but any other breach will mean that the contract has not been performed. This rule becomes especially significant where a contract is entire: that is, where one party must perform his obligations in full before that party is entitled to benefit under the contract.

In such a case, any non-performance, even though limited, will have the effect that the party is not entitled to any benefit.

Question 6

what is the rule in Sumpter v Hudges

Answer 6

If a party receives three quarters of a consignment of baked beans, he has received three quarters of the value of the contract. However, where a party is furnished with a half-built house, it cannot be said that he has received half of that for which he contracted. This rule has been clearly confirmed in Sumpter v Hudges

Question 7

explain what the case of Cutler v powell established - substantial performance

Answer 7

it established that it depends on whether contract is entire or divisible. Here, he wasn’t entitled to payment until end of the journey. Thus he couldn’t get substantial performance

Question 8

explain what the case of Re Moore & Co v. Lavender established

Answer 8

The traditional rule is that you need complete performance to be relieved. Equity will intervene for substantial performance.

Question 9

explain what happened in the case of Hoemig v. Issacs

Answer 9

Here a builder carried out a 750 pound contract but did not get the bookshelf completed. Def argued no completion but he was ordered to pay the full price minus the bookshelf.

Question 10

what are the two factors that determines if substantial performance of the contract has taken place

Answer 10

(i) The nature of the defects; and,

(ii) The cost of remedying the defects compared to the contract price.

Question 11

explain how time of performance plays a role in discharge of contract

Answer 11

In instances where contracts specifically provide the time of performance is crucial, then failure to perform will result in breach of contract. In the absence of an express statement regards timing, it may be implied due to the nature of the subject matter of the contract.

Question 12

what is discharge by breach?

Answer 12

A breach of contract may occur where one party fails or refuses to perform a contractual promise when the time for performance has fallen due. A breach of contract may also occur where there is a defective performance of a promise.

Question 13

what is the difference between a failure to perform and an anticipatory breach?

Answer 13

(a) A failure to perform occurs after the time for performance has expire; whereas,
(b) An anticipatory breach precedes the time for performance.

Question 14

what do the courts consider when determining whether the breach is sufficiently serious to give the innocent party
the right to elect to terminate the contract?

Answer 14

1. Does the contract expressly confer a right to terminate for breach?
2. Does the contract implicitly confer a right to terminate for breach?
3. Does statute or precedent define the term as a condition allowing such termination
4. If none of the first 3 apply, has the breach gone to the root of the contract, depriving the innocent party of that for which he contracted?

Question 15

does a breach of a contract automatically terminate the contract?

Answer 15

a breach of contract does not in of itself automatically terminate the contract. Instead, the breach may, in some circumstances, allow the wronged party to bring the contract to an end.

In these circumstances, the wronged party has a choice as to whether he will end the contract; if he chooses not to do so, then the contract remains in existence and his
remedy will be in damages.

Question 16

what are the four situations where right to terminate arises?

Answer 16

1. Breach of condition
2. Repudiatory Breach
3. Fundamental breach of innominate term
4. Provision in the contract

Question 17

what is a repudiatory breach?

Answer 17

This is where they refuse to comply with their obligations. It is an objective test, did the conduct of the party show an intention to abandon the contract, judged objectively

Question 18

what is the test for repudiatory breach and breach for an innominate term?

Answer 18

did the breach substantively deprive the injured party of the substantial benefit of the contract

Question 19

what did charlton J note in the case of Leopardstown club Ltd v Templevill Development Ltd

Answer 19

Charlton J noted that it not always possible to classify a term. What matters is how serious the breach is and whether it can be classified as string to the heart of what the party was to expect

Question 20

what is affirmation?

Answer 20

Affirmation occurs where the innocent party decides not to treat the contract as terminated by the breach f the defaulting party. If the innocent party decides to affirm the contract the status quo is preserved intact.

Question 21

what is frustration of a contract?

Answer 21

Frustration occurs when contractual
obligations can no longer be performed as a result of unforeseen circumstances which are beyond the control of either party.

Question 22

In McGuill v Aer Lingus & United Airlines High Court McWilliam J. laid
down the which principles as applying when a claim of frustration is made?

Answer 22

1. A party may bind himself by an absolute contract to perform something which subsequently becomes impossible.
2. Frustration occurs when, without default of either party, a contractual obligation has become incapable of being performed.
3. The circumstances alleged to occasion frustration should be strictly scrutinised and the doctrine is not to be lightly applied.
4. Where the circumstances alleged to cause the frustration to have arisen from the act or default of one of the parties, that party cannot rely on the doctrine.
5. All the circumstances of the contract should be strictly scrutinised.
6. The event must be an unexpected event.
7. If one party anticipated or should have anticipated the possibility of the event which is alleged to cause the frustration and did not incorporate a clause in the contract to deal with it, he should not be permitted to rely on the happening of the event as causing frustration.