Lecture 4 - Discharge of Contracts Flashcards
what are the four ways parties can be discharged from a contract?
- performance
- agreement
- frustration
- breach
discharge of contracts = ?
when a contract comes to an end and parties are discharged from their contractual obligations
discharge by performance = ?
parties must carry out precisely what they agreed under their contract - specifically
exceptions to the discharge of contracts by performance?
- de minimis rule
- doctrine of substantial performance
- voluntary acceptance of partial performance
- performance prevented by the promise
- divisible contracts
de minimis rule?
courts will ignore minor discrepancies
doctrine of substantial performance?
if contract has been substantially performed, it won’t be discharged - obligation to the contract holds
voluntary acceptance of partial performance?
parties must pay for the benefits they have received - even if they haven’t received everything in totality
performance prevented by the promise?
where a party to a contract is prevented by the person to whom the promise is made, he can recover a reasonable sum for what he has done
divisible contracts?
obligations are split up into stages or part payments can be claimed for each stage
discharge by agreement = ?
what is created by agreement can be ended by agreement
ways through which discharge by agreement can occur?
- out of the original agreement
- out of a new contract (bilateral discharge/unilateral discharge)
discharge by agreement out of the original agreement?
parties have previously agreed that they’ll end the contract after a fixed period of time
discharge by agreement out of a new contract?
bilateral discharge - if contract is executory, parties may agree to surrender their rights under the contract through: waiver or novation
unilateral discharge - if contract is executed, the other party who wished to be released must provide consideration for the release through: release or accord & dissatisfaction
executory contract = ?
promise for promise, no performance has been made
waiver?
parties agree to waive (give up) their rights and responsibilities under the contract
novation?
parties agree to make a fresh contract in substitution of the old
unilateral discharge from contract by release?
the party to whom the obligation is owed may release the other party
unilateral discharge from contract by accord & dissatisfaction?
the party to whom the obligation is owed may agree with the other party to accept something different to replace the former obligation
the subsequent agreement is the accord
the new consideration is the satisfaction
discharge by frustration?
where a contract is discharged after its formation by something happening to make its performance impossible
reasons for a contract being deemed impossible to perform?
- destruction of subject matter
- personal incapacity
- government intervention
- supervening illegality
- foundation of the contract is destroyed
personal incapacity causing discharge by frustration?
e.g., illness
supervening illegality causing discharge by frustration?
a subsequent change in the law may make performance of a contract illegal
foundation of contract being destroyed in discharge of contract by frustration?
e.g., parties made agreement on the basis of a forthcoming event - if the event is cancelled, the doctrine of frustration will apply
in which situations does the doctrine of frustration not apply?
- alternative mode of performance is still available
- performance becomes unexpectedly more expensive/difficult
- one of the parties are responsible for the frustrating event
- one of the parties has given absolute undertaking
