Lecture 4 - Discharge of Contracts

Question 1

what are the four ways parties can be discharged from a contract?

Answer 1

• performance
• agreement
• frustration
• breach

Question 1

discharge of contracts = ?

Answer 1

when a contract comes to an end and parties are discharged from their contractual obligations

Question 2

discharge by performance = ?

Answer 2

parties must carry out precisely what they agreed under their contract - specifically

Question 3

exceptions to the discharge of contracts by performance?

Answer 3

• de minimis rule
• doctrine of substantial performance
• voluntary acceptance of partial performance
• performance prevented by the promise
• divisible contracts

Question 4

de minimis rule?

Answer 4

courts will ignore minor discrepancies

Question 5

doctrine of substantial performance?

Answer 5

if contract has been substantially performed, it won’t be discharged - obligation to the contract holds

Question 6

voluntary acceptance of partial performance?

Answer 6

parties must pay for the benefits they have received - even if they haven’t received everything in totality

Question 7

performance prevented by the promise?

Answer 7

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

Question 8

divisible contracts?

Answer 8

obligations are split up into stages or part payments can be claimed for each stage

Question 9

discharge by agreement = ?

Answer 9

what is created by agreement can be ended by agreement

Question 10

ways through which discharge by agreement can occur?

Answer 10

• out of the original agreement
• out of a new contract (bilateral discharge/unilateral discharge)

Question 11

discharge by agreement out of the original agreement?

Answer 11

parties have previously agreed that they’ll end the contract after a fixed period of time

Question 12

discharge by agreement out of a new contract?

Answer 12

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

Question 13

executory contract = ?

Answer 13

promise for promise, no performance has been made

Question 14

waiver?

Answer 14

parties agree to waive (give up) their rights and responsibilities under the contract

Question 15

novation?

Answer 15

parties agree to make a fresh contract in substitution of the old

Question 16

unilateral discharge from contract by release?

Answer 16

the party to whom the obligation is owed may release the other party

Question 17

unilateral discharge from contract by accord & dissatisfaction?

Answer 17

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

Question 18

discharge by frustration?

Answer 18

where a contract is discharged after its formation by something happening to make its performance impossible

Question 19

reasons for a contract being deemed impossible to perform?

Answer 19

• destruction of subject matter
• personal incapacity
• government intervention
• supervening illegality
• foundation of the contract is destroyed

Question 20

personal incapacity causing discharge by frustration?

Answer 20

e.g., illness

Question 21

supervening illegality causing discharge by frustration?

Answer 21

a subsequent change in the law may make performance of a contract illegal

Question 22

foundation of contract being destroyed in discharge of contract by frustration?

Answer 22

e.g., parties made agreement on the basis of a forthcoming event - if the event is cancelled, the doctrine of frustration will apply

Question 23

in which situations does the doctrine of frustration not apply?

Answer 23

• 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

Question 24

consequences of contract frustration?

Answer 24

money paid before frustration is recoverable

money due before frustration ceases to be payable

benefits received before frustration must be paid for

Question 25

discharge by breach = ?

Answer 25

breach means failure to comply with the terms in a contract

Question 26

examples of breaches?

Answer 26

• refusal to carry out contract
• wrongdoer can defectively purport performance of the contract

Question 27

anticipatory breach?

Answer 27

before the time for performances arrives, a party to the contract may declare his intention of not performing the contract

Question 28

repudiate = ?

Answer 28

denial of the existence of a contract or refusal to perform a contract obligation