Part 1: Performance

Question 1

How can a contract be discharged by performance?

Answer 1

Both parties must do precisely and completely what they promised to do.

Called - the entire performance rule.

The ‘entire’ contract must be performed and all obligations.

CASE: Widow tried to recover wage for period up until husbands death. Failed as husband did not perform his obligations under contract.

CASE: Heating system didn’t work effectively after installation. Held that defendant had not fully performed and the claimant did not need to pay him.

Question 2

What are the exceptions to the ‘entire performance rule’?

Answer 2

1. The acceptance of partial performance

A party who accepts partial performance of contract will be obliged to pay the other for what they have done so far.
The original contract ends and they enter into new agreement.
For this exception to apply - must be an element of choice.

2. Substantial performance

CASE: Held that the bad job of a decorator was not sufficiently bad enough to amount to failure of performance and that he should be paid (minus cost of rectifying)

3. One party prevents the performance of contract by the other. The person who has been prevented from performing can sue for payment of work they have already done.

CASE: Author commissioned to write a book for £100 but publisher withdrew had way through. Entitled to claim £50

4. One party tenders (attempts) performance which is then rejected by the other.

It would be unfair to view the attempt as anything but full performance.
For exception to apply - only if other party’s compliance is needed for performance to occur.

CASE: Attempter to deliver oil but defendant rejected. Held the attempt amounted to performance.

5. Not used for contracts which are divisible or severance obligations.

Question 3

How does the timing of performance affect contract?

Answer 3

Important to check whether “time is off the essence” in a contract.

Even if a set time is given - may not be “of the essence”.

Section 10 of SGA 1979 states:
- unless a different intention appears from the terms of contracts - stipulations as to payment are not of the essence
- other stipulations as to whether time is of the essence depends on term.

“Time is of the essence” - situations when time for performance is vital term of the contract.

Breach entitles the injured party to treat contract as repudiated.

Question 4

When will time be of the essence in a contract?

Answer 4

1. When contract expressly or implied says so
2. If agree date not met - one party notified other that time is of the essence and new deadline is set
3. Circumstances indicate that time is of the essence (e.g goods that are perishable)

If time not of the essence - relevant clause instead viewed as innominate term.

Up to court to decide status of the term and whether breach has gone to the root of the contract.

CASE: V rented dental practise from J in exchange for 50% of monthly costs.
V refused to make payments for three months and J claimed breach.
Held that, in relation to time of performance, time not of the essence as breach not gone to root of contact.