Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Matteo's contract class > perforance and breach of contract > Flashcards

perforance and breach of contract Flashcards

1
Q

breach of contract

A

a breach of committed when a party without lawful excuse fails or refuses to perform what is due to him under the contract

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

where do obligations in a contract come from?

A

Express Terms: Production specification

Implied Terms: Contracts between trader and consumers: A term that the good are satisfactory

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Strict liability

A

default position in contract law - only have to prove that they didn’t do it

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

fault-based liability

A

take ‘reasonable care’ or ‘use reasonable endeavours’

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

what are the two basic remedies for breach of contract

A

damages and termination of contract

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

damages

A

an award of monetary compensation and the objective is to put the innocent party in the position as if the contract had been performed.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

termination of contract

A

if the innocent party is entitled to terminate the contract because of a breach, they can effectively tear up the contract and refuse to perform or accept performance of future obligations. It is powerful and an advantageous remedy and it is used commercially

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Is an innocent party always entitled to terminate the contract

A

No

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

condition precedent

A

something that must be done as a condition of the other party’s performance - something has to be performed before a contract price arises

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

entire obligations rule

A

a party must perform his entire obligation before receiving payment

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

severable obligations rule

A

party can receive payments at various stages of the contract

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Cutter v Powell

A

Mr Powell engaged Mr cutter as a second mate on a ship and the contract provided for a high level of pay if Mr Cutter continues and does his duty from the port of Jamaica to the port of Liverpool. Mr Cutter died and his widowed wife wanted to claim for a proportion of his wages under this contract.. Courts held that the obligation to pay the contract price had not arisen has he didn’t finish the performance.

Law Reform (frustrated contract) act 1943 - where non-performance arises due to frustration (like in Cutter v powell) the court may award a ‘just sum’ in respect to the valuable benefit.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Taylor v Laird

A

Commander of ship hired for £50 a month, but he didn’t complete the voyage. Held that it was a severable obligation so he had to pay for the work he done

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

substantial performance doctrine

A

mitigates the harshness of the entire obligations rule. If the work is done and is regarded fit for the purpose, then the party is obliged to receiving his contractual price

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Hoenig v Issacs

A

redecoration of flat for £750, minor defects totalling up to £55. Courts held that that the works were finished and the claimant was entitled to the full contract price, but defendant could set-off £55

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Bolton v Mahadeva

A

Installation of central heating system for £564. System had serious defects and unfit for purpose so the customer not obliged to pay the contract price.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

quantum merit

A

‘as much as it deserves’ - courts may award a sum of the benefit obtained by the other party if a contract has only been partly performed and the right to the price has not yet arisen. VERY RESTRICTIVE AND LIMITED

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Anticipatory breach

A

after a contract is made, but before it was meant to be performed. Breach before the works are meant to start

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

White and Carter (Councils) v McGregor

A

McGregor’s agent entered into a contract for the advertising of McGregors business on local authority litter bins. Before the contract began, Mc found out and informed the council he did not want the contract. His actions amounted to an anticipatory breach of contract.
POLICY QUESTIONS: should this be actionable? some may argue that they should be held to the terms of the contract and it undermines contract sanctity. However the innocent party could obtain performance elsewhere

20
Q

what can an innocent party do when there is an anticipatory breach

A

They can accept it, regard the contract as terminated and sue for damages immediately. Honchster v De la Tour: the innocent party does not have to wait till the contract was about to begin

21
Q

what does the law allow the innocent party to do in the event of an anticipatory breach

A

The law allows the innocent party to affirm (continue with) the contract and claim the contract prices like in White and Carter v Mcgregor

22
Q

2 exceptions for when they can’t carry on the contract after an anticipatory breach

A
  1. When the innocent’s party performance of the contract would require the other party to do something i.e. their co-operation
  2. When the innocent party has no legitimate interest in performing the contract and damages would be an adequate remedy - Gator Shipping Corporation v Trans-Asiatic Oil Ltd SA and Occidental shipping establishment
23
Q

can every breach of contract entitle the innocent party to terminate the contract

A

no

24
Q

what happens when your entitled to terminate a contract

A

you can effectively tear up a contract and refuse to perform or accept performance of future obligations.

25
Q

How is termination different from rescission

A

rescission has the effect of unwinding the transaction from the beginning

26
Q

When do you have the right to terminate for breach

A
  • When there’s a breach of a condition, the innocent party is entitled to terminate the contract and claim damages.
  • When there’s a serious breach of an innominate term, but breach must be sufficiently serious (accumulations of breaches)
27
Q

classification of terms

A

Conditions: the most important terms,’roots’ or ‘essence’ of the contract
warranties: less important term, and this breach would only entitle a party to claim for damages
innominate terms: important principle, inbetween a condition or a warranty

28
Q

how do we identity what a contract term is?

A

objective intentions of the parties. From the interpretation of the contract you can infer what were meant to be warranties and conditions

29
Q

Lombard North Central plc v Butterworth

A

contract to rent a computer, which provided that timely payment of the rental ‘shall be the essence of’ the agreement. this was a condition of the contract and if the other party didn’t meet the condition the owner was entitled to terminate the contract

30
Q

L Schuller AG v Wickman Machine Tool Sales Ltd

A

Schuler were manufactures of pannel presses and they entered into a distribution contract with Wickmman. A clause of the contract was that it was a ‘condition’ that Wickamn should visit certain major car manufacturers once a week. Another section of the contract provided how they breach can be remedied.
Out of a large number of visits, Wickman missed a couple (trivial breach), and Schuler tried to terminate the contract for the breach of the condition.

Lord Reid affirmed that the general principle is that parties can make conditional to the contract anything they like, even if it’s trivial.

-However the HL interpreted the clause in light of the whole contract to ascertain the parties objective intention:
>there is more than one meaning to the word condition, it could be to simply denote a term of a contract
>poorly drafted contract
>they had a remedy for the breach, so the parties could not have intended that a breach could lead to a termination

31
Q

Rice v Great Yarmouth Borough Council

A

differents from the schuller case, had explicit termination clauses , which stated that a contract could only be terminated under serious breaches

32
Q

SALE OF GOODS ACT 1979, s.13

A

implied term that good will correspond to their description

33
Q

SALE OF GOODS ACT 1979, s.15A

A

‘if the breach is so slight that it would be unreasonable for the buyer to reject the good, the breach may instead be treated as a breach of warranty’

34
Q

SALE OF GOOD ACTS 1979, s.11

A

Whether a term is interpreted as a condition, or a warranty depends in each case on the construction of the contract

35
Q

time clauses

A

time clauses are a type of term that specifies that something needs to be done by a certain time. TIME STIPULATIONS ARE OFTEN RECOGNISED AS CONDITIONS

36
Q

innominate terms

A

terms that are capable of being breaches in serious and trivial ways

37
Q

problems with the condition/warranty classification

A
  • two-fold distinction between conditions is too rigid, doesn’t reflect commercial reality
  • termination is a drastic remedy and not suitable for all breaches
  • innocent party may elect to terminate a contract because they can get a better deal elsewhere
38
Q

Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd

A

Charterers hired a ship for 24 months and the relevant terms of the contract was that the ship would be fully ‘seaworthy’. The seaworthy clause was breached( ship was off hire for 5 weeks and with the prospect of a further 15 weeks) and the charterers purported to terminated the contract and claim damages. Ship owner tried to claim damages for charterers wrongful repudiation

Court of Appeal reasoning: if a contract term is broad, like in this where there is serious and trivial breaches, then it is an innominate term. broad terms like this should not be classified by the courts
Whether termination is appropriate should be assessed once the term has been breached: because if a term is interpreted as a condition, even though its trivial, it could lead to termination of the contract and this is contrary to commercial common sense.
Termination should be last resort.
If the term is interpreted as a warranty then no breach is capable of terminating the contract, even though it was so inefficient that it sank, which is contrary to commercial common sense
Held: THE BREACHES DID NOT DEPRIVE THE CHARTERERS OF SUBSTANTIALLY THE WHOLE BENEFIT OF THE 2 YEAR CHARTER

39
Q

how to ascertain whether the innocent party can terminate the contract if it was an innominate term that was breached

A

the courts will look at the breach and the event caused by the breach, and only if the breach is sufficiently serious can the contract be lawfully terminated

40
Q

TEST FOR SUFFICIENTLY SERIOUS BREACH

A
  • will it deprive the party of the whole benefit which was intended that he should from the contract?
    -will it make further commercial performance of the contract impossible?
    HIGHER MARKS!:
    > what is the benefit that the innocent party was to get under the contract?
    >what losses as the innocent party suffered as a result of the breach?
    >weigh the two against each other
    >how much would it cost to remedy the breaches and is the innocent party happy with this?
    > Is this breaching party likely to breach the contract further?
41
Q

Hansa Nord[1976] (Cehave NV c Bremer Handels GmbH)

A

Contract for the sale of pellets, term of the contract said that the shipment was ‘to be made in good condition’. Parts of the good were not in good condition, but could all be used for original purpose. Buyer only wanted to get out the contract to take advantage of a huge drop in the market and buy them cheaper elsewhere, so it was held that he could not terminate the contract

42
Q

Grand China Logistics Holding (Group) Co Ltd v Spar Shipping AS

A

’ The modern english law approach to the classification of contractual terms is that a term is innominate unless it’s clear that it is intended to be a condition or a warranty’

43
Q

Debate on whether innominate terms are good

A

in favour : flexibility and remedy of injustice

against : ‘remove certainty which is the most indispensable quality of mercantile contracts’

44
Q

How does a party end a contract?

A

the innocent party must elect to accept the other party’s repudiatory breach and end the contract

45
Q

What is the right procedure to terminate a contract

A

the innocent party must communicate the decision to terminate the contract, either expressly or by inference by action.
Silence does not amount to acceptance of breach - Vitol SA v Beta Renowable Group SA
THE INNOCENT PARTY HAS A REASONABLE TIME TO DECIDE THE COURSE OF ACTION THEY WISH TO TAKE. ANY FURTHER DELAY MIGHT BE TREATED AS AFFIRMING THE CONTRACT

Matteo's contract class (8 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions