Performance and Breach Flashcards
What are the different ways to discharge a contract?
- Agreement
- Performance
- Breach
- Frustration
Explain discharge by agreement
What is said about expressing this agreement?
Discharge by agreement sees a contract being terminated by the parties agreeing to release each other from their obligations
It is said that if there is no express form of agreement parties may be found to have abandoned their rights
What are the two requirements for a contract to be discharged by performance?
- Performance must be precise and exact (this rule is strictly applied by the courts)
- Must comply with contractual description
What are the developments in the law?
- Consumer rights Act 2015: s11 - Goods has to be as described (ss 1 & 2)
- Sale of Goods Act 1979 :
- s13 - Sale by description, s14 - Implied terms as to quality and fitness (ss 2), s15 - Sale by sample
- Unfair Contract Terms Act [1977]
Give case law examples for compliance with contractual description?
Refer to table of cases for answers on what the cases were specifically about
- Re Moore & Co v Launder & Co [1921] (Authority) - canned fruit case
- *There was a contract for the sale of cases of Austrialian canned fruits
- Goods were stated as being: a) in cases containing 30 tins each b) Payment to be per dozen tins
- Sellers tendered the whole quantity ordered but : about hald of the cases contained 24 tins and the rest contained 30 tins
- It thus did not reflect on what they agreed
- Buyers refused to take the delivery on this ground
- Held: Buyers were entitled to reject goods as they were not as described in contract*
- Arcos v EA Ronaasen [1933] (key case) -
- *Seller agreed to sell vertical posts (staves) of Russian redwood and whitewood
- Seller knew buyer was going to use for a making cement barrels
- Agreement contained stipulations as to length bredth and thickenness
- Some variation allowed to length and bredth but NOT to thickness
- Buyer rejected goods on arrival : a) Did not conform to description in contract b) Thickness specified in the contract was half an inceh but on arrival the staves were 9/16th of an inch - so was not precise and exact and the measurement was not right
- Held: Buyers not bounf to accept goods and entitled to demand goods to comply with descrioption in contract, even though the goods tendered were merchantable
JC Smith’s textbook states that it is unclear if the same result will be reached today because
1. In Reardon Smith Line ltd V Hansen Tangen Lord Wilberforce said that some of the prior case law had been too technical
2. A new section was inserted into the Sale of Goods Act in 1994 which provided that where the buyer is not a consumer and ‘the breach is so slight that it would be unreasonable for him to reject the [goods]’ the breach is not to be treatef as a breach of condition but may be treated as if it were a breach of warranty. Section 15 A applies to the terms implied by sections 14 and 15 as well as section 13
What is the less strictly applied rule in compliance with contractual description? And what were modifications in the law as a result?
Can still be regarded a key case as it has legislation to back it up
*Reardon Smith Line Ltd v Hansen Tangen [1976]
** Agreement made before building a vessel commenced that vessel to be chartered on completion
* Vessel was to be built at Osaka with the yard/hull number 354 but due to its size the vessel was built at Oshima and had the yard/hull number of Oshima 004
* But in all external documents it was known
* a) BUT in all external documents it was “known as” or “called” Osaka 354
* b) HOWEVER physical attributed of vessel corresponded with requirements of respectibve charters - corresponded with the terms of the contract
* * When vessel was ready for delivery in 1974, an oil crisis caused market collapse and charterers tried to escape obligation by rejecting vessel, arguing that, by analogy with contracts for the sale of goods:
* a) the vessel tendered did not correspond with contractual description;
b) vessel was Oshima 004 and not Osaka 354
c) It was stamped 004 and not Osake 354 *
* *Held: Vessel did comply with the description set out in the respective charters, fundamentally the physical attributes comply with the description - change of name not that important
* Lord Wilberforce stated that:
* * Prior case law regarding sale by description was too technical
* Failure to comply with description, however trivial, would amount to a breach of condition and entitle a buyer to reject the goods, leading to harsh results
* Need to establish a term was a condition as a matter of interpretation, before it can be established as a condition under s 13, Sale of Goods Act 1893, and as amended in 1979
Since Reardon Smith: - modifications to legislation
* New s15A inserted into Sale of Goods Act in 1994
* A new section was inserted into the Sale of Goods Act in 1994 which provided that where the buyer is not a consumer and ‘the breach is so slight that it would be unreasonable for him to reject the [goods]’ the breach is not to be treatef as a breach of condition but may be treated as if it were a breach of warranty. Section 15 A applies to the terms implied by sections 14 and 15 as well as section 13
What is the general rule of “entire obligation” v partial performance ?
Where the bilateral contract stipulates an entire piece of work is to be done by one party, that obligation must be completely performed, unless the parties agreed other wise
- Cannot recover payment for partial performance of an entire obligation
Give case law examples for “entire obligation” v partial performance
Cutter v Powell [1775-1802] 101 ER 573
* The contractual note stated:
“Ten days after the ship Governor Parry arrives at Liverpool, myself master, I promise to pay to Mr. T. Cutter the sum of thirty guineas, provided he proceeds, continues and does his duty as second mate in the said ship from hence to the port of Liverpool. Kingston, July 31st, 1793”
* Mr. T. Cutter performed his duties under the contract until his death which happened BEFORE the ship arrived at Liverpool.
* Could his widow recover his wages?
Held:
* Wages were not recoverable
* Cutter had not completed performance of the contract - he died before he ship could be delivered
Ashurst J :
“This is a written contract, and it speaks for itself.
And as it is entire, and as the defendant’s promise depends on a condition precedent to be performed by the other party, the condition must be performed before the other party is entitled to receive any thing under it.”
The same principles were applied in Appleby v Myers [1867] to a contract to install machinery in the defendant’s premises. The bulk of the work was done when, without the fault of either party, the premises were burnt down and the machinery destroyed. The claimant could not recover anything.
Look at information regarding Section 30 of the Sale of Goods Act and if the defendant has an option to accept or reject the claimant’s incomplete performance and the claimant chooses to accept the courts will infer a new contract
Sumpter v Hedges (1898)
* Claimant was a builder, who contracted to erect certain buildings on defendant’s land for a lump sum of £565
* After he had done PART of the work, he abandoned the contract (when the sum reached £333) because he ran into financial difficulties - he had received part of the price but his action to recover the balance of the value of the work he had done failed
* Defendant then completed the buildings using materials left by the claimant on the site. The defendant was held liable to pay for the materials, because he had an option whether to use them. This was different from the work done by the claimant.
Held:
* The court held that the defendant had no option to accept or reject an unfinished building on his land, so was not liable to pay anything for the work done. The unfinished building was simply there on the land and could not be rejected. Moreover, the defendant was bound not to leave it in an incomplete state.
- Claim for a quantum meruit (ie: for what one has earned) for partial performance should fail
Bolton v Mahadeva [1972]
* Bolton installed central heating for £560 in Mahadeva’s house
* It was too cold: heat came unevenly and heater gave off fumes - therefore the heating (core of the contract did not work)
* Bolton refused to correct it, which would cost Mahadeva an extra £174
* Mahadeva refused to pay any money at all
Held:
* Bolton was not entitled to payment as there had been no substantial performance of the contract, as per the “entire obligation” rule - (would have been a central heating that works completely and not from time to time)
* The lack of performance was not a trivial one, rather it went to the root of the contract
What is Substantial performance? Support answer with case law
Substantial performance is if there is a minor variation from the contractual terms, the other party cannot claim no discharge
There may be rise to an action for damages if there is a breach of contract
Hoenig v Issacs [1952]
- Contract by claimant to decorate and furnish defendant’s flat for £750
- Defendant alleged workmanship was poor and defective and only paid £400
- Claimant sued for the balance
Held:
a) Court of Appeal found that the contract was an ordinary lump sum contract that had been substantially performed
b) Although there were some defects, they were valued at £55 (minor defects), so balance owed was £750 less £55
Where there is substantial performance the claimant may still be entitled to the complete lump sum but defected or troublesome areas may be deducted from this lump sum
Give case law examples of Performance having to be ON TIME
What do these cases show about the expression of goods needing to be done at a certain time?
Startup v Macdonald (1843)
- Defendant contracted to buy 10 tons of linseed oil from Plaintiff at a certain price
- Parties agreed oil “to be free delivered by the plaintiffs to the defendant within the last fourteen days of March, and paid for at the expiration of that time in cash”
- Goods were tendered on the last of the fourteen days at 21h
- Buyer refused to accept owing to the lateness of hour
Held:
Although it was late at night, the goods were still tendered within the agreed period (ie: during the last fourteen days of March) - they did not make it clear that there was a specific time during this period for the goods to be tendered
This case shows that there needs to be an express statement of goods are to be brought at a specific time
United Scientific Holdings Ltd & Burnley Borough Council [1978]
- Rent review provisions in two leases
- In each case, failure to strictly adhere to timetable established by the rent review clauses
- Tenants claimed time was of the essence under the timetable, so landlord had lost right to a review
Held
House of Lords pointed out that time is not of the essence for performance of contractual obligations UNLESS the express words of the contract, the nature of the subject matter or the surrounding circumstances indicated to the contrary - There may be some timetable but if it is not expressly said at the time, it does not count
What is NON-performance?
NON-performance is when obligations have not been discharged in full and thus the conract comes to an end
What is Quantum Meruit?
Payment of what they have done/earned
What is a case law example of Quantum meruit?
Planche v Colburn (1831) EWHC KB J56
- Defendants were in the process of compiling a series of books to be entitled ‘the juvenile library’
- They engaged the claimant to write a book on medieval costume and amour
- When claimant had written several chapters, the series was cancelled
- Publishers offered to publish the book separately
Held
Claimant was entitled to refuse publishers’ offer and claim in quantum meruit for work completed on the book
When is there a breach in a contract?
If the terms of a contract have or have not been complied with and also depends on the term:
- Condition (core of the contract)
- Warranty (lesser term in the contract)
- Inominate term
Whether a party has breached a contract by faulty or inadequate performance will depend on the standard of performance required (sometimes implied by things such as legislation)
When will a breach give rise to termination?
What legal rights cannot be ignored?
If the contract prives a right to terminate for the breach in question
OR
The law provides a right to terminate for the breach in question
Some legal rights cannot be ignored such as the Consumer Rights Act 2015
