Private Law 10

Question 1

What is a breach of contract?

Answer 1

Occurs when one party fails to perform their obligations under the terms of a contract without a lawful excuse (unjustified breach of a contractual term).

Question 2

What is an anticipatory breach?

Answer 2

When a breach may occur before performance is due.

Question 3

What constitutes a breach of contract?

Answer 3

• Non-performance
• Defective performance
• Late performance

Question 4

Are there any reasonable justifications for a breach?

Answer 4

• Other party in breach
• Non-cooperation of other party
• Impossibility

Question 5

Who seeks remedies in a breached mutual agreement?

Answer 5

If one party breaches, it affects the mutual agreement, and the non-breaching party has the right to seek remedies.

Question 6

What are the 4 remedies for a breached mutual agreement?

Answer 6

1. Rights and duties counterparts of one another.
2. A party in breach cannot insist on further
   performance by other party.
3. ‘Wronged’ party not relieved of liabilities already
   incurred while party now in breach was performing.
4. “A material breach of a contract does not entitle the
   party affected by it to escape liability for debts which
   have already accrued.. to hold that it would did
   would introduce the element of punishment, foreign
   to the law of contract”.

Question 7

What case is an example of a breach of contract in a mutuality agreement?

Answer 7

Graham & Co v United Turkey Red Co Ltd (restrictive covenant breached).

Graham entered a contract to sell goods to UTR, and agreed to a restrictive covenant restricting Graham from selling goods to other manufacturers. Graham went on to breach this.

The court held the restrictive covenant was enforceable as a clear breach.

Question 8

What is a material breach?

Answer 8

A severe violation that affects the essential terms of the contract, depriving the non-breaching party of the benefits they reasonably expected to receive.

Question 9

What are the 3 most important rules for materiality breaches of contract and remedies?

Answer 9

1. The more serious the breach, the greater the range of remedies.
2. A breach that does not ‘go to the root’ of the contract will not allow the other party to rescind.
3. Can stipulate that a term will be material:
   * “It is a material term that…”
   * “Time is of the essence”

Question 10

What case is an example of a breach of contract in a materiality agreement?

Answer 10

Wade v Waldron (notice was not given).

The comedian agreed with a theatre manager to perform. There was a stipulation in the agreement which stated there must be a 14-day notice before performing. No notice was given and therefore there was no permission to perform.

The court held the failure to give notice was not an entire breach of contract and did not equate to termination. He could only claim damages.

Question 11

What are the 3 remedies for a breach of contract in an anticipatory agreement?

Answer 11

1. Rescind and sue for damages.
2. Wait until the time for performance and then sue for
   damages.
3. Perform and sue for contract price.

Question 12

What case is the first example of a breach of contract in an anticipatory agreement?

Answer 12

White & Carter (Councils) Ltd v McGregor (display advertisements for his garage on litter bins).

McGregor attempted to cancel the 3 year contract claiming his representative had no authority to enter into the agreement. However, White & Carter refused to cancel and proceeded to perform the contract.

The court held the innocent party (White & Carter) had the right to affirm the contract and enforce its terms, even if it resulted in a loss to the breaching party (McGregor).

Question 13

What case is the second example of a breach of contract in an anticipatory agreement?

Answer 13

The AMA (New Town) Ltd v Law (price for flats due at date of entry).

The contract specified the payment was due 14 days after the first two events. The respondents then failed to pay.

The court held the AMA was entitled to enforce payments as the respondents had failed to fulfil their payment obligations.

Question 14

What is a recession breach?

Answer 14

• Rescission is a legal remedy that voids a contract and returns the parties to their pre-contractual positions as if the contract never existed.
• Rescission aims to undo the effects of a contract rather than just compensate for its breach.
• Releases innocent party from future but not past obligations.

Question 15

What case is an example of a breach of contract in a recession agreement?

Answer 15

McNeil v Aberdeen City Council (resigned without notice).

After working for 21 years, McNeil resigned without notice. He claimed the manner in which the council conducted disciplinary investigations constituted a breach of mutual trust and confidence.

The court held this was true.

Question 16

What is called to withdraw from a contract in a lawful way?

Answer 16

Resile

Question 17

What are the 3 remedies for breach of contract?

Answer 17

1. Self-help Remedies.
2. Judicial Remedies.
3. Damages.

Question 18

What is a self-help remedy?

Answer 18

Actions that the non-breaching party can take themselves, without needing to go to court, to mitigate the effects of a breach of contract.

• Retention (withholding performance)
• Lien (retaining possession)

Question 19

What is a judicial remedy?

Answer 19

Judicial remedies are formal legal solutions provided by the courts to enforce or correct the contract.

• Declarator
• Action for Payment
• Specific Implement
• Interdict
• Damages

Question 20

How is damages used as a remedy in a breach of contract?

Answer 20

To restore the wronged party to the position they would have been in but for the breach.

Question 21

What case looks at damages which have been used as a remedy in breach of contract?

Answer 21

Wilkie v Brown

Question 22

What are the 2 limitations of using damages as a remedy in breach of contract?

Answer 22

1. Must be a link between the breach and the loss.
2. Remoteness “a party who breaks his contract is liable for those consequences which a reasonable man, possessing the knowledge which the party had at the time of contracting, would have anticipated.”

Question 23

What are the 4 types of agreements with a breach of contract?

Answer 23

1. Mutual agreement
2. Material agreement
3. Anticipatory agreement
4. Recession agreement

Question 24

How does a contract come to an end?

Answer 24

1. Performance
2. By agreement:
   - Acceptilation (acceptilatio) or Discharge
   - Novation (novatio) (A new, replacement contract)
   - Delegation (delegatio) (A new, replacement debtor)

Question 25

What are the 4 categories of termination?

Answer 25

1. Confusion
2. Compensation (“set off”)
3. Prescription (and Limitation)
4. Frustration

Question 26

What is a confusion termination?

Answer 26

This occurs when the roles of the debtor and creditor merge in one person, resulting in the extinguishment of the obligation, e.g. if you owe a debt and also become the person to whom the debt is owed, the obligation is nullified because you cannot owe a debt to yourself.

Question 27

What is a compensation termination?

Answer 27

Allows one party to reduce or eliminate their debt by claiming that they are owed an equivalent amount by the other party.

Question 28

What is prescription termination?

Answer 28

Can bring a contract to an end by extinguishing the rights and obligations of the parties due to the passage of time.

Question 29

What is a frustration termination?

Answer 29

Allows for the termination of a contract when an unforeseen event occurs, making the performance of the contract impossible, illegal, or radically different from what was originally agreed upon.

Question 30

What is a case example of a frustration termination?

Answer 30

Taylor v Caldwell (gardens + music hall burn down).

The contract stated it would be £100 per day and the hall would be available for 4 days. Before the first concert, the hall was burned down in a fire at no fault of either parties. Taylor claimed the cost of organising the concerts was expensive.

The court held Caldwell was not liable for breach of contract. The court implied the doctrine of frustration which states the destruction of the hall made the peformance of the contract impossible.