Standard of Performance Flashcards
Hochster v de la Tour (1853) Facts
o T spoke to H on April 12 to enter into his services
o Employment was to start on June 1
o On May 11, T told H that his services were no longer required
o H brought an action, although the time of performance had not yet arrived (June 1)
o Held:
• H was entitled to do so
• It was a anticipatory breach
• Only has to wait until contract is made, not until performance is due
• Entitles H to be discharged and to sue for damages
Hochster v de la Tour (1853) Principle
Anticipatory breach
• created the doctrine
o Contract says performance has to happen on certain day
o If clear that it wont happen on that date, allows us to terminate when it is clear that it wont happen if they know beforehand
o Terminating is a risky business
• Court may not agree with you
• Must be very obvious
Schuler v Wickman Machine Tool Sales [1974] Facts
o S manufactured tools
o W was a sales company granted the sole right to sell certain tools made by S
o Term of contract, listed as a condition, stated that W would send a sales person to each named company once a week to solicit sales
o Imposed obligation to make 1,400 visits total.
o W failed to make some of the visits
o S terminated the contract for breach of condition
o Held:
• It was only a warranty
• Even though it expressly stated that the term was a condition
Schuler v Wickman Machine Tool Sales [1974] Principle
• Construction of the contract
It was only a warranty
• Even though it expressly stated that the term was a condition
• Identifying terms as conditions
Standard was unreasonably high
not a condition
Arcos v Ronaasen [1933] Facts
- Wooden staves
- Should be1/2 inch thick
- Some were not thick enough
- Didn’t meet specific term
- Held:
- Not good
- Said ½ inch , should be that thick
- Strict liability
- Sale of goods
Arcos v Ronaasen [1933] Principle
Strict Liability
Supply of Goods
• Didn’t meet specific term
Not good
Breach and termination
The term broken is a major term: a ‘condition’ or ‘of the essence’
s.13 of the Supply of Goods and Services Act 1982?
Standard of reasonable care and skill
- Adds additional requirements for services
- Implied term for services that they must be carried out with reasonable care
- S.14, must be in reasonable time
- S. 15, if no price, must pay reasonable price
4 Ways to Bring a contract to an end?
• 1. by the parties performing according to the terms of the contract (the most common outcome)
• 2. by the parties agreeing to abandon/discharge the contract (needs consideration or deed)
o New agreement in and of itself
o Need to abandon needs consideration
• 3. by operation of law (e.g., frustration)
o Misrep, Duress, Mistake, etc…
• 4. By breach
o Usually just one party breaches
Re Moore and Landauer [1921] Facts
o Fruit to be sold in tins o Supposed to be packed in cases of 30 o In the case, packed cases of 24 o Description said 30 o Held: • Could reject the shipment • S. 15 SOGA 1979
Re Moore and Landauer [1921] Principle
Performance
Parties must perform precisely all the terms of the contract in order to discharge their obligations
Cutter v Powell (1795) Facts
- Seaman
- C was supposed to do his duty as a sailor
- Died 2 weeks before end
- Compensation?
- Did not perform ALL of his obligations
- Held:
- His wife got nothing
Cutter v Powell (1795) Principle
Performance
Parties must perform precisely all the terms of the contract in order to discharge their obligations
Sumpter v Hedges [1898] Facts
• Build stable of C’s land • Did part of the work, than abandon the rest of the contract • D actually completed the building • Can D claim amount of work done • Held: o No o Cannot recover for partial performance o Entire contract
Sumpter v Hedges [1898] Principle
Performance
Divisible contracts
Cannot recover for partial performance
Roberts v Havelock (1832) Facts
• Repair of a ship • Contract did nt say when payment occurred • Ship right stopped • Can he claim money? • Held: o Yes o Divisible o Can claim part of the money • Difference: • Construction of the contract • If implied that partial performance can amount to partial payment, then it will be construed as such • Courts are reluctant to allow someone to claim payment before completion • If in doubt, it is divisible
Roberts v Havelock (1832) Principle
Performance
Divisible contracts
- If implied that partial performance can amount to partial payment, then it will be construed as such
- Courts are reluctant to allow someone to claim payment before completion
- If in doubt, it is divisible
Christy v Row (1808) Facts
• Ship going to Hamburg
• Did not arrive because it was seized by people
• Cargo dropped at other point, still accepted
• Were they liable for cost?
• Held:
o They implied a new contract for the new port
o Could get the expenses incurred
o Cargo was still accepted
o This makes it acceptable to the court
Christy v Row (1808) Principle
Performance
Acceptance for partial performance
• Court can infer new agreement
o This makes it acceptable to the court
Planche v Colburn (1831) Facts
• P was supposed to write a book • Receive £100 for it • Publisher abandoned before he started • P made 2 claims • Held: o P could recover money for research completed o Not his fault that contract was stopped o Not his fault
Planche v Colburn (1831) Principel
Performance
COmpletion of performance prevented by the promise
o P could recover money for research completed
o Not his fault that contract was stopped
- Quasi contract claim
- Recover in on quantum merit (something of value)
Dakin v Lee [1916] Facts
• Building a house • Had specific specification • Did not match of these specifications • Purchasers refused to pay • Held: o Substantial performance occurred o Can receive payment, o Minus defective costs
Dakin v Lee [1916] Principle
Performance
Substantial performance
• if you do pretty much everything under the contract, can be said to have substantially performed obligations under the contract
Startup v M’Donald (1843) Facts
• P agreed to sell 10 tons of oil to D at end of March • Delivery took place of 31st of march • Said it was too late • Held: o Still 31st of march o Their offer to deliver is ok o Could recover for damages o S. 29 SOGA • Delivery is ok, as long as it is at reasonable hour • Reasonable= depends of circumstance
Startup v M’Donald (1843) Principle
Performance
Tender of performance
o Could recover for damages
o S. 29 SOGA
• Delivery is ok, as long as it is at reasonable hour
• Reasonable= depends of circumstance
Stipulations as to time of performance: 2 modifications
- Section 41 Law of Property Act 1925
• if no stipulation, than late payment is acceptable
• might be remedy for damages, but cannot terminate contract
2. Equity Time is not regarded of the essence 3 exceptions o 1) Expressly says it is of the essence o 2) It is clear by notice o 3) If it is clear from the circumstances that time is of the essence
2 Types of Agreements to End a contract?
1) Bilateral Discharge
2) Unilateral Discharge
4 types of Bilateral Discharge?
1) – Accord and satisfaction
o Parties want to terminate present contract
2)– Rescission and substitution
o Terminate existing contract and substitute a new one in its place
o Not rescission!
3) – Variation
o Agreeing the change some of the terms
4)– Waiver
o Agreement to accept less the complete performance under the contract
o Agree to accept tless than promised
Diab v Regent Insurance Co Ltd [2006] Facts
- Deals with insurance
- Insurer said that if he made a claim under the policy, it will be rejected
- Contract is still alive, still must follow all obligation
- Important
- Even if breach of one clause, does not permit you to breach the contract as a whole
Diab v Regent Insurance Co Ltd [2006] Principle
Breach and Termination
• Even if breach of one clause, does not permit you to breach the contract as a whole
Universal Cargo Carriers Corporation v Citati [1957] Facts
o Shipping case
o Ship was being chartered
o Wanted to load cargo in July
o Couldn’t find a cargo upon arrival
o Hirer of ship grew impatient
o Cancelled charter party
o Owner wanted to rehire the ship as fast fo possible
o Still had lay-days remaining
o Can the ship be loaded with remaining lay-days?
o Held:
• No, it could not be done
• Ok for them to breach the contract
• Was the breach a condition or warranty?
• If condition, entitled to terminate with damages
• If warranty, only damages
• Held:
• If delay was long enough to frustrate the contract, they can terminate
Universal Cargo Carriers Corporation v Citati [1957] Principle
Breach and Termination
The other party refuses to perform or is clearly unwilling to do so
- If condition, entitled to terminate with damages
- If warranty, only damages
- Held:
- If delay was long enough to frustrate the contract, they can terminate
• Other party refused and were unable to perform
• Anticipatory breach
Said Anticipatory breach can happen in 2 ways
1) breacher displays by words or conduct that he will not perform, or
2) he made it impossible for himself to perform on that day
o ex: already sold the goods
• Clear that the breach is going to happen
• Do not need to wait
• Acting on a tip is not good enough
o Must be based on real facts
ERG Raffinerie Mediterranee SpA v Chevron USA (The Luxmar) [2007] Facts
o Sale of gasoline
o C was selling it to E
o E said it was entitled to terminate the contract because it said it was a traditional FOB contract
o Time of shipment is of the essence in these
o If it was, termination was possible
o Contract itself said there was a 4 day period to load the ship, could be narrowed to 2 days (lay day clause)
o Held:
• Have to read delivery clause as a whole
• Cannot read out 4 day period
• Made it a non-tradition Freight on board (FOB) contract
• Time was no longer of the essence
• Can no longer terminate the contract
ERG Raffinerie Mediterranee SpA v Chevron USA (The Luxmar) [2007] Principle
Breach and Termination
The other party refuses to perform or is clearly unwilling to do so
- Have to read delivery clause as a whole
- Cannot read out 4 day period
- Made it a non-tradition Freight on board (FOB) contract
- Time was no longer of the essence
- Can no longer terminate the contract
Mersey Steel & Iron v Naylor, Benzon (1884) Facts
o Sale of steel
o R sold 5000 tons to P
o Supposed to delivery 1000 a month
o When started, got in difficulties
o When Buyers found out, they suspended payments
o R didn’t get paid and refused to continue with the contract
o Was this a repudiatory breach?
o Held:
• No
• Because they thought they had the right to not pay
• Did not give rise to the right of termination
Mersey Steel & Iron v Naylor, Benzon (1884) Principle
Breach and Termination
The other party refuses to perform or is clearly unwilling to do so
- Because they thought they had the right to not pay
- Did not give rise to the right of termination
Eminence Property Developments Ltd v. Heaney [2010] Facts
o CoA gave us a test to look a repudiatory breach
o E sold flats to H
o Contract had standard conditions for sale
o Conditions say time is of the essence only where there is notice to complete
o If purchaser did not complete, seller had right to rescind the contract and claim damages
o Seller served notice, but gave wrong date of complete (15 Dec, rather than 18 Dec)
o Buyer did not complete, but said date was wrong
o Argued that wrong date amounted to rescission of the contract
o Held:
• Sending the notice of rescission was not a repudiatory breach
• Clear that buyer actually knew the actually date and that the seller wanted to complete the contract
• Clear what was intended
• Test:
• If look at all circumstances objectively (reasonable person)
• Have they shown a clear intention to not perform obligations under the contract
• They showed intention to perform
Eminence Property Developments Ltd v. Heaney [2010] Principle
Breach and Termination
The other party refuses to perform or is clearly unwilling to do so
o CoA gave us a test to look a repudiatory breach
• If look at all circumstances objectively (reasonable person)
• Have they shown a clear intention to not perform obligations under the contract
Test for Repudiatory Breach?
If look at all circumstances objectively (reasonable person)
• Have they shown a clear intention to not perform obligations under the contract
Eminence Property Developments Ltd v. Heaney [2010]
British & Benningtons v NW Cachar Tea [1923] Facts
• tea trade case
• question whether the buyers repudiated the contract or not
• buyers argued the seller has to show that he was ready and willing to deliver the tea to get damages
• did not argue that he repudiated
• Held:
o No
o They can still get damages even if they weren’t ready to deliver
o Buyer was the one who breached
British & Benningtons v NW Cachar Tea [1923] Principle
Breach and Termination
o • The other party is clearly unable to perform
o They can still get damages even if they weren’t ready to deliver
o Buyer was the one who breached
Union Eagle Ltd v Golden Achievement Ltd [1997] Facts
• sale of land
• completion was supposed to be at 5pm on certain date
• time was expressed to be of the essence
• buyer sent the money 10 mins after 5
• seller said no, rescinded the contract
• Argued that matter of equity, its unfair
• Held:
o Seller won
o Specified date/time to be of the essence is good
o Matter of equity, this is contract for sale of land, no jurisdiction of equity
o Could of made it by 5, did not
Union Eagle Ltd v Golden Achievement Ltd [1997] Principle
Breach and Termination
The term broken is a major term: a ‘condition’ or ‘of the essence’
o Specified date/time to be of the essence is good
o Matter of equity, this is contract for sale of land, no jurisdiction of equity
o Could of made it by 5, did not
15A, Sale of Goods Act 1979?
Breach and Termination
The term broken is a major term: a ‘condition’ or ‘of the essence’
- Gives standard for strict liability for sale of goods is modified
- Term would normally be a breach of condition (s. 13-15 SOGA 1979)
- 15a says if breach is so slight that it would be unreasonable for buyer to reject the goods, it is a breach of a warranty rather than condition
- Only remedy is damages, no termination
- Courts determine what is reasonable
The Mihalis Angelos [1971] Facts
• owners of the ship let it to charterers
• contract said it would be ready to load july 1, then go to the destination
• charterer could cancel it if it wasn’t ready by the 20th of july
• charterer could not get a cargo by the 17th and cancelled it
• ship was not ready by the 23rd
• both were in breach of the contract
• argued that the owner was in breach on the 27 (implied term that it would be ready to load on july 1)
o court said term was a condition
o allowed to end the contract on the 17th
• does not matter if it was frustration
• Denning
o Bad reason to terminate does not mean you cant later rely on a good reason to terminate
The Mihalis Angelos [1971] Principle
Construction of the contract
o • Common usage of the term ‘condition’
• Denning
o Bad reason to terminate does not mean you cant later rely on a good reason to terminate
o Bentsen v Taylor [1893] Facts
- Ship sailing from a certain port
- Contracts say ships need to start at a certain port
- Courts tend to treat this as a condition
- Supposed to sail from pitch pine ports to Uk, dated march 29
- Ship didn’t actually leave until April 23
- Was this a breach of condition
- Held:
- Yes
- Didn’t leave at appropriate time
- Didn’t matter because breach was raised in this case
o Bentsen v Taylor [1893] Principle
Construction of the contract
o • Common usage of the term ‘condition’
- Didn’t leave at appropriate time
- Didn’t matter because breach was raised in this case
Lombard North Central Finance v Butterworth [1987] Facts
- Involves the lease of a computer from C
- C was supposed to pay £584, 20 installments every 3 months
- Lease said prompt payment is required
- Breach would end up in termination
- D was behind payments
- C took possession and sold it for £175
- C sued D, claiming arrears and all future payment ($7000)
- Was this term a condition?
- Held:
- Yes it was
- Construction of contract made it clear
- They both insisted on prompt payment
- Necessary that payment was prompt
- Even 1 late payment would allow for termination
Lombard North Central Finance v Butterworth [1987] Principle
Construction of the contract
o • Common usage of the term ‘condition’
- Construction of contract made it clear
- They both insisted on prompt payment
- Necessary that payment was prompt
- Even 1 late payment would allow for termination
Hong Kong Fir Shipping v Kawasaki [1962] Facts
- ship was out of action for 20 weeks of 24 month contract
- justify termination?
- Held:
- 20 weeks was not enough
- sets out the rules for innominate terms
Hong Kong Fir Shipping v Kawasaki [1962] Principle
• Role of innominate terms
o What goes to the root of the contract?
• Depends on each case
The Hansa Nord [1976] Facts
• involves the sale of citrus pulp pellets
• used for animal food
• contract said shipment must be made in good condition
• shipment was in poor condition (part of it)
• market value fell
• Buyers rejected the goods
• Later sold to original buyers for much less money
• Buyers used the goods for intended purpose, but had less than originally planned
• Was this rejection justified?
• Held:
• No
• This statement about good condition was an innominate term
• Must look at effect of breach
• Was not serious enough to justify termination
• Motivation?
o Not because of poor condition
o They saw opportunity to get them at lower price
The Hansa Nord [1976] Principle
• Role of intermediate terms
- Must look at effect of breach
- Was not serious enough to justify termination
• Motivation?
o Not because of poor condition
o They saw opportunity to get them at lower price
Anticipatory breach can happen in 2 ways?
• 1) breacher displays by words or conduct that he will not perform, or
• 2) he made it impossible for himself to perform on that day
o ex: already sold the goods
• Clear that the breach is going to happen
• Do not need to wait
• Acting on a tip is not good enough
