Termination

Question 1

Termination

Answer 1

Right innocent party has to terminate the contract where there are repudiatory breaches:
- where there is a
breach of condition (a particularly important term of the contract)
and
-where there is a very
serious breach of a term classed as an innominate term.

Question 2

Frustration

Answer 2

Contract is automatically
brought to an end.

The supervening event or changes of
circumstances must:
* make performance of the contract impossible, or radically different;
* be something beyond the ordinary risks that the parties can be treated as having taken on board when entering into their contract (ie something unexpected); and
* be something that was beyond the control of either party.

Question 3

Frustration - radically different

Answer 3

Categories include:
(a) Government intervention
(b) Unavailability of a specific person crucial to the contract
(c) Illegality
(d) Destruction of the subject matter
(e) Non- occurrence of a fundamental event

But in all cases it will be a question of degree.

Delay can be a breach or frustration.

Question 4

Frustration - something unexpected

Answer 4

Illegality can never be provided for in the contract.

Where the parties have included a ‘force majeure’ clause governing a
situation there is no room, or need, for the doctrine of frustration.
(force majeure clauses will have to satisfy the reasonableness test)

Question 5

Frustration - consequences

Answer 5

The future performance of the contract is terminated automatically as a matter of law (non-defaulting party has no choice).

• Money paid before the event can be recovered.
• Money that should have been paid before the event need not be paid.
  *At the court’s discretion, expenses incurred by the payee can be recovered out of the total sums paid/ payable before the event.

Question 6

Discharge by performance

Answer 6

Doctrine of complete performance - general rule is that performance of contractual obligations must be precise and exact. If not do not have to pay any part of the price (although they
will not be able to recover money already paid unless there has been a total failure of the
consideration).

Question 7

Discharge by performance - exceptions

Answer 7

(a) Divisible obligations
If the parties have agreed specific payments for each
distinct part or stage of the contract.

(b) Substantial performance
Completed the agreed work but it is slightly defective - entitled to the price less the cost of putting right the
defect.

(c) Wrongful prevention
If a party is wrongfully prevented from completing their contractual obligations they will be
entitled to either damages or a reasonable sum in restitution for what has already been
done.

(d) Voluntary acceptance of part performance
Then the supplier is entitled to a reasonable sum for what they have done.
Must have a genuine choice.
If they have no
choice (eg because the supplier built something on the non- defaulting party’s land and then abandoned the job) the non- defaulting party will not have to pay anything for what was done.