Termination Flashcards
Termination via Frustration
Termination because of an unforeseen event beyond it’s control
Examples of Frustration
Subject matter of the contract is destroyed
Illegality
Ilness of rockstar
Government intervention
When deciding if delay amounts to frustration:
- Length of the delay in relation to the duration of the contract
- Time set in the contract for the obligations to be performed
Is a 14 month delay in completing a building contract due to labour shortages held to frustrate the contract?
No
Is a road closure something that would frustrate a contract?
No
What is a force majeure clause?
A clause that excuses delays and performances due to unforseen events [pandemics, wars]
The clause may suspend performance, terminate the contract, excuse liability.
What are the consequences of frustration/who can recover what?
- Recover money paid before the event
- Money that should have been paid before event need not be paid
- Expenses incurred by payee can be recovered out of the sums paid before event
If one party has conferred a valuable benefit on the other party before the frustrating event (installing bullet proof windows, installing water fountain) what can the court order be paid?
A just sum
What is the doctrine of complete perfomance?
That the contractual obligations be performed exactly and precisely otherwise the payer does not have to pay.
If the contract states ‘to be payable on performance’ of the contract.
What if performance is not precise under the doctrine of complete perfomance?
Failure of consideration
Payer does not pay
Exceptions to the doctrine of complete performance?
Contracts divided into distinct parts, with specific payments for each part. Payment is due for completed parts.
What happens if a contractor completes only part of a divisible contract?
The contractor is entitled to payment for the completed parts but not for the incomplete parts
Paint 3x rooms at £200 each and paints 2 = £400.
What is substantial performance?
Where the work is mostly completed but has minor defects.
What’s the effect of substantial performance [most of the work done but with minor defects]
Contractor entitled to the contract price - cost of rectifying the defects
1/14th contract price
What is the rule of thumb for substantial performance? (1/14)
If the cost of rectification is less than 1/14 of the contract price, the work is considered substantially performed.
What is wrongful prevention?
When one party wrongfully prevents the other from completing their obligations.
What happens if a party is wrongfully prevented from completing a contract?
damages or a reasonable sum [loss of bargain] for their work done
What is voluntary acceptance of part performance?
When the other party voluntarily accepts part performance then the supplier entitled to a reasonable sum
What is the key requirement for voluntary acceptance?
The non-defaulting party must have a genuine choice to accept the partial performance.|
