Termination of a Contract - Week 4/5

Question 1

What are the ways obligations in a contract can be extinguished?

Answer 1

Parrots Pretty Polly And Chirpy Charlie Do Not Fly:

• Performance of obligation
• Payment (when obligation is to pay money)
• Prescription (lapses over time)
• Acceptilation (mutual agreement to terminate)
• Confusion (obligation owed to oneself)
• Compensation (set-off against another obligation)
• Delegation (someone else takes over the obligation)
• Novation (a new obligation replaces the old one)

Question 2

What is termination of contract by frustration?

Answer 2

Occurs when, after formation but before performance, the contract becomes:

• Impossible
• Illegal
• Or so radically changed that it’s no longer what was agreed

Question 3

What causes frustration of a contract?

Answer 3

Unforeseen events not caused by either party

These events make performance impossible, illegal, or fundamentally different

Question 4

What are the legal effects of frustration?

Answer 4

• Contract ends automatically by law
• It is NOT considered void
• No breach occurs, so no damages are due
• Any part-performance must be paid for
• Deposits should be returned

Answer 5

• Supervening impossibility:
• Rei Interitus: total destruction of something essential
• Constructive total destruction
• Change in personal circumstances (Delectus Personae)
• Supervening illegality (law changes making contract illegal)
• Circumstances radically changing the contract’s nature