Termination of Contract Flashcards
What are the 3 types of discharge of contract?
Performance
Frustration
Breach
What is performance discharge?
Ending a contract if one party prevents performance
Can claim quantum meruit for amount already completed
What is discharge by frustration?
When it is impossible to complete the contract
What are the terms of discharge by frustration?
Must have been possible when entered
Clause applies if it includes a force majeure clause
Contract still fine if another mode of performance possible
What are 4 examples of discharge by frustration?
Destruction of subject matter
Personal incapacity
Government intervention
Non-occurrence of sole purpose event
What is included in the Law Reform Frustrated Contracts Act?
Any money paid must be returned
Any sums due are not payable
Can recover expenses incurred in the performance of the contract before frustration
Valuable benefit obtained before discharge paid to other party in full or partly
What is a breach of contract discharge?
A contract terminated when a party does not perform the obligation sufficiently unless by frustration or lawful excuse
What are the lawful excuses for a breach of contract?
Tendered performance rejected
Other party makes performance impossible
Agreement permitted non-performance
What are the 2 types of breaches?
Repudiatory
Anticipatory
What is a repudiatory breach?
Breach of a term which is fundamentally important/ deprives the injured party of substantially whole benefit of the contract
What is an anticipatory breach?
Renouncing obligations in advance by showing no intention of performing them
What can the injured party do in the case of an anticipatory breach?
Treat contract as discharged immediately and sue for damages
Contract continues until actual breach
What are the remedies for a repudiatory breach?
Not discharged from obligations due at the time but discharged from future/continuing obligations and cannot be sued on them
Not accept/pay for further performance
Refuse to pay for partial/defective performance
Reclaim money paid in respect of defective performance
Claim damages
What is the purpose of damages and what tests need to be satisfied?
Puts the parties in the position they would be in if the contract was correctly performed
Remoteness of damage
Measure of damage
When can damages be issued under remoteness?
Arisen naturally
Losses not reasonably foreseeable - defendant only liable for reasonably foreseeable losses
What are the 2 types of measure of damages and what are they?
Expectation interest - person in position if contract performed
Reliance interest - claimant in position if not relied on contract
What are damages awarded for?
Actual financial loss
Personal Injury
Mental distress
Loss of enjoyment
What is mitigation of loss?
The claimant should take all reasonable steps to mitigate loss without taking risky measures
What are liquidated damages and when is a penalty clause not enforceable?
Genuine attempt at a pre-estimate of potential damages
Liquidated damages excessive
What is a specific performance and when can it be awarded?
An equitable remedy which makes defendant perform his part of the contract
When damages not adequate
Not requiring supervision of performance
Not for personal services
What are the 3 types of injunction?
Mandatory - positive steps to undo something already done in breach
Prohibitory - observe a negative promise
Asset-freezing
What is alternative dispute resolution?
Using any types of procedure to resolve issues without going to court - arbitration, mediation and conciliation
What is arbitration?
Settled by independent person acting like a judge
Parties agree to process - agreement at start of relationship setting out processes and rights and obligations
Disagreements settled in court
What is mediation and conciliation?
Independent 3rd party assisting in coming up with own solutions
Not legally binding
What are the advantages of alternative dispute resolution?
Gain expert services
Cheaper
Private
Can tailor to change way the party behaves, not do something, obtain an apology or explanation, compensation
Quicker
What are the disadvantages of alternative dispute resolution?
Lacks legal authority
Run for a long time but end up in court
No privacy
Not legally enforceable
No timescale
What is an exclusion clause and what makes it enforceable?
A clause that restricts or excludes liability for a breach or negligence
Must be an integral part of the contract and signed
When is the exclusion clause interpreted against the person who is seeking to rely on it?
When there is ambiguity in the exclusion clause
What is the Unfair Contract Terms Act?
Restricts the effectiveness of exclusion clauses in contracts between businesses by declaring them to be void
Does not apply to insurance or land transfer
Does not apply to private individual contracts
What tests does an exclusion clause need to meet to be voided?
Restricting liability for death or personal injury from negligence
Restricting liability for other loss or damage from negligence
Limiting liability for breach as to the title of seller or owner in sale/hire purchase contracts
What is reasonableness?
The term must be fair and reasonable in regard to all the circumstances known to the parties when the contract was made
Who has the burden of proof and what is included in the Act?
The person relying on the clause
Relative strength of bargaining position
Inducement offered
Innocent party knew or should have known
Insurance in place/available
Misrepresentations made
What does the Consumer Rights Act apply to?
Consumer contracts and notices
Traders engaged in activity incidental to the business
When is the CRA unenforceable?
When the provision excludes liability for death or injury from negligence
Restricts legal rights
When is a term unfair and what are the considerations?
If contrary to requirement for good faith, it causes significant imbalance between parties’ rights and obligations
Terms written in plain language
Circumstances when contract signed
Nature of contract
