Termination of contract

Question 1

What are the reasons for discharge of a contract?

Answer 1

• by performance
• by frustration
• by breach

Question 2

Describe how a contract may be discharged by performance?

Answer 2

• when the duties of the contract are fulfilled
• these should be complete and exact
• courts may accept substantial performances

Question 3

Describe how a contract may be discharged by frustration?

Answer 3

When forces outside the contract make performance impossible

Question 4

Describe how a contract may be discharged by a breach?

Answer 4

• contractual duties not properly performed
• actual breach - at time of contract
• anticipatory breach - before time performance is due

Question 5

What are the two types of remedies for discharges of contract?

Answer 5

• damages - available as a right to the injured party

- equitable remedies - available at discretion of the court

Question 6

What are the 3 types of damages?

Answer 6

• liquidated damages
• penalty clause
• unliquidated damages

Question 7

Describe liquidated damages

Answer 7

Genuine attempt to pre-estimate losses

Question 8

Describe penalty clause

Answer 8

Excessive or arbitrary amount in contract - not enforceable

Question 9

Describe unliquidated damages

Answer 9

The court must decide the value

• remoteness - only award for losses which are natural or in both parties contemplation
• measure of loss
  
  • expectation interest - what position did the claimant expect to be in?
  • reliance interest - what has the claimant lost out on by on the contract being performed
  • parties have a duty to mitigate their losses

Question 10

Describe the types of equitable remedies

Answer 10

• specific performance
• rescission
• injunction - mandatory, prohibitory, asset-freezing

Question 11

What are exclusion clauses?

Answer 11

Terms included in written contract to limit or exclude liability

Question 12

What 2 tests must exclusion clauses pass to be valid?

Answer 12

• common law tests

- statutory rules

Question 13

Describe the common law test

Answer 13

• must be incorporated - by signature or by bringing the exclusion clause to the attention of the other party at/before the time of agreement
• wording will be interpreted against the person trying to rely on them

Question 14

What are the statutory rules?

Answer 14

• unfair contract terms act - in all contracts except those specifically excluded
• consumer rights act - in contracts where one party is a consumer