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Law > Termination of Contract > Flashcards

Termination of Contract Flashcards

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1
Q

How can a contract be ended?

A
  1. Performance
  2. Frustration
  3. Breach of contract
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2
Q

Define performance of the contract

A

A contract is usually discharged by the performance by both parties of their obligations under the contract

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3
Q

What are the conditions under which performance must be executed?

A
  1. Exact

2. Complete

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4
Q

Is partial performance sufficient performance?

A

No

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5
Q

When may partial performance discharge the contract?

A

If it is freely accepted by the other party

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6
Q

Is substantial performance sufficient performance?

A

Yes

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7
Q

When can severable contracts be ended?

A

By performance of part of the obligations at divisible points

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8
Q

When can a party sue for quantum meruit

A

When one party is prevented from performing their duties under a contract due to the actions of the other party, the offer of performance is sufficient to discharge contractual obligations and the party can sue for damages or bring an action for quantum meruit

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9
Q

Define quantum meruit

A

An order for the defendant to pay damages for the proportion of the contract price that the work is worth at this point

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10
Q

Define frustration of the contract

A

If performance of the contract becomes impossible due to a matter for which neither party is responsible then the contract is discharged by frustration

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11
Q

Is a contract frustrated if performance is more difficult?

A

No

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12
Q

Is a contract frustrated if performance is more expensive?

A

No

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13
Q

What is the Law Reform (Frustrated Contracts) Act 1943?

A

This Act regulates the rights and liabilities of each party following the frustration of a contract

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14
Q

What does the Law Reform (Frustrated Contracts) Act 1943 provide?

A

Where a contract has been frustrated:

  1. Amounts paid by one party to another party under the contract are to be refunded
  2. Amounts still outstanding are no longer due
  3. If a person has to repay sums he may set off any expenses, provided they were incurred in carrying out the contract prior to the frustrating event
  4. If either party has benefited other than with a payment of money the court can, at its discretion, order a payment of all or a part of that value as it considers just
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15
Q

Define actual breach of contract

A
  1. When one party fails to put forward any sort of performance
  2. When the performance put forward is so inadequate the injured party is substantially deprived of the whole benefit of the contract
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16
Q

Define anticipatory breach

A

Takes place where, before the due date for performance of the contract, one party states or shows by his actions that he will not be performing the contract

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17
Q

Define express anticipatory breach

A

When one of the parties declares before the date of performance that he has no intention of carrying out his duties

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18
Q

Define implied anticipatory breach

A

When one of the parties does something which makes the performance of the contract impossible

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19
Q

What are the options available to the injured party when an anticipatory breach takes place?

A
  1. The contract may be treated as being discharged immediately and the injured party may sue for damages
  2. The injured party may continue with his obligations under the contract until such a time as there is an actual breach of the contractual terms
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20
Q

What are the circumstances under which there is a lawful excuse for the breach?

A
  1. If one party has offered to perform his obligations under the contact but the other party has refused
  2. If one party makes it impossible for the other to perform his obligations
  3. Where the parties have agreed that certain obligations shall not be performed
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21
Q

What is the intention of damages?

A

To put both parties in the position they would have been in had the contract been properly performed

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22
Q

If there is no provision in the contract for damages under what basis will the court determine the damages payable?

A

Unliquidated damages

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23
Q

What are the principles included in unliquidated damages?

A
  1. Remoteness
  2. Measure of damages
  3. Liquidated damages and penalty clauses
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24
Q

Define remoteness

A

The principle that it may not be justifiable to blame the party at fault for all of the consequences of their actions. Damages will only be awarded for losses that are not too remote.

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25
Q

What are the two types of recoverable losses established by the case of Hadley vs Baxendale?

A
  1. Losses that are a natural consequence of the breach

2. Losses that were in both parties’ contemplation as a possible consequence at the time of the agreement

26
Q

Are damages usually recoverable for loss of enjoyment?

A

No, but on very rare occasions the court will award damages for mental distress where that is the main result of the breach

27
Q

Define measure of damages

A

The financial value of the claimant’s loss, which is usually valued as the cost to put the claimant back in the position they would have been if the contract had been properly performed

28
Q

How are damages measured if a buyer bought goods but the seller refused to deliver?

A

The buyer’s damages would be the extra cost to him of acquiring the same goods from someone else

29
Q

How are damages measured if a buyer refused to accept the goods from the seller?

A

The seller’s damages would be the difference between the contract price and the final selling price, if this were lower due to market forces

30
Q

How are damages measured if the claimant has suffered no actual loss?

A

They will be awarded only nominal damages

31
Q

Define reliance losses

A

Losses that enable the claimant to recover compensation for expenses incurred in performing their part of the contract before the breach occurred. They may be claimed where such losses exceed any likely profit.

32
Q

Define mitigation of loss

A

When calculating the level of damages to be awarded, the court will assume that the claimant has taken all steps that could be reasonably be expected to mitigate his loss.

33
Q

Define liquidated damages

A

A genuine pre-estimate of the expected loss and are enforceable by the court

34
Q

Define a penalty clause

A

Imposes a sum that is arbitrary or excessive and it will not usually be enforceable

35
Q

When is a sum presumed to be a penalty clause?

A
  1. If the amount is out of proportion to potential losses

2. If the same amount is given for a number of potential losses

36
Q

When will equitable remedies not be granted?

A
  1. If damages are an adequate remedy
  2. If the claimant has acted unfairly
  3. If the claimant has unduly delayed bringing an action to court
37
Q

When is specific performance usually granted?

A

In connection with the sale of land or other goods that were unique and exactly irreplaceable

38
Q

Define specific performance

A

An order to the defendant to perform his part of the contract. It is awarded at the discretion of the court where damages would not be an adequate remedy.

39
Q

When will specific performance never be granted and why?

A

To enforce a contract for personal services. This is because it would be unfair to force one person to work for another after a disagreement resulting in a court case

40
Q

Define injunction

A

An order for a person to do or not to do something

41
Q

What are the types of injunction?

A
  1. Mandatory
  2. Prohibitory
  3. Asset-freezing
42
Q

Define mandatory injunction

A

A direction for a party to take positive steps to undo something they have already done in breach of contract

43
Q

Define prohibitory injunction

A

This requires the defendant to observe a negative promise in a contract

44
Q

Define asset-freezing injunction

A

This prevents the defendant from dealing with assets

45
Q

Define exclusion clause

A

Terms that are included in written contracts in an attempt to exclude or limit liability for a breach of contract

46
Q

What tests must an exclusion clause pass in order to be valid?

A
  1. Common law tests

2. The statutory rules

47
Q

Define common law tests

A

The exclusion clause will only be enforceable if it has been properly incorporated into the contract and if the wording of the clause covers the loss suffered by the claimant

48
Q

How can an exclusion clause be incorporated?

A
  1. Signature

2. Notice

49
Q

What are the statutory rules an exclusion clause must pass?

A
  1. The Unfair Contract Terms Act 1977

2. The Consumer Rights Act 2015

50
Q

The Unfair Contract Terms Act 1977 states a clause exempting liability for what is void?

A
  1. Death or personal injury due to negligence

2. Other loss due to negligence, unless reasonable

51
Q

What does the Consumer Rights Act 2015 state?

A

That terms in contracts between a consumer and a business must be fair

52
Q

What factors are considered to determine if a clause in a contract is fair?

A
  1. Does the clause put the consumer at a disadvantage?
  2. Were there any relevant circumstances when the contract was signed?
  3. What is the nature of the contract itself?
  4. Is the clause stated in plain, intelligible language?
  5. Are any relevant terms prominent?
53
Q

Under the Law Reform (Frustrated Contracts) Act 1943, if either party has obtained a valuable benefit under the contract before it is discharged by frustration, can the court order payment of that value?

A

Yes

54
Q

Are damages for breach of contract intended to restore the injured party to the same position they were in at the time when the contract was made?

A

No. They’re intended to restore the injured party to the same position they would have been in if the contract had been performed.

55
Q

Are claimants required to take every opportunity to mitigate their loss arising as a consequence of a breach of contract?

A

No. They’re required to take only reasonable steps.

56
Q

A mandatory injunction often has the same result as a specific performance.

A

True

57
Q

Which is less common: a mandatory injunction or a specific performance?

A

Mandatory injunction

58
Q

How is the statutory test of reasonableness under the Unfair Contract Terms Act 1977 expressed in the Act?

A

‘Whether it is fair and reasonable, with regard to all the circumstances which were, or which ought to have been known to the parties when the contract was made.’

59
Q

Why would specific performance not be awarded in the case of a contract to build a house?

A

Supervision would be required; involves a service.

60
Q

What are ways of resolving disputes?

A
  1. Negotiation
  2. Expert determination
  3. Mediation
  4. Adjudication
61
Q

Can parties continue to settle disputes themselves after court proceedings have been commenced?

A

Yes

Law (6 decks)

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