TOPIC 2- TERMINATION

Question 1

what are the key principles we must understand under TERMINATION

Answer 1

-agreement
-performance
-breach
-frustration

• Key to understand how law related to discharge by performance

-Key to understand the law relating to discharge by breach

Question 2

Discharge by performance

Answer 2

Depends upon the contract terms
Burden of proof

Condition precedent: Pym v Campbell
(1856): approval by third party,
Abernethie, required

Condition subsequent: Head v Tattersall
(1871): buyer could return the horse,
despite its injury because it had not been
hunted with the Bicester hound

Question 3

What are entire contracts ?

Answer 3

KEY CASE LAW-

Cutter v Powell (1795):
FACTS

30 guineas ‘provided he proceeds, continues and does
his duty’ from Jamaica to Liverpool
Sailed on 2 August, arrived at Liverpool on 9 October
Cutter died on 20 September
Widow sued for payment
Contract was entire
Completion of the voyage was a condition precedent
to the obligation to pay for the work he had done
Lord Kenyon CJ said:
 ‘He stipulated to receive the larger sum if the whole
duty were performed, and nothing unless the whole of
that duty were performed; it was a kind of insurance.’

Question 4

Entire contracts case 2

Answer 4

CASE LAW-Hoenig v Isaacs (1952)
FACTS

Decoration and furnishing of flat for £750
 Contract fulfilled except defects, £55 to rectify
 H able to recover the sum due under the contract, less
the sum which could be claimed in damages for the
defects: he had substantially performed

Question 5

Entire contracts case 3-

Answer 5

CASE LAW- Bolton v Mahadeva (1972)

FACTS
Installation of a central heating system for £560
Defective system, £175 extra needs to be spent
Fumes and house 10 – 30 per cent less warm
Mr B had not ‘substantially performed’
General assessment of the extent to which the
performance carried out differs from that
required by the contract

Question 6

What is a breach of contract?

Answer 6

Right to damages
Sue for the contract price
Specific enforcement
Injured party may have choice to terminate contract
Repudiatory breach
Anticipatory breach

CASE LAW- Universal Cargo Carriers Corpn v Citati (1957)

Woodar Investment Development Ltd v
Wimpey Construction (1980)

Federal Commerce and Navigation Co. Ltd v
Molena Alpha Inc (1979

Question 7

LEADING AUTHORITY

Answer 7

Vaswani v Italian Motors (Sales and
Services) Ltd (1996)

FACTS
- deposit was paid
delivery but then sellers demanded higher price
clause allowing for forfeit of the deposit
buyers failed to make payment
Sellers forfeited the deposit

Question 8

KEY TERM- what is repudiatory breach?

Answer 8

ANOTHER CASE LAW- Eminence Property Developments Ltd v Heaney (2011)

FACTS

what are the issues with repudiatory breach

• the legal test for repudiatory breach conduct is
• contract can be kept alive

-Duty to mitigate - no damages to cover loss which the
injured party would not have incurred had he behaved
reasonably on breach.

• A problem if the injured party chooses not to accept the
  repudiation - no breach at that point and no duty to
  mitigate.

-

Question 9

CASE LAW-Isabella Shipowner SA v
Shagang Shipping Co Ltd (2012

Answer 9

an innocent party will have no legitimate interest in
maintaining the contract if damages are an adequate
remedy and his insistence on maintaining the contract
can be described as “wholly unreasonable”, “extremely
unreasonable” or, perhaps, in my words, “perverse”’

(Justice Cooke at [44]).

Repudiation by one party (refusal to perform)

Injured party may be able to perform without co-
operation of the other party.

Injured party could choose to continue, perform their
obligations, and claim the contract price

However, not able to do this where injured party had
no legitimate interest in performing, rather than
claiming damages.