Unit 4 - Discharge of Contract and Remedies

Question 1

What are the four ways in which a contract can be discharged?

Answer 1

Performance, agreement, breach, or frustation.

Question 2

What is the definition of “performance” i/r/t discharge of contract?

Answer 2

All obligations under the contract have been performed, matching the contract’s obligations precisely.

Question 3

Case - showing that part performance does not discharge contract unless agreed

Answer 3

Cutter v Powell (1795) - wrong size cases

Question 4

What is “substantial” performance i/r/t discharge of contract?

Answer 4

Performance of a large part of the obligations required which may lead to enforcement of some payment

Question 5

Case - showing that substantial performance may be enforceable

Answer 5

Daken v Lee (1916) - partial building

Question 6

Case - showing that if one party refuses tendered performance, the other’s obligations are discharged

Answer 6

Startup v McDonald (1843) - close of business

Question 7

What type of breach of term is “failure to perform on time” in most cases?

Answer 7

Breach of warranty

Question 8

When time is of the essence, what three conditions must be met to allow repudation of a contract from “failure to perform on time”?

Answer 8

1. Both parties made this clear
2. The subject matter dictates that this is just
3. A time extension is given on the provisio of repudiation if the extension is not met.

Question 9

What is the definition of discharge by agreement i/r/t discharge of contract?

Answer 9

Both parties agree to discharge the contract.

Question 10

Case - showing that consideration must be provided for a discharge by agreement

Answer 10

Williams v Roffey (1990) - extra cash for builders

Question 11

What are three examples of a breach of contract?

Answer 11

1. Non-performance
2. Defective performance
3. Repudiating obligations without justification

Question 12

What are the three types of breach of contract?

Answer 12

1. Breach of a general term of the contract allowing damages
2. Breach of a condition (express or implied or innominate) where the breach is sufficient to allow repudiation
3. Anticipatory breach where one party informs other of intention to breach

Question 13

Case - example of breach of condition sufficient to allow repudiation

Answer 13

The Hong Kong Fir case (1962) - unseaworthy ship

Question 14

Case - example of an anticipatory breach

Answer 14

Hochester v De La Tour (1853) - courier

Question 15

What are the consequences of the three different types of breach?

Answer 15

Breach of general term - can allow for damages, but no repudiation in the event of a breach of warranty
Breach of condition - damages and/or repudiation
Anticipatory breach - can enforce immediately or wait until breach

Question 16

Case - showing that anticipatory breaches may be enforced before the breach

Answer 16

Frost v Knight (1872) - spurned fiance

Question 17

What is frustration i/r/t discharge of contract?

Answer 17

An unforeseen event prevents absolute performance of the contract.

Question 18

What are the three main types of frustration?

Answer 18

The contract becomes illegal to perform, becomes impossible to perform, or the central purpose of the contract is destroyed and becomes “fundamentally different”

Question 19

Case - example of a contract becoming frustrated by illegality

Answer 19

Metropolitan Water Board v Dick Kerr (1915) - reservoir war

Question 20

What are the four ways in which a contract may become frustrated by impossibility?

Answer 20

1. Subject matter is destroyed
2. Subject matter is unavailable
3. One of the party dies
4. There is a risk of the contract being unable to be performed completely

Question 21

Case - example of a contract becoming frustrated through impossibility as the subject matter was destroyed

Answer 21

Taylor v Caldwell (1863) - music hall fire

Question 22

Case - example of a contract becoming frustrated through impossibility as the subject matter was unavailable

Answer 22

Morgan v Manser (1943) - drafted actor

Question 23

Case - example of a contract becoming frustrated through impossibility due to being unable to be performed completely

Answer 23

Nicholl and Knight v Ashton Eldridge and Co (1901) - specific ship damaged

Question 24

Cases - the two “coronation cases” showing whether a contract has become “fundamentally different”

Answer 24

Krell v Henry (1903) - hotel room, frustrated

Herne Bay Steamboat Co v Hutton (1903) - boat hire, not frustrated

Question 25

What are the three common law limits on the doctrine of frustration?

Answer 25

1. If one party induced the frustrating event
2. If the event was expressly provided for by the contract
3. If the actual event was or should have been foreseen

Question 26

What is the name of the Act of Parliament which created statute in regards to recoverable costs following a frustrated contract?

Answer 26

Law Reform (Frustrated Contracts) Act 1943

Question 27

What three changes to the doctrine of frustration is made by the relevant Act of Parliament?

Answer 27

1. Money paid before the frustrating event is recoverable.
2. Money payable after the frustrating event is no longer owed.
3. The Court may order payment of expenses or of valuable benefit obtained.

Question 28

What are the two types of damages payable in contract law, and how do they differ?

Answer 28

Liquidated - costs agreed to by the parties in event of breach
Unliquidated - the amount determined by the court in order to restore the parties to the original position

Question 29

Is the Court bound by the amount listed as liquidated damages?

Answer 29

No, they can choose to ignore these if viewed to be not fair and proper

Question 30

What are the main tests used by the Court to determine unliquidated damages?

Answer 30

• was the breach factually caused by the Defendant?

- how remote was the loss caused and is it fair to hold the Defenant liable for this?

Question 31

Case - example of Court’s ruling on remoteness of loss i/r/t contract remedies

Answer 31

Hadley v Baxendale (1854) - mill shaft

Question 32

What is the Court’s stance on mitigation of loss i/r/t contract remedies?

Answer 32

The Claimant should look to mitigate as many of their losses as possible prior to judgment.

Question 33

What are the two equitable remedies available in contract law? Define these.

Answer 33

Specific performance - the Defendant must carry out their specified obligation under the Agreement.

Rescission - the contract is set aside and the parties set back in the position they were previously in.

Question 34

Case - example of specific performance being viewed as fair

Answer 34

Nutbrown v Thornton (1805) - special machines