Unit 4 - Discharge of Contract and Remedies Flashcards
What are the four ways in which a contract can be discharged?
Performance, agreement, breach, or frustation.
What is the definition of “performance” i/r/t discharge of contract?
All obligations under the contract have been performed, matching the contract’s obligations precisely.
Case - showing that part performance does not discharge contract unless agreed
Cutter v Powell (1795) - wrong size cases
What is “substantial” performance i/r/t discharge of contract?
Performance of a large part of the obligations required which may lead to enforcement of some payment
Case - showing that substantial performance may be enforceable
Daken v Lee (1916) - partial building
Case - showing that if one party refuses tendered performance, the other’s obligations are discharged
Startup v McDonald (1843) - close of business
What type of breach of term is “failure to perform on time” in most cases?
Breach of warranty
When time is of the essence, what three conditions must be met to allow repudation of a contract from “failure to perform on time”?
- Both parties made this clear
- The subject matter dictates that this is just
- A time extension is given on the provisio of repudiation if the extension is not met.
What is the definition of discharge by agreement i/r/t discharge of contract?
Both parties agree to discharge the contract.
Case - showing that consideration must be provided for a discharge by agreement
Williams v Roffey (1990) - extra cash for builders
What are three examples of a breach of contract?
- Non-performance
- Defective performance
- Repudiating obligations without justification
What are the three types of breach of contract?
- Breach of a general term of the contract allowing damages
- Breach of a condition (express or implied or innominate) where the breach is sufficient to allow repudiation
- Anticipatory breach where one party informs other of intention to breach
Case - example of breach of condition sufficient to allow repudiation
The Hong Kong Fir case (1962) - unseaworthy ship
Case - example of an anticipatory breach
Hochester v De La Tour (1853) - courier
What are the consequences of the three different types of breach?
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
Case - showing that anticipatory breaches may be enforced before the breach
Frost v Knight (1872) - spurned fiance
What is frustration i/r/t discharge of contract?
An unforeseen event prevents absolute performance of the contract.
What are the three main types of frustration?
The contract becomes illegal to perform, becomes impossible to perform, or the central purpose of the contract is destroyed and becomes “fundamentally different”
Case - example of a contract becoming frustrated by illegality
Metropolitan Water Board v Dick Kerr (1915) - reservoir war
What are the four ways in which a contract may become frustrated by impossibility?
- Subject matter is destroyed
- Subject matter is unavailable
- One of the party dies
- There is a risk of the contract being unable to be performed completely
Case - example of a contract becoming frustrated through impossibility as the subject matter was destroyed
Taylor v Caldwell (1863) - music hall fire
Case - example of a contract becoming frustrated through impossibility as the subject matter was unavailable
Morgan v Manser (1943) - drafted actor
Case - example of a contract becoming frustrated through impossibility due to being unable to be performed completely
Nicholl and Knight v Ashton Eldridge and Co (1901) - specific ship damaged
Cases - the two “coronation cases” showing whether a contract has become “fundamentally different”
Krell v Henry (1903) - hotel room, frustrated
Herne Bay Steamboat Co v Hutton (1903) - boat hire, not frustrated
What are the three common law limits on the doctrine of frustration?
- If one party induced the frustrating event
- If the event was expressly provided for by the contract
- If the actual event was or should have been foreseen
What is the name of the Act of Parliament which created statute in regards to recoverable costs following a frustrated contract?
Law Reform (Frustrated Contracts) Act 1943
What three changes to the doctrine of frustration is made by the relevant Act of Parliament?
- Money paid before the frustrating event is recoverable.
- Money payable after the frustrating event is no longer owed.
- The Court may order payment of expenses or of valuable benefit obtained.
What are the two types of damages payable in contract law, and how do they differ?
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
Is the Court bound by the amount listed as liquidated damages?
No, they can choose to ignore these if viewed to be not fair and proper
What are the main tests used by the Court to determine unliquidated damages?
- 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?
Case - example of Court’s ruling on remoteness of loss i/r/t contract remedies
Hadley v Baxendale (1854) - mill shaft
What is the Court’s stance on mitigation of loss i/r/t contract remedies?
The Claimant should look to mitigate as many of their losses as possible prior to judgment.
What are the two equitable remedies available in contract law? Define these.
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.
Case - example of specific performance being viewed as fair
Nutbrown v Thornton (1805) - special machines
