WEEK 6 CONTRACT LAW 4

Question 1

Discharge of a contract

Answer 1

This is when a contract comes to an end

All obligations under the contract finish and the parties are no longer bound in law

Question 2

4 methods of terminating a contract

Answer 2

• Agreement
• Performance
• Frustration
• Breach

Question 3

Discharge by agreement

Answer 3

Where the parties agree to bring a contract to an end before all obligations have been completed

Can be a bilateral or unilateral agreement

Bilateral agreement to discharge: where neither party has completed all their obligations

The consideration each party offers is releasing the other party from their obligations
Unilateral agreement to discharge: one party has performed all their obligations, but the other party wishes to be released from their obligations before performing them

Can only be released if that party provides some consideration for the release

Agreement to be released = Accord
Supply of consideration to be released = Satisfaction

Question 4

Discharge by frustration

Answer 4

Before the obligations have been completed, an event may occur (through no fault of the parties) that renders performance impossible

For example: destruction of subject matter, illness/injury of one of the party, non-occurrence of crucial event etc.

Both parties discharged from carrying out any further obligations

Question 5

Discharge by breach

Answer 5

Where one of the parties breaks one or more terms of the contract

Breach will only discharge the contract if it is a condition or an innominate term that deprives the party of substantially the whole benefit of the contract

There are two types of breach, an actual breach and an anticipatory breach

Question 6

Discharge by performance

Answer 6

This is the ideal method of discharge

Each party has done precisely what they have promised to do

Contract ends as all obligations have been performed

Question 7

Remedies for breach of contract

Answer 7

If the contract is breached, the innocent party may claim for one or more of the following remedies in court:

Damages (more details to follow)

Quantum Meruit – A claim for work done, where completion has been prevented by the other party

Specific performance – party is legally required to complete performance of contract (or specified action)

Question 8

Damages

Answer 8

Monetary compensation aimed to put the parties into the position they would have been in had the breach not occurred

It is the most commonly sought remedy

It is up to the court to decide the amount of damages to grant, unless the parties have pre-estimated the amount of damages & have stated this in the contract

Where the innocent party suffered no real loss, the damages awarded will be nominal

The aim of damages is to restore the innocent party to the same financial position they would have been in if the contract had been performed….

NOT to punish the party who broke the contract

Question 9

The sale of goods

Answer 9

Mainly covered by two statutes:

Consumer Rights Act 2015 (CRA) - applies to consumer contracts (I.e. those made between a trader and a consumer) for the supply of goods, digital content or services from 1st Oct 2015 onwards. i.e. B2C transactions

Sale of Goods Act 1979 (SOGA) - covers all other contracts for the sale of goods e.g. trader to trader, individual to individual etc.

Question 10

Implied terms (using SOGA refs.)

Answer 10

The Right to Sell (SOGA, s12)

Sale by Description (SOGA, s13)

The Goods are of Satisfactory Quality (s 14(2))

The Goods are Reasonably Fit for their purpose (s 14(3))

Sales of goods by sample (s 15)