Contract Law - Discharge of a contract

Discharge of a contract

Typically through the performance which may lead to breach however this doesn’t always discharge the contract

Types of discharge

Frustration

Breach

Performance

Performance

Must be complete and exact to the terms specified

Divisible contracts

When a contract can be seen as being separate parts

Ritchie v Atkinson

Prevention of full performance

When one party prevents the other from fulfilling their obligations the innocent party can claim to be granted for all the completed work

Planche v Colburn

Could claim for prevention of full performance

Substantial performances

Payment of appropriate amount will be due if a party has completed substantially what was required

Hoeing v Isaacs

Could claim for substantial performances

Bolton v Mahadeva

Could not claim for substantial performance

Acceptance of part performance

If one party has agreed that the other not need complete the full contract then they must get paid for the completed work

Timed performance  

Regarded as a condition if:

• Expressly stated in contract

• Critical for the contract

If none apply it will be deemed a warranty - Union eagle v Golden achievement

Types of breach

• Actual

• Anticipatory

• Repudiatory

Actual breach

Occurs when:

• Impossibility created by their own act

• Partial or total non - performance

Repudiatory breach

Contract can be treated as void, damages awarded and contract terminated

How repudiatory breach occurs

• Breach of condition

• Refusal to perform the contract

• Sufficiently serious breach of innominate term

Anticipatory breach

One party tells the other they will not be able to complete the contract

Hochester v De La Tour

Remedies for each type of breach

Anticipatory - Damages to put the party in same position they were in before contract but must mitigate losses

Actual - Damages assessed at the time performance should have occurred

Breach of condition - Damages and or repudiation

Breach of warranty - Damages only

Frustration

When a party is prevented from fulfilling their obligations due to an unforeseeable intervening event

Taylor v Caldwell

Illness

If the contract is for a service the illness of the performing party may be a frustrating event

Robinson v Davidson

Reasons for frustration

• Contract is illegal to perform - Dickinson v Fraser and Co

• Destruction of common venture, main purpose for contract is destroyed - Krell v Henry

• Subject matter is destroyed - Subject matter becomes unavailable due to the fault of neither party

When does frustration not apply

• Self induced - Gamerco SA

• Work was less profitable - Davis contractors v Fareham Council

• Event was a foreseeable risk - Amalgamated property co v John Walker

Remedies

• S.1(2) - Money paid before event is recoverable, money payable before the event ceases to be so

• S.1(3) - If a party has a valuable benefit from the contract before the events, D may be ordered to pay some

• S.1(4) - Overhead or service performed personally are payable

Discharge plan

1. Performance

• Must be complete and exact - Cutter v Powell

Can be paid for part performance

• Divisible contract - Ritchie v Atkinson

• Prevention of full performance - Planche v Colburn

• Substantial performance - Hoeing v Isaacs

• Part performance - Sumpter v Hedges

2. Breach

Actual breach

• Termination if: Impossibility created by own action, failure to perform

• Repudiation if: Condition / serious innominate breached, refusal to perform

Anticipatory breach

• One party gives notice that they will breach

• Innocent party can sue now or wait for date of expected performance to sue