CASE LAW- Performance and Breach

DISCHARGE OF PERFORMANCE

• contract must be carried out strictly in accordance with terms

Standard of Performance

Re Moore & Co v Landauer & Co [1921]

• contractual obligation for the boxes to contain 30 cans of fruit- payment per dozen

• half the cases only contained 24 tins- buyer refused to take delivery, tried to claim damages

• Held- entitled to reject goods, not as described- not precise and exact to the conditions.

Arcos v EA Ronaasen [1933]

Facts: bought timber- for wooden barrel to supply liquid, was1/2 inch thicker than contract provided but usable for their intended purpose

Judgment: House of Lords ruled in favour of Arcos. The goods not match contractual description, so was entitled to reject them.

Legal Principle: reinforced strict compliance rule under Section 13 of the Sale of Goods Act 1979 – goods must exactly match that description-minor deviations are still a breach.

Importance: Demonstrates buyer’s right to reject goods that don't conform exactly to the contract, even if deviation is trivial or the goods are usable.

Exceptions of Specific Contract

Reardon Smith Line Ltd v Hansen Tangen [1976]

Facts: Ship described as "Yard No. 354 at Osaka" -built at a different yard (Oshima), same specs/company. -Buyer tried to reject based on location mismatch

Judgment: Court ruled against the buyer, Yard detail was not essential- ship matched main description and purpose

Legal Principle: Only essential terms must strictly match

Importance: Limits Arcos strictness and Encourages commercially realistic interpretation of contracts

Entire Contract- fully completed before payment

Cutter v Powell [1775-1802]:

Facts: Seaman to sail from Jamaica to Liverpool, was Agreed to be Paid 30 guineas only if journey fully completed

• Seaman died before arrival; wife claimed wages

  Held: No payment – contract required entire performance

  Principle: Entire obligations must be fully completed for payment

• Importance: Harsh rule; later softened by quantum meruit cases

would have been able to claim wages for each week of completed work before his death is a divisible contract

Substantial Performance- exception to entire contracts

Hoenig v Issacs [1952]:

Facts: Contractor hired to decorate flat for £750

• Defendant paid only £400 due to minor defects

• Contractor sued for the balance

  Held: Substantial performance – overall purpose fulfilled

• Entitled to £750 minus £55 (cost to fix defects)

  Principle: Minor defects don’t bar payment if contract is substantially performed

Partial Performance

Sumpter v Hedges (1898)

• If promisee accepts obliged to pay under Quantum meruit- (as much as he has deserved)

  Facts: Sumpter (builder) agreed to build 2 houses + stables for £565

• abandoned work after completing £333 worth

• Hedges finished the job using his own materials- Sumpter sued for payment for work done

• Held: Entire contract – no payment unless fully completed, but H used S’s materials to finish, must pay for value of materials only

• Principle: No right to payment unless promisee voluntarily accepts partial work

Tender of Performance

Startup v Macdonald (1843):

Facts: to buy 10 tons of linseed oil by 31st March

• Seller tendered delivery on 31st March at 9pm

• Buyer rejected, claiming it was too late

  Held: Valid tender – within contract time, buyer could not reject the goods

  Principle: If goods are tendered within the agreed time, even late in the day, it counts as performance

DISCHARGE OF AGREEMENT

2 forms of discharge:

• bilateral - promise to release is good consideration

• unilateral - one party releases the other from performance, other party still to perform under the obligations

Abandonment

The Hannah Blumenthal (1983)

Facts: Dispute over a charterparty agreement (contract for hiring a ship)

Parties agreed to arbitrate the dispute- Arbitration delayed for several years

Arbitration was abandoned by mutual consent

Held: Abandonment of arbitration did not prevent the possibility of resolving the dispute

Principle: Delay and abandonment do not negate the right to arbitrate unless expressly terminated

BREACH OF CONTRACT

• Party fails/refuses to perform or performs defectively (not meeting required standards).

• Breach may end the contract or require both parties to continue unless it's repudiatory (denied performance).

Repudiatory Breach of Contact:

Johnson v Agnew (1980)

Facts: Agnew agreed to sell property to Johnson under a contract, failed to complete the sale- breaching the contract.

• Johnson sought specific performance to compel Agnew to complete the sale.

• when case was heard, the property repossessed by a mortgage lender.- Johnson sought damages instead of specific performance.

Held: Court ruled favouring damages rather than specific performance, as the property was no longer available.

Key Principle: If the subject matter of contract no longer available, specific performance may be denied, and the injured party may seek damages instead

Innominate Terms

Hong Kong Fir Shipping v Kawasaki [1962].

• Ship- 20 weeks of delays- poor condition; charterers claimed breach and tried to terminate.

• Held: The term was innominate — remedy depends on breach severity. Delays weren’t serious enough to end contract- only damages allowed.

• Key Principle: Courts decide remedy by assessing how serious the breach is, not by fixed labels like "condition" or "warranty."

Anticipatory Breach

Hochster v De La Tour (1853)

Facts: Hochster sued for breach of contract immediately, even though the contract was due to begin in a month.

• De La Tour made it clear they would not perform the contract.

  Held: Hochster was entitled to sue immediately for anticipatory breach, even before the contract had commenced.

  party can sue for anticipatory breach when the other party clearly indicates they will not perform.

  Key Principle: Anticipatory breach allows the innocent party to take legal action before the time for performance arrives.

Frost v Knight [1872]

Facts: Defendant made unilateral offer promising reward for the performance of a specific act by Frost. After performed the act, defendant refused to pay the promised reward.

Held: performance of the act was sufficient to accept the unilateral offer.

he completed the act-contract became binding, and the defendant was obligated to pay the promised reward.

Key Principle: Performance of the act in a unilateral contract binds the offeror to the promise made.