Discharge by Performance

Discharge by Performance

General Principle (AO1)

“Discharge by performance requires performance which is complete and exact”

Strict rule

Discharge by Performance

Case (AO3)

(Cutter v Powell)

• C’s husband employed to crew ship Jamaica - Liverpool: 30 guineas but died 15 days before arrival

• C claimed part of wages but was unsuccessful.

Discharge by Performance - Principles

(AO1)

General principle is harsh so others have been developed to mitigate consequences:

1. Substantial performance

2. Acceptance of part-performance

3. Prevention of performance

4. Divisible contracts

5. Time - where it is a critical part of the contract

Substantial Performance

Definition (AO1)

• Where CP1 performs incompletely but substantially (i.e. have completed almost all of what is reqired, but there may be minor defects / issues with full completion)

• CP2 cannot discharge crontract and is liable to pay CP1 for part of contract price -

• On a Quantum merit basis (As much as it is worth)

HOWEVER

• If performance is ineffective, despite being almost completed

• Then payment may not be awarded at all (i.e. a new roof that leaks water) since contract is not substantially performed

Substantial Performance

Case (AO3)

(Dakin v Lee)

Contract for C to repair D’s buildings: £1500 work done - minor faults costing £80 to rectify

C claimed contract price minus the £80 cost to rectify.

Acceptance of Part Performance

Definition (AO1)

Where CP1 performs part of obligations:

• If CP2 accepts part performance (Expressly or impliedly)

• Then CP1 may claim regarding the part performance

• And is discharged from further performance.

NOTE:

Acceptance must be the free choice of CP2 - If they do not accept the part performance, then contract will not be discharged and CP1 cannot enforce payment.

Acceptance of Part Performance

Case (AO3)

(Sumpter v Hedges)

• C contracted to build two houses on D’s land.

• Completed 1 house but ran out of money and left D no choice but to complete the outstanding work themselves.

• C could not claim part payment for work done as D had not accepted part performance.

• C was awarded some money for the building materials used, but no payment for work completed on the buildings.

Prevention of Performance

Definition (AO1)

Where CP2 prevents CP1 from completing performance:

• CP1 may claim regarding any (part) performance

• And is discharged from further performance.

Prevention of Performance

Case (AO3)

(Planche v Colbum)

• C contracted to write series of books for D (publisher)

• C wrote some books but then D closed the series and prevented completion of the contract

• C claimed payment for the books written and was successful

Divisible Contracts

Definition (AO1)

Where a contract comprimises of a series / collection of separate obligations:

Complete performance of each separate set of obligations is sufficient for payment.

Divisible Contracts

Case (AO3)

(Roberts v Havelock)

Ship was docked for repairs, half way through, C asked for money for the work done so far.

C was successful as contract was seen as severable, the contract did not require him to complete all the repairs before the payment was due

Time

Definition (AO1)

This arises if time has been expressed as of the essence between CPs such as if:

1. A specific date has been included in the contract

2. The parties may give notice during the period of the contract as to a set time

Time

Case (AO3)

(Rickard v Oppenheim)

D ordered a Rolls Royce

C promised to deliver it in 6 or 7 months,

After 7 months it was not delivered and C promised another 3 months

After 3 months, car was still not delivered so D said he would cancel the order if it was not delivered in 4 weeks.

After another 3 months, the car was ready but D refused to pay for it.

Held that as a time limit was given but then extended, then D waived his right for time being the essence (but this was not permanent). As another time limit was set then C was in breach meaning D could repudiate the performance.