Contract Termination: Exclusion Clauses, Discharge, and Remedies

Flashcards covering the legal principles of contract termination, including incorporation of exclusion clauses, statutory regulations (UCTA and CRA), methods of discharge like frustration and performance, and the various remedies for breach of contract.

Exclusion clause

Any clause that attempts to restrict or exclude the liability of one party for breach of contract or negligence.

Olley v Marlborough Court (1)

A case ruling that any exclusion clause must be given at the time that the contract is made to be properly incorporated.

Photo Productions v Securicor transport (2)

A case establishing that any ambiguity in an exclusion clause will be interpreted against the party relying on the clause.

The Unfair Contract Terms Act 1977 (UCTA 1977)

Legislation that regulates exclusion clauses in business contracts by requiring they pass a 'reasonableness' test, though it does not cover insurance contracts.

The Consumer Rights Act 2015 (CRA 2015)

Legislation that introduces a requirement for 'fairness' in consumer contracts and notices; a term is unfair if it causes a significant imbalance to the detriment of the consumer contrary to good faith.

Discharge by performance

The usual way a contract ends, occurring when both parties perform their contractual obligations completely and exactly.

Substantial performance

An exception to the exact performance rule where work is mostly completed, allowing for payment while the other party seeks redress for the incomplete portion.

Quantum meruit

Meaning 'the amount merited for the work completed', this is a remedy available where complete performance is prevented by the other party, as seen in Planche v Colborn (3).

Frustration

A method of discharging a contract when it becomes impossible or illegal to perform after it has been entered into, provided the event is not the fault of the parties.

Taylor v Caldwell (4)

A case illustrating frustration of contract due to the accidental destruction of the subject matter, such as a hall destroyed by fire.

Condor v Baron Knights (5)

A case illustrating frustration of contract due to personal incapacity, such as the ill-health of a drummer in a pop group.

Krell v Henry (6)

A case illustrating frustration of contract due to the non-occurrence of an event that was the main reason for the contract.

Law Reform (Frustrated Contracts) Act 1943

Legislation that regulates the rights and liabilities of parties when a contract is discharged by frustration.

Repudiatory breach

A serious breach, such as breaching a fundamentally important term or depriving a party of the whole benefit, that gives the innocent party the right to treat the contract as discharged.

Anticipatory breach

Occurs when one party gives notice of their intention not to comply with a contractual term before the performance is due.

Hadley v Baxendale (7)

A case establishing that damages for breach must arise naturally from the breach or be reasonably foreseeable by both parties at the time the contract was formed.

Victoria Laundry v Newman Industries (8)

A case where normal loss of income of $£16$ per week was recoverable, but a lucrative contract worth $£262$ was not as it was not foreseeable to the defendant.

Doctrine of restitution

The compensatory principle that the awarding of damages should put the parties in the position they would have been in had the breach not happened.

Reliance interest

A measure of damages where the innocent party sues for costs incurred, as seen in Anglia Television v Reed (9).

Jarvis v Swan Tours (10)

A case where non-financial losses, specifically disappointment, were recovered because the contract was for the provision of enjoyment.

Payzu v Saunders (11)

A case establishing that an injured party must take all reasonable steps to mitigate their losses.

Liquidated damages

An agreed compensation for breach of contract set in advance that the court will uphold if it is a genuine pre-estimate of loss.

Penalty clause

An arbitrary or excessive pre-agreed sum for breach of contract that does not protect a legitimate interest and is considered void, as in Ford Motor Co (England) Ltd v Armstrong (12).

Specific performance

An equitable remedy where the court directs a party to complete their contractual obligations, often used in land disputes.

Injunction

An equitable remedy where the court directs a party to stop breaching their contractual obligations, such as mandatory, prohibitory, or asset-freezing injunctions.