Discharge of a Contract

Discharge of a contract refers to the termination of the contractual obligations between parties, which can occur through several means, including:

Performance: When both parties fulfill their contractual obligations as agreed.
Breach of Contract: When one party fails to meet their obligations, allowing the other party to terminate the contract.
Frustration of Purpose: When unforeseen circumstances make it impossible to fulfill the contract's purpose.

For a contract to be discharged by performance, it must be performed completely and exactly.
- Cutter v Powell (1795): Cutter agreed to be a second mate for a fixed fee but died before completing the voyage. His widow was entitled to nothing since the contract was not fully performed.

Divisible Contracts: Contracts may be divided into parts. Non-completion of one part does not constitute a breach of the entire contract.
- Ritchie v Atkinson (1808): A ship owner carried only part of the cargo and was entitled to payment for the part carried but was liable for damages for not completing the cargo.
Substantial Performance: Payment may still be due for work performed, even if not perfectly executed.
- Dakin v Lee: Builders completed a contract but had three poorly performed aspects. They were entitled to payment minus the cost to remedy those aspects.
- Hoenig v Isaacs: A decorator was paid for a room despite providing some poor quality furnishings, with the payment adjusted accordingly.
Prevention of Full Performance: If one party prevents the other from completing the contract, the innocent party may claim payment for work done.
- Planche v Colburn (1831): An author was entitled to a fee when a publisher abandoned a project, preventing completion through no fault of the author.
Accepted Part-Performance: Agreement that the other party need not complete the full contract can lead to a payment based on what has been done.
- Sumpter v Hedges (1898): The builder completed half the work but ran out of funds. The customer had no choice but to finish the work. The builder could not claim for the unfinished part due to this.

The specific timing for performance can be critical and agreed upon in the contract.Failure to meet these deadlines may result in a breach of contract, allowing the non-breaching party to seek damages or terminate the agreement.
- Union Eagle Ltd v Achievement Ltd (1997): The time specified for completion was crucial, and late performance entitled the seller to repudiate the contract.
- Under Consumer Rights Act 2015 (s52): If no time is stated, a reasonable time is implied.

Actual Breach: Occurs when a party fails to perform as per the contract.
Circumstances of Breach:
1. Not conforming to responsibilities.
2. Impossibility created by their actions.
3. Total or partial failure to perform.
Anticipatory Breach: When a party to a contract indicates or demonstrates that they will not fullfil their obligations before the performance is actually due allowing the innocent party to terminate the contract.
- Three circumstances:
  1. Breach of condition.
  2. Refusal to perform.
  3. Serious breach of an innominate term.
- Hochster v de la Tour (1853): The innocent party may sue upon notification of a forthcoming breach, without waiting for actual non-performance.

Contracts may be frustrated when unforeseen events prevent completion.
- Taylor v Caldwell (1863): A music hall burned down before a rental could occur, illustrating frustration due to impossibility of performance.
- A force majeure clause can provide clarity in such situations.
- Force Majeure: refers to circumstances that prevent one or both from fulfilling their contractual obligations. This excuse performance without liability for breach of contract.

Impossibility: Contract cannot be performed.
- Jackson v Union Marine Insurance (1874): A ship’s charter was frustrated due to candid maritime perils preventing loading.
Illegality: Example is Denny, Mott & Dickson v James Fraser & Co (1944), where a contract became illegal due to law changes.
Change in Circumstance
- Krell v Henry (1903): Hired room for a coronation that was cancelled was frustrated.
- Avery v Bowden (1855): the claimant contracted to rent a room for a specific date, but the coronation was canceled unexpectedly. The court held that the contract was frustrated because the main purpose for entering into it could no longer be achieved due to circumstances beyond the control of the parties.
- Herne Bay Steamboat Co v Hutton (1903): Contract not frustrated as the main purpose could still be fulfilled.

Frustration will not apply if caused by:
1. Self-Induced Frustration (Maritime National Fish v Ocean Trawlers)
2. Contracts becoming less profitable (Davis Contractors Ltd v Fareham UCD).
3. Foreseeable risks or mentioned events in contract (AIP v Walker & Sons).

Governed by the Law Reform (Frustrated Contracts) Act 1943.
- Money paid is recoverable, and payments due are not payable.
- Courts may allow discretionary compensation for work done before the frustrating event.
- Payment for valuable benefits under the frustrated contract may be ordered.
- gamerco v icm

Understanding discharge of contract is crucial for recognising when obligations cease. Case law provides significant insights into performance, breach, and frustration. Knowledge of statutory provisions like the Consumer Rights Act 2015 is also essential for legal practice.

Discharge by Performance: Contracts are discharged when both parties fullfil their obligations. Notable cases include:
- Cutter v Powell (1795): No payment due if the contract was not fully performed.
- Ritchie v Atkinson (1808): Payment for part performance if divisible contracts are involved.
- Dakin v Lee: Builders entitled to payment minus costs for uncompleted aspects.
Discharge by Breach: A breach occurs when one party fails to fullfil obligations, with Hochster v de la Tour (1853) establishing the right to sue upon notification of a forthcoming breach.
Discharge by Frustration: Contracts may be frustrated by unforeseen events that prevent completion, as illustrated in Taylor v Caldwell (1863). The Law Reform (Frustrated Contracts) Act 1943 governs remedies for frustration, allowing recovery of money paid and possible discretionary compensation.