Contract 9 - Discharge

Question 1

What are 4 methods of discharging a contract?

Answer 1

• Performance 🕺
• Agreement 🤝
• Frustration 😰
• Breach 💥

Question 2

What is the general rule as to discharge by performance and 4 exceptions?
🕺

Answer 2

Complete performance of obligations - a promisor who performs part doesn’t discharge 🚫🎲
1. Acceptance of Partial Performance: defaulting party paid on quantum merit basis 👷🏠🧱
2. Substantial Performance: defaulting party obtains contract price with deduction to reflect cost of remedying defect🫠
3. Stage payments: performing party paid for each part performed🧱
4. Wrongful Prevention of Performance by Other Party 👿: entitled to payment despite not completed; innocent party can sue for damages or claim a quantum meruit

Question 3

What is the meaning of acceptance of partial performance?

Answer 3

must be freely given,

• not possible for half built building but was for bricks left on land 👷🏠🧱
• may get quatum merrit if part performance voluntarily accepted

Question 4

What is the meaning of ‘substantial performance’?
🫠

Answer 4

Does defect go to root of the contract?
🌳

• Small defects did not prevent decorator from being paid 👨‍🎨
• Central heating installed but didn’t work, not substantial performance ♨️

Question 5

What is the defence for failure to perform?
🤺

Answer 5

Tender of Performance:
- unconditionally offered to perform their obligations in line with contract terms but 🍆
- promisee refused 🤬

Doesn’t discharge but creditor can’t claim interest/damages 🪙💵

Question 6

How can a contract be discharged by agreement?
🤝

Answer 6

2. By operation of an original contract term:
   a) condition precedent 👈or
   B) subsequent 🔮
3. By a subsequent binding contract between the parties: requires
   a) agreement obligation is released (accord); 🤝
   b) consideration for promise to release (satisfaction) 🎁

Question 7

Where one party has completed its obligations but other hasn’t, what can be done for discharge by agreement by subsequent binding contract?

Answer 7

Completed party can release other’s obligations
- under deed🧾
OR
- accept something else in place of former obligation 🎁

Question 8

What is the meaning of a condition precedent?

Answer 8

Condition which must be satisfied before any rights come into existence - contract suspended until condition satisfied
🏁

Question 9

What is the meaning of a condition subsequent?

Answer 9

Term providing for the termination of a contract in event of specified occurrence
🔮

Question 10

What remedies are there for breach of contract?

Answer 10

• Compensatory damages 💵
• Specific Performance 🫵
• Injunction ✋

Question 11

What are the 2 types of breach?

Answer 11

2. Anticipatory Breach 🧨: party indicates they won’t perform obligations in advance

• innocent party has automatic right to ‘accept’ the renunciation and treat contract as terminated.

1. Repudiatory Breach 💥: breach of condition (or innominate treated as such) entitling other to treat contract as terminated party can either

• affirm & claim damages, or
• terminate & claim damages

Question 12

What must be shown to treat contract as terminated for an anticipatory breach?
🧨

Answer 12

That if breach occurred at time performance was due, it would have been repudiatory (I.e. a term rather than a condition)

Question 13

What are the risks of wrongful termination?

Answer 13

Court could, after termination for repudiation, later find term was a warranty/treated as one which means they would’ve had no right to terminate = wrongful termination

Wrongful notice seen as serious breach
Risk particularly high for terms not defined as conditions and depending on test

Question 14

What are benefits of affirming a contract?

Answer 14

• Contract survives & rights of innocent party preserved
• Commercial reasons
• Innocent party doesn’t sacrifice opportunity to claim for damages

Question 15

How can one affirm?

Answer 15

Must be evidence of a very clear and unequivocal commitment to continuing the contract

Question 16

What limitations are there for the right to affirm?

Answer 16

1. Cooperation of breaching party required for continued performance 🤝
2. Innocent party must have a legitimate interest financial or otherwise, in affirming and continuing 🤑

Question 17

What is frustration and what’s its effect?
😰

Answer 17

Events:

• that occur after formation of the contract, and 🕰️
• are beyond control of either party 🧟‍♂️ and
• render performance radically different 🐴➡️🦄

Effect: relieves a party from further obligations under the contract - contract ends automatically 😮‍💨

Question 18

How may performance be rendered radically different?
🐴➡️🦄

Answer 18

Performance is
- impossible, 🪄
- unavailable 🫥
- illegal 👮
- common purpose is frustrated i.e. can’t be carried out 👯‍♀️😭

Question 19

What is not a frustrating event?

Answer 19

• Merely an increase in expense/onerousness 💰💰💰😩
• One which parties could’ve reasonably foreseen 🧐
• Provided for in the contract i.e. force majeure clause 📝
• Caused by party’s default 😈

Question 20

What happens to obligations arising to frustrating event?

Answer 20

• Money paid before can be recovered & money that should’ve been paid no longer need to be ⏳💵
• Expenses of payee can be recovered at discretion of the court 🧑‍⚖️💵
• Where benefit was non-monetary, a party who received it may be required to pay a just sum for it 🎁🏠⚖️💵

Question 21

What is the case on acceptance of partial performance?

Answer 21

👷

Builder went broke halfway through project.

• No payment for part completed building as C couldn’t reject. 🏠
• Payment for building materials left on land s could have returned 🧱

Question 22

What is Wrongful prevention of performance and what are the remedies
😈

Answer 22

Party prevented from completing work due to fault of other party.
- sue for damages 💵
OR
- claim quantum meruit 🧱💵

Question 23

What are the cases on frustration?
Impossibility 🪄
Unavailability 🫥
Illegality 👮

Answer 23

🪄
- Music hall destroyed=frustrated 🎼💥
- Install Machinery in a factory but factory destroyed=frustrated ⚙️🏭💥
🫥
- Ill drummer=frustrated 🥁🤮
- ship requisitioned 5 months = frustrated 🚢🇮🇴 but 5 years not (it’ll be done soon).
👮
- war made deliveries to Poland illegal 🚢🇵🇱❌

Question 24

What are the cases on frustration of common Purpose?
👯‍♀️😭

Answer 24

Must be purpose of both parties

• Hired room to watch coronation that was cancelled = frustration
  👑🤮😢
• hired boat to watch Navy show which was cancelled. Still have a boat = not frustrated 🛥️🚢❌
• lease of office no longer needed due to brexit = not frustrated 🏢🇪🇺💥❌

Question 25

What are the cases on frustration - Difficult or expensive? 💰💰💰😭 - Self-induced 🤪 - Foreseeable 🧐

Answer 25

💰💰💰😭 - Built houses cost more than expected = not frustrated 🏘️💰😭 🤪 - rig moving boat 1 sunk, rig boat 2 leased = not frustrated as choice to lease rig boat 2 🚢❌🚢✅😭 🧐 - Contract signed during civil unrest, got worse = not frustrated as foreseeable 🇬🇷🎼🔥➡️💥❌ - No frustration of force majeure clause in contract.

Question 26

What are the consequences of frustration?

Answer 26

- money paid before event can be recovered 💵💥😊 - money should have been paid before frustrating event need not be paid 🤑💥😊 - expenses by supplier can be recovered out of sums paid/payable before event👷‍♂️🧱💷 - all future obligations cancelled 🔮😮‍💨

Question 27

What’s the case on the amount of expenses payable to the supplier and frustration?

Answer 27

Value of benefit payable to supplier is benefit received not costs of supplier Libyan Oilfield case 😊BP🛢️👨‍🔬 🏗️🧔🏽‍♂️😭😢 -🛢️👨‍🔬 ❌ - 😢 ✅