Chapter 9

Question 1

Ending a Contract

Answer 1

Principal methods of discharging a contract
- Performance
- Breach
- Agreement between the parties
- Frustration

Question 2

Performance

Answer 2

Contractual obligations are discharged when each party
satisfactorily completes its part of the bargain

Question 3

Substantial performance

Answer 3

condition is breached in some minor way and subject to a claim for the loss caused by the shortfall

Question 4

Tender of performance

Answer 4

An offer or attempt to do what is required under a
contract
* One party is ready, willing, and able and attempts to perform but
performance is refused by other party

Question 5

Breach

Answer 5

Failure of a breaching party to properly perform its
contractual obligations

Two ways to breach:
1. Improper or incomplete performance; or
2. Refusal to perform

Question 6

Conditions

Answer 6

terms essential to substantial performance
- Where breached, victim relieved of obligations

Question 7

Warranties

Answer 7

minor terms of contract
- Where breached, performance still required

Question 8

Exemption Clauses

Answer 8

Attempt to significantly limit or eliminate liability

Question 9

Fundamental Breach

Answer 9

A breach of a fundamental aspect of the contract that is not covered
by an exclusion clause

Question 10

Discharge by Agreement

Answer 10

Contracts can be modified or ended by agreement

• Bilateral or unilateral discharge

Question 11

Bilateral Discharge

Answer 11

agreement by both sides to terminate the contract or to
disregard a term of the contract – both parties are relieved of
obligations and therefore there is consideration.

Question 12

Unilateral Discharge

Answer 12

One party performs and allows the other to be relieved
of all or some obligations – may not be adequate
consideration and the contract may be enforceable.

Question 13

Conditions precedent

Answer 13

contract is binding only if a pre-existing condition is met

Question 14

Conditions subsequent

Answer 14

The contract ends when some event or condition takes place

Question 15

A force majeure clause

Answer 15

spells out who bears the risk if certain events occur
- Consequences for catastrophic events

Question 16

Frustration

Answer 16

An unexpected event (out of control of the parties) which:
1. Makes performance impossible
2. Changes the nature of the contract

Question 17

Frustration Test

Answer 17

Frustration does not occur when:
 There is a shared mistake
 When one party is responsible for an act that frustrates a contract (just a breach)

Question 18

Common Frustrating Events

Answer 18

• Destruction of the subject matter
• Cancellation of a critical event
• Change of the relevant laws

Question 19

Krell v Henry

Answer 19

parties agreed to the rental of an apartment from which
the tenant could view the coronation of Edward VII. The coronation was postponed. It was still possible to occupy the flat, but to require the tenant to do so with no coronation parade to watch would be something essentially different from what the parties contracted for.

Question 20

Damages

Answer 20

Most common remedy for breach of contract is damages

• In a breach of contract damages look forward in time
• court asks what loss has been suffered by the plaintiff and compensates for those
  losses
• Tort damages look backward

Question 21

Equitable Remedies

Answer 21

Equitable remedies are discretionary and will be granted only when
the judge thinks it right and fair to do so – special situations where
the ordinary remedy of damages would not be adequate.

Question 22

Recession

Answer 22

returning parties to their original position

Question 23

Rectification

Answer 23

court interprets and corrects wording of a document to
reflect agreement of parties

Question 24

Specific performance

Answer 24

Court orders defaulting party to perform its
obligations if damages are not suitable or adequate

Question 25

Injunction

Answer 25

an order to prevent a party from breaching a contract

Question 26

Accounting

Answer 26

court may order breaching party to disclose all financial
dealings and records and pay profits

Question 27

Quantum meruit

Answer 27

court may order payment for part performance