Discharge

Question 1

What constitutes discharge by performance?

A. Parties agree to replace the original contract
B. One party anticipatorily breaches
C. A supervening event frustrates performance
D. Both parties fully perform their contractual obligations

Answer 1

D. Both parties fully perform their contractual obligations.
Explanation: Complete, exact performance by each party terminates the contract.

Question 1

Which event discharges a contract by expiry?
A. When a fixed term ends or a condition precedent occurs
B. When one party breaches a condition
C. By mutual agreement to terminate
D. When performance becomes impossible

Answer 1

A. When a fixed term ends or a condition precedent occurs.
Explanation: A contract for a set period ends automatically at term expiry or on fulfillment of a condition precedent.

Question 2

Which of the following is NOT a form of discharge by agreement?
A. Novation
B. Mutual rescission
C. Frustration
D. Accord and satisfaction

Answer 2

C. Frustration.
Explanation: Frustration is a court-imposed discharge for unforeseen events, not a consensual agreement.

Question 3

What is novation?
A. Introducing a new contract to replace the old one
B. Complete performance of existing duties
C. Discharge by impossibility
D. Breach going to the root of contract

Answer 3

A. Introducing a new contract to replace the old one.
Explanation: Novation swaps in a new contract (or party), extinguishing the original.

Question 4

Which breach allows the innocent party to terminate immediately?

A. Anticipatory breach of condition
B. Breach of warranty
C. Frustration
D. Lapse of offer

Answer 4

A. Anticipatory breach of condition.
Explanation: Breaking a condition (including anticipatory) lets the innocent party affirm or terminate.

Question 5

What is the effect of a repudiatory breach?

A. The innocent party may terminate immediately or affirm
B. Automatic discharge from moment of breach
C. No effect until court order
D. Only monetary damages available

Answer 5

A. The innocent party may terminate immediately or affirm.
Explanation: A repudiatory breach allows the innocent party choice to terminate or insist on performance.

Question 6

Which event can discharge a contract by frustration?
A. Mutual rescission
B. Supervening illegality
C. Failure to give notice
D. Expiry of a fixed term

Answer 6

B. Supervening illegality.
Explanation: Frustration arises when an unforeseen event (e.g., new law) makes performance illegal or impossible.

Question 7

Under the Law Reform (Frustrated Contracts) Act 1943, what follows frustration?
A. Contract remains binding
B. Automatic discharge and possible adjustment of sums paid
C. Parties must continue performance
D. Only common-law relief applies

Answer 7

B. Automatic discharge and possible adjustment of sums paid.
Explanation: The Act allows recovery of monies paid and compensation for expenses upon frustration.

Question 8

Landlord and tenant agree a 5-year lease. After 5 years, tenant remains. Has the contract discharged by expiry?
A. Yes—fixed term has ended
B. No—tenant must give notice
C. Yes—immediate performance suffices
D. No—only frustration applies

Answer 8

A. Yes—fixed term has ended.
Explanation: Leases for fixed terms expire automatically at the end of the term.

Question 9

A contractor completes building works exactly as specified. Which discharge applies?
A. Expiry
B. Performance
C. Agreement
D. Frustration

Answer 9

B. Performance.
Explanation: Full completion of contractual duties discharges the contract.

Question 10

Parties execute a deed cancelling their contract. This exemplifies:
A. Novation
B. Mutual rescission
C. Frustration
D. Lapse

Answer 10

B. Mutual rescission.
Explanation: Mutual rescission by deed ends the contract by agreement.

Question 11

Seller tells Buyer they will not perform; Buyer treats contract as at an end. This is:
A. Expiry
B. Performance
C. Discharge by breach
D. Frustration

Answer 11

C. Discharge by breach.
Explanation: A clear refusal to perform is a repudiatory breach allowing termination.

Question 12

A sudden export ban on wheat frustrates a sale contract. What relief applies?
A. Discharge by performance
B. Discharge by frustration
C. Accord and satisfaction
D. Termination by expiry

Answer 12

B. Discharge by frustration.
Explanation: The unforeseen illegality discharges the contract by frustration.

Question 13

After frustration, what does the 1943 Act allow?
A. No recovery of sums
B. Recovery of money paid and expenses
C. Specific performance
D. Only nominal damages

Answer 13

B. Recovery of money paid and expenses.
Explanation: The Act permits restitution of payments and compensation for expenses.

Question 14

If a party repudiates before performance is due, the other may:
A. Sue for nominal damages only
B. Affirm and wait for performance or terminate immediately
C. Wait until expiry
D. Only seek equitable relief

Answer 14

B. Affirm and wait for performance or terminate immediately.
Explanation: Anticipatory breach gives the innocent party the choice to affirm or rescind.

Question 15

A contract required delivery by June but is never delivered. Buyer ends contract on 1 July. Which discharge applies?
A. Expiry of time (reasonable time)
B. Frustration
C. Mutual rescission
D. Performance

Answer 15

A. Expiry of time (reasonable time).
Explanation: Where no explicit deadline, contract lapses after a reasonable time.

Question 16

Which distinguishes novation from accord & satisfaction?
A. Novation substitutes a new contract; accord & satisfaction discharges by performance of a new obligation
B. Novation is a form of frustration
C. Accord & satisfaction applies only to torts
D. Novation requires no consideration

Answer 16

A. Novation substitutes a new contract; accord & satisfaction discharges by performance of a new obligation.
Explanation: Novation replaces the contract; accord & satisfaction requires a new agreement (accord) and its performance (satisfaction).

Question 17

When does a breach of an innominate term become repudiatory?
A. Always upon any breach
B. Only if it deprives the innocent party of substantially the whole benefit
C. Never—innominate terms give damages only
D. If the parties expressly agree

Answer 17

B. Only if it deprives the innocent party of substantially the whole benefit.
Explanation: Serious effect on contract’s foundation turns an innominate breach into repudiation.

Question 18

Which scenario exemplifies frustration?
A. Both parties agree to terminate after performance
B. Performance becomes illegal by change in law
C. One party changes their mind
D. A minor breach

Answer 18

B. Performance becomes illegal by change in law.
Explanation: Frustration requires an unforeseen event making performance impossible or illegal.

Question 19

Under the 1943 Act, if A paid £1,000 and incurred £200 expenses before frustration, A may recover:
A. £1,200 in full
B. £1,000 only
C. Expenses only
D. A “just sum” including some of the expenses

Answer 19

D. A “just sum” including some of the expenses.
Explanation: The court awards sums paid and expenses as it deems just under ss.1(2)–(3).

Question 20

If a party affirms after an anticipatory breach, they:
A. Lose the right to terminate but can claim damages
B. Automatically discharge the contract
C. Must wait until frustration
D. Get specific performance only

Answer 20

A. Lose the right to terminate but can claim damages.
Explanation: Affirmation waives termination but preserves damages for breach.

Question 21

Which discharge method requires both an accord and performance (satisfaction)?
A. Novation
B. Mutual rescission
C. Accord & satisfaction
D. Frustration

Answer 21

C. Accord & satisfaction.
Explanation: An accord is a new promise; satisfaction is performing it, which discharges the original contract.

Question 22

A contract to build a bridge is frustrated when the river dries up. Which applies?
A. Expiry
B. Frustration
C. Discharge by breach
D. Discharge by agreement

Answer 22

B. Frustration.
Explanation: Unforeseen physical impossibility (river drying) discharges by frustration.

Question 23

Which bar prevents 1943 Act relief after frustration?
A. Third-party rights intervening before discharge
B. Lack of written contract
C. Delay in filing claim
D. Discharge by breach

Answer 23

A. Third-party rights intervening before discharge.
Explanation: If third parties acquire rights before frustration, restitutionary relief may be barred.

Question 24

In an “entire” contract, which outcome applies if one party only partially performs? A. The contract remains undischarged and the performing party cannot claim the contract price B. The contract is discharged pro tanto, and the performing party claims quantum meruit C. The innocent party must accept partial performance and pay proportionally D. The contract is frustrated by partial performance

Answer 24

A. The contract remains undischarged and the performing party cannot claim the contract price. Explanation: In an entire contract (Cutter v Powell), partial performance does not discharge obligations, and the performing party cannot enforce the contract price; they may only recover on quantum meruit if the other party accepts the benefits

Question 25

Which feature distinguishes accord & satisfaction from simple mutual rescission? A. Accord & satisfaction requires a deed; mutual rescission does not B. Accord & satisfaction discharges by performance of a new obligation; mutual rescission abandons both old and new obligations C. Accord & satisfaction applies only to tort claims; mutual rescission applies to contracts D. Accord & satisfaction must be in writing; mutual rescission can be verbal

Answer 25

B. Accord & satisfaction discharges by performance of a new obligation; mutual rescission abandons both old and new obligations. Explanation: Accord is agreement to accept a different performance (new obligation), and satisfaction is actual performance, which discharges the original contract; mutual rescission simply cancels the contract without creating a new obligation

Question 26

If a party terminates for a repudiatory breach, what happens to rights accrued before termination? A. They are discharged along with future obligations B. They merge into the fresh cause of action C. They survive and remain enforceable D. They convert into equitable relief only

Answer 26

C. They survive and remain enforceable. Explanation: Termination by breach discharges future duties but leaves intact any rights or liabilities that have already accrued before termination (White & Carter v McGregor)

Question 27

When performance is frustrated after partial performance, what restitutionary principle applies? A. No restitution; the contract is void and nothing is recoverable B. Full contract price must still be paid C. Only expenses reasonably incurred prior to frustration are recoverable D. A just sum for benefits conferred may be awarded under the 1943 Act

Answer 27

D. A just sum for benefits conferred may be awarded under the 1943 Act. Explanation: Upon frustration, the Law Reform (Frustrated Contracts) Act 1943 allows recovery of a “just sum” for benefits conferred before the frustrating event, even if performance was partial