Discharge

Question 1

entire obligations rule

Answer 1

An obligation is discharged by complete performance of the obligation. Until the obligation is completely performed, the performing party is not entitled to payment

Question 2

Defence to allegation of failure to perform

Answer 2

Tender of performance

Question 3

How can the promisor successfully put forward the defence of tender of performance?

Answer 3

the promisor must show that they unconditionally offered to perform their obligations in accordance with the terms of the contract, but that the promisee refused to accept such performance

Question 4

condition precedent

Answer 4

a condition in a contract that must be fulfilled before the contract itself or certain contractual rights or obligations become binding

Question 5

How does a condition precedent operate?

Answer 5

a condition precedent suspends the contract or specific right or obligation until the condition is satisfied

Question 6

How does a condition subsequent precedent operate?

Answer 6

A condition subsequent provides for the termination of the contract and the discharge of obligations outstanding under the contract, in the event of a specified occurrence

Question 7

repudiatory breach

Answer 7

a breach of a major term of a contract that goes to the root of the contract and deprives the non-breaching party of substantially the whole benefit of the contract

Question 8

Is a non-breaching party obliged to terminate upon a repudiatory breach?

Answer 8

No, it has a choice to affirm or terminate

Question 9

anticipatory breach

Answer 9

Where a party indicates they will not perform their contractual obligations in advance of the date for performance

Question 10

What rights does the innocent party have if presented with an anticipatory breach?

Answer 10

the innocent party has an immediate right to ‘accept’ the renunciation and to treat the contract as terminated (Hochster v De la Tour)

Question 11

If a party wants to rely on an anticipatory repudiatory breach to terminate the contract, what will it need to demonstrate?

Answer 11

that if the breach occurred at the time performance was due, it would have been repudiatory

Question 12

Is a breach of warranty repudiatory?

Answer 12

NO

Question 13

Is a breach of condition repudiatory?

Answer 13

YES

Question 14

When will a breach of an innominate term be repudiatory?

Answer 14

if its effect goes to the root of the contract

Question 15

Risk of wrongful termination

Answer 15

If a court later finds that the breach was of a warranty, not a condition, A’s wrongful notice will be regarded as a ‘renunciation’ of future performance of the contract and/or a serious breach of contract and may be accepted by the other party, B (the original contract breaker), as repudiating the contract.

Question 16

How do commercial contracts mitigate the risk of wrongful termination?

Answer 16

the commercial parties will explicitly agree a list of breaches, which will give rise to a right to terminate

Question 17

2 important limitations on the innocent party’s right to affirm the contract in response to a repudiatory breach

Answer 17

The cooperation of the breaching party is required for continued performance of the contract - Hounslow London Borough Council v Twickenham Garden Developments Ltd.

The innocent party has no ‘legitimate interest, financial or otherwise’ in affirming the contract and continuing with performance - The Dynamic

Question 18

discharge by frustration

Answer 18

concerns events that take place after formation of the contract and which render the performance radically different from that which was agreed on

Question 19

Why might performance be radically different?

Answer 19

Performance is impossible, illegal or the common purpose of the contract is frustrated

Question 20

What is the essential factor for satisfying Frustration of purpose?

Answer 20

it must be the joint / common purpose of the parties

Question 21

doctrine of frustration must be applied within

Answer 21

very narrow limits

Question 22

Frustration will fail if it was

Answer 22

self-induced

Question 23

the less foreseeable an event… the more likely…

Answer 23

it will lead to frustration

Question 24

If you could have foreseen an event, but failed to make provision for it in your contract, the doctrine of frustration will be

Answer 24

less likely to apply

Question 25

the key test for foreseeable events

Answer 25

whether the event would have informed the manner in which the parties assessed the risk of entering into the contract

Question 26

The inclusion of a force majeure clause enables the parties to

Answer 26

allocate risks in relation to Acts of God, terrorism etc. at the outset and may allow for the continuance of the contractual relationship in circumstances that would otherwise amount to frustration of the contract

Question 27

a contract is not frustrated because it has become more

Answer 27

expensive or onerous to perform

Question 28

Rule from Gamerco SA on burden of proof for person seeking to retain/recover expenses after frustration

Answer 28

Burden of proof is on the payee to show that it is 'just' for him to retain or recover expenses (Gamerco SA)

Question 29

A party who has gained a valuable benefit under the contract before the frustrating event may be required to pay a just sum for it. How will the court assess this?

Answer 29

The court will: 1) identify and value the benefit conferred, and; 2) make an assessment of the just sum that should be awarded.

Question 30

The amount awarded cannot exceed the value of the

Answer 30

benefit obtained

Question 31

Consequence where the value of the benefit has been reduced to nil by the frustrating event

Answer 31

the provider of the 'benefit' has no claim

Question 32

What are the rights of the innocent party when faced with a repudiatory breach?

Answer 32

innocent party has the right of election between terminating and affirming the contract and the right to claim damages

Question 33

What discretion does the court have under Law Reform (Frustrated Contracts) Act 1943?

Answer 33

to order such retention or recovery of money as it thinks just in all the circumstances to account for expenses incurred by the payee