Discharge of a contract by performance Flashcards
The doctrine of complete performance - discharge by performance
The contract may make it clear that one party only has to perform his obligations when the other party has performed his part of the contract
The doctrine of complete performance - general rule
If one party does some of the work but not all of it general rule is that they will not be entitled to any payment. The doctrine of complete performance therefore would apply to prevent that party from getting any payment. Performance of contractual obligations must be precise and exact
The doctrine of complete performance - Cutter v Powell
Contract provided that Cutter would be paid after the ship reached Liverpool, he died before the ship reached Liverpool and his widow brought an action claiming payment for the work he had done on a quantum merit basis (a reasonable sum for what he had done). The court decided that as Cutter had not performed his obligations completely the widow could not receive the money. The wording of the contract indicated that her husband would be paid a lump sum at the end of the voyage provided he completed it but he had not done so. Cutter had accepted the risk of only being paid if he completed the voyage
Exceptions to the doctrine of complete performance
If an exception applies then some payment can be recovered eventhough the contractual obligations have not been performed precisely and exactly.
Exceptions to the doctrine of complete performance - wrongful prevention of performance by the other party
Could recover lost profit (the contract price less any expenses saved). The party who was wrongfully prevented may claim damages or a quantum merit. Might be better to claim for damages as its for all losses arising from the breach which are not too remote whereas quantum merit represents a reasonable amount for work actually done.
Exceptions to the doctrine of complete performance - voluntary acceptance of partial performance by the other party
The defendant must have an option to take or not to take the benefit of the work done - there must be free choice. The person who has done the work can claim quantum merit from the other party. Acceptance of partial performance will not apply if the party has no option but to accept performance.
Exceptions to the doctrine of complete performance - voluntary acceptance of partial performance by the other party - Sumpter v Hedges
In this case work had been done on the defendant’s land and the court felt that the defendant had no option but to take the benefit of the work. Did not have a genuine choice to accept as the work had been carried out on his land and no practical way he could reject benefit once work had been carried out
Exceptions to the doctrine of complete performance - voluntary acceptance of partial performance by the other party - S. 25(1) CRA
Where a trader delivers to a consumer a quantity of goods less than the trader contracted to supply, if the consumer decides to accept them he must pay for them at the contract rate
Exceptions to the doctrine of complete performance - substantial performance
A party who substantially performs his obligations may be able to claim some money for the work. For substantial performance to apply the work must be finished but slightly defective. The party substantially performing may claim full contract price less the amount needed to put right the slightly defective performance.
Exceptions to the doctrine of complete performance - substantial performance - Where this won’t apply
If it’s seriously defective e.g if the cost of putting it right is close to overall contract cost. If the cost is more than 1/14th of contract price
Exceptions to the doctrine of complete performance - Divisible obligations
If the parties have agreed payments for a distinct part of stage of work. Each part/stage is treated like a separate contract. The completion of each stage gives rise to the right to some payment
Key point
If both parties perform all their contractual obligations then the contract will be discharged - the contract is said to be discharged by performance and this is the way most contracts come to an end
