Discharge of contract Flashcards
(37 cards)
Discharge of contracts - 4 types
1) Discharge by performance
2) Discharge by breach
3) Discharge by acceptance
4) Discharge by frustration
Discharge by performance
Is there full, exact, precise performance by the parties of all contractual obligations?
YES
- Discharge by performance
๐๐ฎ๐ญ๐ญ๐๐ซ ๐ฏ ๐๐จ๐ฐ๐๐ฅ๐ฅ
where a sailor died during his voyage, before his full completion of obligations, so his widow wife cannot claim anything.
NO
- check for 5 exceptions
1) De Minimis Rule
2) Severable obligations
3) Substantial performance
4) Voluntary acceptance of partial performance
5) Prevented performance
Discharge by performance - exception - De Minimis Rule
If the deviation in performance is microscopic, the contract will be deemed to have been performed fully and precisely.
eg; u ask for a dark brown carpet but u received a light brown - microscopic!!
Discharge by performance - exception - Substantial performance
- usually where a party has performed its obligations effectively.
- if a party has substantially performed his obligations, he is entitled to the agreed sum, subject to a DEDUCTION for the omission or defect in performance
- ONLY applies if contract is divisible and payment is NOT conditional upon full performance of the contract.
eg; build a door without door handles
Discharge by performance - exception - Severable obligations
Contracts carrying obligations that are separate and independent can be charged separately when fulfilled. Payment is paid accordingly to the price attached to each sub-contract.
- It depends on the intention of parties to see whether a contract is Entire or Divisible.
Discharge by performance - exception - Voluntary acceptance of partial performance
- where one party partially performs and other party accepts, the promisor is entitled to claim payment equal to the amount of work he has done on a quantum meruit basis.
Exception:
where one has NO CHOICE but to accept the partial performance
๐๐ฎ๐ฆ๐ฉ๐ญ๐๐ซ ๐ฏ ๐๐๐๐ ๐๐ฌ
where Hedges had no choice but to accept the partially completed building on his land. Sumpter cannot claim anything.
Discharge by performance - exception - Prevented performance
If the promisor was prevented by the promisee from performing his obligations fully and precisely, the promisor can sue the promisee for damages for breach of contract, as well as claim payment for the work he had already done on a quantum meruit basis.
๐๐ฅ๐๐ง๐๐ก๐ ๐ฏ ๐๐จ๐ฅ๐๐ฎ๐ซ๐ง
where Colburn abandoned the book-writing project he contracted Planche to write. Planche could claim remuneration on a quantum meruit basis.
Discharge by breach
Breach must amount to a clear and unequivocal repudiation of contract. If it is not clear, and there is an underlying willingness to corretc oneโs understanding and fulfil his obligations, then there is no actual repudiation.
Not all breaches are repudiatory in nature
4 Situations in RDC Concrete determins if the breach is repudiatory.
- Anticipatory breach
- Repudiatory breach of a condition
- Fundamental breach
- Breach of warranty which entails serious consequences
Discharge by breach - Anticipatory breach
Where time of performance is not due yet but promisor indicates he will not perform.
2 options
- wait and insist on performance
- treat contract as discharged and sue for breach of contract.
Situation 2 of RDC Concrete, where party in breach renounces that he will not perform his obligations, entitling the innocent party to terminate the contract.
Discharge by breach - Effects
Grants the innocent party a right of eletion as to whether to affirm or terminate the contract.
- Affirming the contract
- contract continue, entitled to damages - Terminate the contract
- contract ends, entitled to damages
Discharge by breach - Breach of a condition
Situation 3a of RDC Concrete v Sato Kogyo Pte Ltd
where the party in breach has breached a condition, which allows the innocent party to terminate the contract regardless the consequences of the breach
Discharge by breach - Fundamental breach
Situation 3b of RDC Concrete v Sato Kogyo Pte Ltd
where regardless of the type of term breached, if the consequences of the breach deprives the innocent party of substantially the whole benefit of the contract, the innocent party is entitled to terminate the contract.
Discharge by breach - Express right to terminate
Situation 1 of RDC Concrete v Sato Kogyo Pte Ltd
where the contract cleary states that in the event of a breach, the innocent party may terminate the contract
Exception to RDC Concrete v Sato Kogyo Pte Ltd
๐๐ฉ๐จ๐ซ๐ญ๐ฌ ๐๐จ๐ง๐ง๐๐๐ญ๐ข๐จ๐ง ๐ฏ ๐๐๐ฎ๐ญ๐๐ซ ๐๐ฉ๐จ๐ซ๐ญ๐ฌ
where the contract expressly states that the clause is a warranty and states clearly and unambiguously that the breach of a warranty will NEVER entitle the innocent party to terminate the contract.
Then, the Court will give effect to such a clause and the contract cannot be terminated when a warranty is breached.
Discharge by agreement
For existing agreements:
A termination clause in the existing agreement allows discharge by allowance if conditions are met.
- eg; in employment contracts - either party can terminate with a 3 monthsโ notice
For subsequent agreement:
must be supported by all 4 elements of a valid contract in the fresh agreement unless under either:
- Unilateral release under seal or deed
- Doctrine of promissory estoppel applies
- Principles set out in Williams v Roffey applies: discharging an existing duty owed to the promisor may constitute good consideration for a fresh promise.
Discharge by frustration
ALL 3 criteria have to be met:
- an unexpected event beyond the control of the parties
- after making of the contract but before performance of the contract is completed
- which makes the circumstances RADICALLY DIFFERENT & usually makes contract
1. Illegal
2. Impossible to perform
3. Radically different from what was originally envisaged
If established, parties will be excused from performing their obligations.
Discharge by frustration - Destruction of subject matter
๐๐๐ฒ๐ฅ๐จ๐ซ ๐ฏ ๐๐๐ฅ๐๐ฐ๐๐ฅ๐ฅ
where the contract to lease a music hall is discharged by frustration as the music hall destroyed by fire.
Discharge by frustration - Non-occurrence of event
๐๐ซ๐๐ฅ๐ฅ ๐ฏ ๐๐๐ง๐ซ๐ฒ
where the contract to rent a room is discharged by frustration when the coronation parade was cancelled. The purpose of renting the room was that it had a splendid view of the coronation parade.
Discharge by frustration - Government Interference
๐๐๐ญ๐ซ๐จ๐ฉ๐จ๐ฅ๐ข๐ญ๐๐ง ๐๐๐ญ๐๐ซ ๐๐จ๐๐ซ๐ ๐ฏ ๐๐ข๐๐ค, ๐๐๐ซ๐ซ & ๐๐จ
where D was contracted to construct a reservoir for the Water Board. It was discharged by frustration when a statute was set up during World War I to halt the work.
Discharge by frustration - Change of circumstances
Introduction of war, natural disasters.
๐
๐ข๐๐ซ๐จ๐ฌ๐ ๐๐ฉ๐จ๐ฅ๐ค๐ ๐๐๐ค๐๐ฒ๐ฃ๐ง๐ ๐ฏ ๐
๐๐ข๐ซ๐๐๐ข๐ซ๐ง, ๐๐๐ฐ๐ฌ๐จ๐ง ๐๐จ๐ฆ๐๐ ๐๐๐ซ๐๐จ๐ฎ๐ซ ๐๐ญ๐
where contract was frustrated because the port was subsequently occupied by enemies during WW2. Even though it was physically possible to go to the port, it is against public interests to have commercial links with enemies in times of war.
Discharge by frustration - Personal Incapacity
๐๐จ๐ฎ๐ฌ๐ฌ๐๐ซ๐ ๐ฏ ๐๐ฉ๐ข๐๐ซ๐ฌ & ๐๐จ๐ง๐
where the contract is discharged by frustration when the opera singer fell ill.
Scenarios where Frustration is unlikely to apply
- Forseeable events
- Self-induced frustration
- Force Majeure Clauses
Frustration cannot be applied - Foreseeable events
by definition, frustration is the occurrence of an unexpected event. So if an event is reasonably foreseeable, frustration cannot be applied to the contract.
If it could have been foreseen and parties still went on with the contract, the parties cannot rely on frustration.
๐๐๐ ๐ฏ ๐๐ข๐๐ซ๐จ๐๐จ๐ซ๐ฆ ๐๐ซ๐๐๐ข๐ฌ๐ข๐จ๐ง ๐๐ง๐ ๐๐ญ๐ ๐๐ญ๐
where D knew for a long time that their rented land was blocked and had no access to it. Frustration could not be applied since they were aware of the issue for a long time.
Frustration cannot be applied - Self-induced Frustration
If the frustrating event was brought about by one of the parties, frustration cannot be raised.
๐๐๐ซ๐ข๐ญ๐ข๐ฆ๐ ๐๐๐ญ๐ข๐จ๐ง๐๐ฅ ๐
๐ข๐ฌ๐ก ๐๐ญ๐ ๐ฏ ๐๐๐๐๐ง ๐๐ซ๐๐ฐ๐ฅ๐๐ซ๐ฌ
where Maritime self-induced frustration by allocating the licenses to other ships and not the fishing trawler it should have.
