lecture six Flashcards
mutuality 1
- Both parties have reciprocal rights in contracts.
- If one party (CB) fails to perform, the other party (IP) need not perform.
- A party (CB) who hasn’t or won’t perform cannot compel the other (IP) to do so.
terminology
The obligee is the innocent party
The obligor is the contract breaker
Breach of contract
Breach occurs when a party fails to fully or partially fulfil their contractual obligations. The innocent party has various remedies available.
Remedies
The available remedies depend on the breach’s nature and the innocent party’s desired outcome (performance or termination).
Types of breaches
*Partial performance,
*Delayed performance,
*Anticipatory non-performance,
*Defective performance
Anticipatory breach
White & Carter (Councils) Ltd. v McGregor
The innocent party can either accept the repudiation and sue for damages, regardless of the performance time, or reject it, keeping the contract in full effect.
Self help remedies 1
Scottish Law Commission, Report on Review of Contract Law: Formation, Interpretation, Remedies for Breach and Penalty Clauses, March 2018
what are the self help remedies?
- Retention
- Rescission
- They are often defensive.
- They rely on:
- Mutuality & Materiality
Remedies to compel performance
- Retention – IP withholds performance
- Specific implement to do a thing
- Action of payment, money to be paid under contract
Remedies to be free of their obligations
Resile (rescission) – brings the contract to an end
Damages – receive money for non-performance
Mutuality
- The party seeking a remedy must show they [the IP] are not themselves in breach of their obligations. They can only insist on performance by other party if they have performed theirs”.
Graham & Co v United Turkey Red Co Ltd
Interdependency
Assume all terms are interdependent (holistic approach) or that there is a presumption to that effect?
(See McQueen & Thomson, para 6.11)
presume mutuality
Presume mutuality McNeil v Aberdeen City Council
presume mutuality unless
Clear indication to the contrary Inveresk Plc v Tullis Russell Papermakers Ltd.
what happens when there is two contracts?
In a complex transaction with two contracts, such as the purchase of two ships for a single price, the purchaser can refuse full payment for a breach of one contract (Claddagh Steamship Co 1919 SC (HL) 132).
materiality
- Materiality of the breach means the level of seriousness.
what to do if retention does not work?
If retention doesn’t work then rescind
resile
- Lawfully withdraw from a contract.
Repudiate:
Make clear that you will not perform the contract
what needs to happen before rescission?
Before rescission the CB must be in material breach
If rescinded but not in breach IP is at risk
retention
- Suspends the contract
- Pressures parties to perform
- ‘it serves to provide security for future performance’ McNeil v Aberdeen
