Performance and Discharge of a Contract Flashcards
(112 cards)
1
Q
What is the rule relating to complete performance?
A
Performance of contractual obligations must be precise and exact.
2
Q
What happens if the order of performance is not specified in a contract?
A
Payment and delivery are concurrent provisions unless otherwise agreed.
3
Q
What is the doctrine of complete performance?
A
A party must complete their obligations fully to be entitled to payment.
4
Q
In the case of Cutter v Powell, why was Cutter’s widow not entitled to payment?
A
Cutter did not perform his obligations completely before his death.
5
Q
What are the exceptions to the doctrine of complete performance?
A
- Divisible obligations
- Substantial performance
- Wrongful prevention
- Voluntary acceptance of part performance
6
Q
What is an example of wrongful prevention?
A
Elnora telling Vince to stop cutting trees after he cut down two.
7
Q
What is substantial performance?
A
A party may claim payment if they have finished their work but it is slightly defective.
8
Q
In Hoenig v Isaacs, what was the court’s decision regarding substantial performance?
A
The decorator was entitled to the balance less the cost to remedy defects.
9
Q
What distinguishes the case of Bolton v Mahadeva from Hoenig v Isaacs?
A
Bolton’s work was defective and did not perform its primary function.
10
Q
What does it mean if obligations are divisible?
A
Payments are agreed for distinct parts or stages of the work.
11
Q
What is quantum meruit?
A
A reasonable sum in restitution for work done.
12
Q
True or False: A non-defaulting party must accept part performance.
A
False, they must have a genuine choice to accept it.
13
Q
What is the consequence of wrongful prevention in a contract?
A
The non-defaulting party may be liable for breach of contract.
14
Q
Fill in the blank: The _______ clause is included in contracts to address unforeseen events.
A
[force majeure]
15
Q
What is the purpose of a force majeure clause?
A
To protect parties from liability due to unforeseen circumstances.
16
Q
What must a party demonstrate to claim for substantial performance?
A
That the work is finished but slightly defective.
17
Q
What is the measure of damages for substantial performance?
A
The cost of putting the work in accordance with the contract.
18
Q
In what situation can a party recover some money despite not fulfilling all contractual obligations?
A
When obligations are divisible.
19
Q
What is the significance of the Sale of Goods Act 1979 in contracts?
A
It provides statutory provisions regarding payment and delivery.
20
Q
What is the general rule regarding payment if one party fails to perform their obligations?
A
The payer does not have to pay any part of the price.
21
Q
What is meant by ‘entire obligations’ in contracts?
A
Obligations that must be fully performed for payment to be due.
22
Q
What is a divisible obligation in contract law?
A
A situation where obligations are treated as separate contracts, allowing for partial recovery of payment for completed work.
23
Q
In the example of Brooks and Sarah, how much is Brooks entitled to recover?
A
Brooks is entitled to recover £600 for the kitchen and dining room, but nothing for the bedroom.
24
Q
What is the significance of Cutter v Powell in contract law?
A
It illustrates that a lump sum is payable only if the entire contract is completed.
25
What was the payment structure in Nasser's contract with Keith?
* Stage 1: £60,000
* Stage 2: £60,000
* Stage 3: £40,000
26
If Nasser abandons the project after completing Stage 1, how much is he entitled to?
Nasser is entitled to £60,000 for Stage 1.
27
What happens if Keith had to pay £120,000 to another builder after Nasser abandoned the project?
Keith could sue Nasser for damages of £20,000.
28
What does it mean for a contract to be discharged by performance?
It means that both parties have fulfilled their contractual obligations, ending the contract.
29
What is the doctrine of complete performance?
The requirement that all contractual obligations must be fulfilled to avoid breach of contract.
30
In the case of Benjamin and Michael, why is Benjamin entitled to payment despite minor defects?
Benjamin has substantially performed his obligations, making him entitled to the contract price.
31
What is the implication of Section 13 of the Supply of Goods and Services Act 1982?
It implies that services must be performed with reasonable care and skill.
32
What justifies Sonia's dismissal of Wessex Builders?
Wessex Builders committed a very serious breach of contract.
33
What is required for a contract to be discharged by agreement?
The agreement must include offer, acceptance, consideration, and contractual intention.
34
What is consideration in contract law?
The price one party pays for the other party’s promise.
35
What constitutes frustration in a contract?
A supervening event that makes performance impossible or radically different.
36
List the categories of circumstances that may render a contract 'radically different'.
* Government intervention
* Unavailability of a crucial person
* Illegality
* Destruction of the subject matter
* Non-occurrence of a fundamental event
37
In which case was the modern law of frustration established?
Taylor v Caldwell (1863).
38
What was the outcome of Taylor v Caldwell?
The contract was discharged by frustration due to the destruction of the music hall.
39
What does frustration imply about breach of contract?
There is no breach of contract when a contract is frustrated.
40
Fill in the blank: A contract is discharged by _______ when both parties fulfill their obligations.
performance
41
True or False: A party alleging frustration is usually the one who would have been in breach of contract.
True
42
What does it mean for a contract to be discharged by frustration?
A contract is discharged by frustration when an event occurs that makes performance impossible or radically different, and this event is outside the control of the parties.
43
What did Blackburn J state about the implied condition in the contract regarding frustration?
Blackburn J stated that there was an implied condition that the parties would be excused if performance became impossible due to the destruction of the music hall.
44
In which case did the House of Lords dismiss the idea of frustration resting on an implied term?
Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696.
45
What did Lord Radcliffe emphasize regarding the legal effect of frustration?
The legal effect of frustration does not depend on the parties’ intention but on what reasonable men would have agreed upon if they had considered the event.
46
What are the three factors that determine frustration due to the unavailability of a specific person or thing?
* Length of the contract
* Length of the period of absence
* Whether the contract must be performed by that particular individual
47
True or False: Short periods of illness in a long-term employment contract will frustrate the contract.
False
48
In which case was a music-hall artist's contract frustrated due to military service?
Morgan v Manser [1948] 1 KB 184.
49
What can cause frustration in cases of non-occurrence of a fundamental event?
The cancellation of a particular event essential to the contract can frustrate it.
50
In Krell v Henry, why was the contract considered frustrated?
The contract was frustrated because the purpose was to hire rooms specifically to view the coronation procession, which was cancelled.
51
In Herne Bay Steamboat Co v Hutton, why was the contract not frustrated despite the cancellation of the Naval Review?
The cancellation did not constitute the foundation of the contract, as the cruise around the fleet could still be performed.
52
What distinguishes Krell v Henry from Herne Bay Steamboat Co v Hutton?
In Krell v Henry, the cancellation meant the foundation of the contract could not be accomplished, while in Hutton, the contract could still be performed.
53
What type of government intervention can frustrate a contract?
Only substantial government intervention that radically alters the contract can frustrate it.
54
What was the ruling in Metropolitan Water Board v Dick Kerr regarding delay?
The contract was frustrated due to a substantial delay caused by government requisitioning during World War I.
55
What factors are relevant in deciding if delay frustrates a contract?
* Contract provisions on delay consequences
* Likely length of the delay
* Time set for obligations
* Whether the resumed contract is radically different
56
In Tsakiroglou & Co Ltd v Noblee Thorl, why was the contract not frustrated despite increased difficulty?
The contract was not frustrated because it could still be performed, even though it became more difficult and expensive.
57
What is a potential policy reason for why mere increased difficulty does not frustrate a contract?
Allowing contracts to be frustrated due to increased difficulty would lead to uncertainty and open the floodgates to litigation.
58
What was the outcome of Davis Contractors Ltd v Fareham Urban District Council regarding frustration?
The House of Lords held that the contract was not frustrated despite difficulties experienced by the contractors.
59
What did Lord Radcliffe state about the nature of frustration?
Frustration occurs when a contractual obligation becomes incapable of performance due to a change in circumstances, not merely hardship or inconvenience.
60
What is the principle of frustration in contract law?
A contractual obligation becomes incapable of being performed due to circumstances that render it radically different from what was undertaken in the contract.
61
What must occur for the principle of frustration to apply?
There must be a change in the significance of the obligation, making the performance a different thing from that contracted for.
62
What did Lord Radcliffe state regarding foreseeability and frustration?
If the parties could have foreseen the cause of the delay, the contract should not be frustrated.
63
What is one example of an event that can cause frustration?
Illegality, such as a change in the law or outbreak of war.
64
Which case illustrates the effect of illegality on contracts?
Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32.
65
List three events that can lead to a contract being frustrated.
* Unavailability of a specific thing vital to the contract (Taylor v Caldwell)
* Non-occurrence of a fundamental event (Krell v Henry)
* Government intervention (Metropolitan Water Board v Dick Kerr)
66
True or False: A contract can be frustrated if an event makes performance more difficult or expensive.
False.
67
What is a 'force majeure' clause?
A clause in a contract that covers events outside the control of the parties, potentially preventing frustration.
68
Why is it advisable to include a force majeure clause in contracts?
It offers flexibility and certainty regarding unforeseen events and how losses should be managed.
69
What happens if the frustrating event was foreseen by the parties?
The contract may not be frustrated if there was express provision in the contract covering the event.
70
Explain self-induced frustration.
A party cannot rely on frustration if their own act or election caused the frustrating event.
71
What was the outcome in Maritime Fish Ltd v Ocean Trawlers Ltd regarding frustration?
The contract was not frustrated as the claimants' own decision caused the problem.
72
In which case did the court hold that a self-induced frustration occurred due to the party's actions?
The Super Servant Two [1990] 1 Lloyd’s Rep 1.
73
What was determined about leases of land concerning frustration?
Frustration can apply to a lease of land if a frustrating event occurs during the term, but circumstances are rare.
74
What did the House of Lords decide in National Carriers Ltd v Panalpina (Northern) Ltd regarding lease frustration?
The lease was not frustrated despite access issues, as the remaining lease term was significant.
75
What occurs automatically when a contract is frustrated?
The future performance of the contract is terminated, and both parties are released from future obligations.
76
True or False: A party can choose whether to terminate a contract after it has been frustrated.
False.
77
What was the original position at common law regarding recovery of money after frustration?
Money paid before the frustrating event could not be recovered.
78
In Krell v Henry, what was the cause of frustration?
The non-occurrence of a fundamental event.
79
What is the principle regarding money paid before the frustrating event in common law?
It cannot be recovered
## Footnote
If one party had paid money to the other before the frustrating event, it could not be recovered.
80
In Krell v Henry, how much was the defendant required to pay after the coronation procession was cancelled?
£0
## Footnote
The obligation to pay the outstanding £50 arose after the frustrating event.
81
What was the amount the claimant in Chandler v Webster had to pay after the cancellation of the coronation?
£41
## Footnote
The claimant had to pay this amount as it was due before the frustrating event.
82
What did the House of Lords state in Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd regarding total failure of consideration?
Money already paid could be recovered
## Footnote
If there had been a total failure of consideration, money paid could be recovered and money due need not be paid.
83
What are the three key points of Section 1(2) of the Law Reform (Frustrated Contracts) Act 1943?
* Money paid before the event can be recovered
* Money that should have been paid before the event need not be paid
* Expenses incurred by the payee can be recovered at the court's discretion
84
What is the maximum sum a court can award for expenses under Section 1(2)?
The lower of total sums paid/payable or expenses incurred
## Footnote
The court has discretion to award expenses, but cannot exceed the total amount paid/payable.
85
What does Section 1(3) of the Law Reform (Frustrated Contracts) Act 1943 address?
Valuable benefits conferred before the frustrating event
## Footnote
The court may order the party receiving the benefit to pay a just sum not exceeding the value of the benefit.
86
What must the court consider when applying Section 1(3) of the Act?
* The value of the benefit received
* Expenses incurred by the party receiving the benefit
* Effect of the frustrating event on the benefit
87
What is a key limitation of Section 1(2) regarding expenses?
Expenses incurred above the total sums paid/payable cannot be recovered
## Footnote
If no money was paid or payable before the frustrating event, s 1(2) does not help.
88
In the example with Moira and Jane, what amount could Moira recover after the contract was frustrated?
£200
## Footnote
Moira could recover her deposit as it was paid before the frustrating event.
89
What happens to future obligations when a contract is frustrated?
They are discharged automatically
## Footnote
Neither party is in breach and both are completely discharged from all future obligations.
90
What is the general rule in Paradine v Jane regarding contractual obligations?
They are absolute
## Footnote
A party must perform its contractual obligations or will be in breach.
91
What is the significance of force majeure clauses in commercial contracts?
They allow parties to make their own provisions regarding the effects of frustration
## Footnote
This preference is due to the limitations and uncertainties of the Law Reform (Frustrated Contracts) Act 1943.
92
What should be assessed to determine if a contract has been frustrated?
* Supervening event making the contract impossible
* Terms in the contract covering the event
* Fault of the parties
93
What is the effect of a frustrating event on a contract?
The contract automatically ends
## Footnote
Neither party is in breach, and all future obligations are discharged.
94
What can a party claim for breach of contract?
Damages and may terminate the contract.
95
What do essay questions test in the context of contract law?
Knowledge, critical evaluation of statements or quotations, and ability to express reasoned conclusions.
96
What does the Law Reform (Frustrated Contracts) Act 1943 attempt to address?
Problems related to the harshness of the common law approach to frustration.
97
Define frustration in contract law.
An event that makes it impossible to perform the contract, discharging parties from future obligations.
98
What is the rule of absolute obligations?
A principle stating that parties must fulfill their contractual duties regardless of circumstances.
99
What happens to a contract when a frustrating event occurs?
The contract ends, parties are discharged from future obligations, and damages cannot be recovered.
100
In which case was the principle of frustration discussed?
Krell v Henry and Chandler v Webster.
101
What was the common law position regarding payments made before a frustrating event?
Payments could not be recovered, and amounts payable still had to be paid.
102
What did the decision in Fibrosa v Fairbairn Lawson address?
The total failure of consideration and its implications for recovering payments.
103
What limitation exists regarding the recovery of expenses under the Law Reform (Frustrated Contracts) Act 1943?
Recoverable amounts are limited to sums paid or payable before the frustrating event.
104
What does Section 1(2) of the Law Reform (Frustrated Contracts) Act 1943 improve upon?
It addresses the issue of expenses incurred before a frustrating event.
105
What discretion do courts have regarding expenditure awards under Section 1(2)?
The court has broad discretion in calculating expenditure.
106
What does Section 1(3) of the Law Reform (Frustrated Contracts) Act 1943 address?
Provision of a valuable benefit not addressed by common law.
107
What challenge arises in valuing benefits under Section 1(3)?
Difficulty in determining the value of the benefit received.
108
What advantage do parties have regarding the effects of frustration?
They can make their own provisions in the contract.
109
What happens to contracts excluded from the Law Reform (Frustrated Contracts) Act 1943?
Common law continues to apply.
110
What is the doctrine of complete performance?
The principle that parties must fully perform their contractual obligations.
111
What are the ways a contract may be discharged?
By performance, agreement, or occurrence of a frustrating event.
112
What is a force majeure clause?
A contract provision that addresses unforeseen events preventing performance.
