What are 4 ways in which a contract may be discharged?
- performance of obligations
- agreement
- breach
- frustration
When a contract is discharged, what ends first, rights or obligations?
rights then obligations
What are 4 exceptions to the rule that contracts are discharged once obligations are fulfilled?
- Choosing to accept partial performance
quantum merit basis - payment only for the work completed
- Paying difference for substantial performance
if substantially performed but not completely, can pay contract price less the defect that needs remedying
- Wrongful prevention of performance
- Statute - s15 SoGA
Partial performance with only a slight breach of contract -> paying party can accept the goods but claim damages under breach of warrantly
What is the remedy for total failure of consideration?
restituion
What is unjust enrichement?
D has been enriched/ received a benefit at the expense of C
e.g. D accepts service from C, C performs, D gets benefit, if contract in fact void -> unjust enrichment will step in to compensate C
In what 2 ways can a contract be discharged by agreement?
- Waiver
note: if there has been part-payment of a debt discharge must be via deed as there has been no consideration
- operation of a term in the contract
e.g. material breach term -> if there is a material breach, other party may have the right to exit the contract
If a contract is discharged by breach, does the innocent party have a right of election and damages?
yes
(note: breach of warranty is only right of damages, contract not terminated)
What is meant by a right of election
party has the ability to choose whether to terminate the contract and claim damages or affirm the contract and claim damages.
In either case, innocent party needs to mitigate losses.
Breach causing discharge can be either repudiatory or anticipatory - what is the difference?
- repudiatory
- breach of condition -> goes to the core of the contract
- includes breach of innominate terms classed as conditions
- anticipatory
one party makes the other aware that they do not intend to perform obligaitons under contract before breach actually happens.
Breach of condition therefore gives rise to a right of election
What is a benefit of frustrating a contract?
terminates the contract without the risk of being sued
When can frustration arise
- events outside of party control;
- which were completely unforeseeable and not dealt with in the contract
- render the contract incapable of being performed
Doctrine of frustration:
Provide an example of 3 events which will frustrate the contract if completely unforeseeable
- Impossibility
a) destruction of contract subject matter
b) death or illness of party
c) excessive delay
- Supervening illegality and government intervention
e.g. change of laws
- Change in circumstances
All commercial purpose must be destroyed - if there can still be some commercial benefit gained, frustration will not apply
There are 4 main limitations to the doctrine of frustration - what are these?
- contract becomes more expensive/ difficult to perform
no frustration as it is still possible to perform; frustration cannot prevent bad bargain or bad luck
- change in circumstance was an inherent risk and was foreseeable (e.g. nature of the industry). Provision for that kind of risk must be made in contract
- self-induced frustration
- express contractual provision
e.g. force majeure clause -> courts must uphold this
There are 2 mechanisms by which money can be recovered from frustration - what are these?
- Common law where statute has been excluded by parties in their contract
- Law Reform (Frustrated Contracts) Act 1943
When recovering money from frustration via common law:
- when does the contract end releasing obligations
- If there has been advance payment can this be returned
- at the actual point of frustration
- only where there has been a total failure of consideration after payment and before frustration.
If party has provided some consideration before frustration, no money need be returned
When recovering money from frustration via Law Reform (Frustrated Contracts) Act 1943 - is money paid in advance recoverable?
yes
but: expenses incurred by the party performing the contract before frustration must be deducted -> no need for a total failure of consideration
When recovering money from frustration via Law Reform (Frustrated Contracts) Act 1943 - is benefit gained through partial performance (non-monetary) recoverable?
yes
