discharge by performance

Question 1

What is the structure for PQ in discharge of performance

Answer 1

1. Apply strict rule
   2.identify PADS to avoid the rule
2. Discuss time if relevant
3. Conclude if successful and add remedy

If about time- 1.strict rule, 2.time- condition or warranty, 3. Conclusion- remedy if successful

Question 2

What is the strict rule- discharge of performance- include at start of PQ.

Answer 2

• Originally there was a strict rule, which meant the performance must be complete and exact. So if a party hadn’t fulfilled their exact obligations under the agreement, the other party didn’t have to fulfil their obligations either.
Cutter v Powell
• The strict rule was also shown in Re Moore and Landauer

Question 3

Cutter v Powell- discharge performance

Answer 3

C tried to claim for a proportion of her husband’s wages. He died near the end of the voyage working on a ship.
HELD: She was entitled to nothing. He agreed to work the entire voyage. His work was not complete.
STRICT RULE

Question 4

What are the ways the strict rule can be avoided- performance

Answer 4

1. Prevention of full performance
2. Acceptance of part performance
3. Divisible contracts
4. Substantial performance

Question 5

Prevention of full performance- PADS- discharge by performance

Answer 5

• If one party prevents the other from carrying out the contract, the innocent party can claim the on a quantum meruit basis
Quantum meruit means the party can claim for the work they did even though the obligation hasn’t been fulfilled as agreed.
Planche v Colburn

Question 6

Planche v Colburn- discharge by performance

Answer 6

An author was hired by a publisher to write a book for a series. The author began writing and wanted to finish the book, but the publisher scrapped the series. The author claimed for payment.
HELD: He was able to recover a (quantum meruit) fee for the work completed as the publisher prevented full performance.
Prevention of full performance

Question 7

Acceptance of Part-Performance- PADS- discharge by performance

Answer 7

• There has to be consent for this to apply and the consent has to be free from pressure.
• If the parties agree that one party doesn’t have to complete the entire contract, then the contract must be paid on a quantum meruit basis.
• It must be agreed that the defaulting party is allowed to be paid for the work which they have completed.
• It is not considered to be consent if the innocent party has no option but to take the benefit of the work done.
Sumpter v Hedges

Question 8

Sumpter v Hedges- discharge of performance

Answer 8

A builder was carrying out work, but ran out of money. He tried to claim his wages for the work he carried out before his money ran out. The customer completed the work himself. The builder claimed the customer prevented him from fulfilling the contract by doing the work himself.
HELD: The customer had no choice but to complete the work. They did not consent to the builder’s part-performance. The builder was not entitled to any payment.
Acceptance of Part-Performance

Question 9

Divisible Contracts/ Severable Contracts- PADS- discharge by performance

Answer 9

• If the contract has separate parts, this is a divisible contract.
• For this to apply, the contract must be clearly divided into separate parts.
• Non-completion of one part doesn’t breach the entire contract.
Usually in a PQ where numbers of things e.g. 50 laptops and 10 didn’t work,vSplit into one item each. Or e.g. 2 journeys.
Richie v Atkinson

Question 10

Richie v Atkinson- discharge by performance

Answer 10

It was agreed that cargo carried would be paid for by the ton. Only part of the cargo was carried.
HELD: The ship owner was entitled to be paid for the cargo he carried, however, he did have to pay damages for breach of contract as he didn’t carry the entire cargo.
DIVISIBLE CONTRACT

Question 11

Substantial performance- PADS- discharge by performance

Answer 11

• This applies when a party has done ‘substantially’ what is required under the contract. So, the court believes they have done enough.
• If there is substantial performance, payment must be completed for the appropriate amount (to cover the work done).
• This will not apply if the contract is seen as a single transaction (like Cutter v Powell)
• This often occurs in large contracts where small elements of the contract are not performed.
• The amount to be paid is decided on a case-by-case basis.
Darkin & Co. v Lee
Hoenig v Isaacs
• However, if the work hasn’t been substantially performed, the party who carried out the work will be entitled to nothing.
• That the substantial performance rule will not apply where there is no real benefit from the contract or the work is dangerous
Bolton v Mahadeva
• Though in Young v Thames Properties Ltd.,(a recent case!) a contract was made to resurface a carpark. Even though the work was defective, the court decided the contractors needed to be paid for the work they’d done.

Question 12

Darkin & Co. v Lee- PADS- discharge by performance

Answer 12

Builders agreed to repair premises. Some of the repairs were below standard.
HELD: The contract had been substantially performed. The builders were entitled to the money for the work they’d done to standard.
SUBSTANTIAL PERFORMANCE

Question 13

Hoenig v Isaacs- PADS- discharge by performance

Answer 13

A decorator was hired to decorate and furnish a room. Some defective furniture was supplied.
HELD: The decorator was entitled to be paid for what he had done on a quantum meruit basis.
Substantial performance

Question 14

Bolton v Mahadeva- PADS- discharge by performance

Answer 14

A central heating system was installed. It was agreed the builder would be paid £560. The system was defective and cost £170 to fix.
HELD: The builder was entitled to nothing as the contract wasn’t substantially performed.

Question 15

Whether the Time of Performance is Important- discharge by performance

Answer 15

• In some contracts a time is inserted. The question is, should the innocent party be able to repudiate the contract if this particular term is breached (a condition). Time is seen as a condition in the following circumstances:
o The parties expressly stated in the contract that ‘time is of the essence’.
o In the circumstances, time of completion is critical for the contract.
o One party hadn’t performed on time, so the other party has insisted on another date of completion.
If none of the above apply, the term with regards to the time is seen as a warranty rather than a condition.
Union Eagle v Golden Achievement
Charles Rickards v Oppenheim
• It is essential that if time being of ‘the essence’ is waived, it is then reinstated as a term to ensure the same issue doesn’t arise in future (Hakimzay Ltd v Swailes)

Question 16

Union Eagle v Golden Achievement- discharge by performance

Answer 16

TIME
For the sale of a flat, the completion time was 5pm. It was expressly stated that ‘time was of the essence’. The buyer of a flat delivered the money at 5:10pm, the seller repudiated the contract.
HELD: The completion time was a condition of the contract, so the seller successfully repudiated the contract.

Question 17

Charles Rickards v Oppenheim- discharge by performance

Answer 17

TIME
A contract was made for a car to be built and ready on a certain date, it wasn’t ready. The buyer eventually said that if the car wasn’t ready in 4 weeks, he would cancel the contract. The car wasn’t ready in 4 weeks. When the car was ready, he rejected the contract.
HELD: He was entitled to do so as time was of the essence.

Question 18

Remedies- discharge of performance

Answer 18

1. Quantum Meruit - claim payment for work completed. (mainly this one in PQ).
2. Repudiation - contract comes to an end.
3. Specific Performance - court will specify what needs to happen in the contract for dispute to be resolved.
4. Damages - compensation awarded to c.