Discharge of a contract

By: Agreement Performance Frustration Breach

Agreement

Bilateral Unilateral: new consideration

Acceptance of partial performance: Case: contract for 24 cases of wine: delivered only 20 Genuine choice of accepting / rejecting must exist Case: builder left the house unfinished Prevention of complete performance: quantum meruit basis Cases: made him write and then retrained from publishing

Performance

Ideal. Divisible / non-divisible Substantial

Frustration

No fault of either party Performance became impossible, illegal or radically different from what was intended

Destruction of subject matter : Illness of one party Non- occurrence of central event Subsequent illegality Government intervention

 Destruction of subject matter : If before contract: mistake If after : then its frustration Case: rent of music hall got burnt before the concert

 Non- occurrence of central event Coronation of Edward VII Destruction of commercial value

 Subsequent illegality

Case: Poland occupied Case: stadium declared unsafe

Limits of doctrine of frustration

Event occurs after contract made (otherwise mistake) No commercial purpose left Parties have not foreseen event

Drop in profit Becomes more onerous Self-induced Force-majeure clauses

Self-induced
Wrong appropriation of licenses

Discharge by Breach

 Breach of conditions Breach of warranties Breach of innominate terms

 Actual breach Anticipatory breach

Anticipatory breach

Innocent party gets the right to treat the contract at its end Can wait till due date of performance risks intervention of frustration ending the contract

Discharge by Breach

 Breach of conditions Breach of warranties Breach of innominate terms

 Actual breach v Anticipatory breach

Anticipatory breach
Prior to the date of performance informs the other party that it does not intend to perform Options for the innocent party:
Treat the contract as breached immediately Wait till actual breach happens

innocent party does not need to give a formal notice that its treating the contract as ended, The awareness can come from
Conduct Authorized third party

 Case: sold goods to third party and sued for breach: did not send bill of lading while loading the goods

Mitigation of loss
Not entitled to damages that the party could evade Anticipatory breach : the party has no duty to accept the breach immediately so its not obligated to mitigate the los also it can wait till actual breach happens

 Case: promotion of garage Does not apply to cases where unreasonable for the party to continue with the contract only to claim damages Contract to hire old ship

Remedies fro breach of contract

Damages Action for agreed price Quantum Meruit Injunction Specific Performance Repudiation

Damages
Purpose: restitution Court decides No real loss--- nominal damages

 Remoteness of damages: Should not be too remote: Hedley and baxendale: Losses natural and normal consequence of breach: objective test Both parties reasonably contemplated those losses at the time of contact: Subjective test

Hedley and baxendale

Case: broken shaft of the mill

Another case: boiler for laundary Ordinary losses Government contract: could not apply for it

Measure of damages
Restitution not punitive in nature Actual financial loss Sales of goods: market price

Liquidated damages
Liquidated means --- stated in contract Sum is less than actual damage--- innocent party gets lesser sum written in contract Sum is more than actual damage--- innocent party retains additional sum If estimate not genuine but for punishment--- not enforced by courts

Specific performance

Remedy in Equity not common law (like damages) Not available in:
where damages are adequate remedy e.g. sales of goods.. As opposed to sale of land or a unique painting Contracts of employment Contracts of continuing nature Party seeking it acting unfairly/ dishonestly

injunction
Court grants it on discretion Orders the party not to break the contract

Not granted where: damages are adequate remedy To enforce positive stipulation in contract

 positive stipulation: To employ someone or to work for someone

Negative stipulation : restraint of trade clause