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Discharge of Contract by performance and breach - Coggle Diagram
Discharge of Contract by performance and breach
ending of the obligations under the contract
one party has failed to complete some or all of their primary obligations.
all of the primary obligations created by the contract have been met in a satisfactory manner or
discharge will be the point at which either:
Where all the obligations under the contract have been carried out = performance of the contract.
3 ways in which a contract can be discharged=
By performance - terms of the contract have been met and all obligations under the contract have been performed and the contract is complete
By breach of contract - actual and anticipatory
By frustration -occurs when, after the contract is formed, factors beyond the control of the parties to the contract make performance impossible, at which point the parties may be released from their obligations to perform.
Discharge by performance = If all the obligations are fulfilled then the contract is in effect complete and discharged.
E.g- builder contracted to build a wall and it was agreed that he would be paid £1,000, he builds the wall and the £1,000 is paid the contract is discharged. Both sides have performed their obligations.
Complete/entire Performance
starting point for performance of a contract is that there should be complete/entire performance of all of the obligations under the contract ie:
Performance must match contract obligations.
Cutter v Powell
Re Moore.
Substantial performance
Voluntary acceptance of part-performance
Divisible/severable contracts
exceptions including:
Where one of the parties has performed the contract partly, but not completely
Sumpter v Hedges.
Substantial Performance
If a party has done substantially what is required under the contract and the other party are refusing to pay then the doctrine of substantial performance can apply.
Hoenig v Isaacs
Bolton v Mahadeva
Stipulation as to time of performance=
Failure to perform a contract on time, while it does give a right to an action for damages, will not give the victim of the breach the right to repudiate a contract.
Under the common law it was accepted that time of performance could be ‘of the essence’ ie if you state in the contract that performance must be by a certain time and date then they must occur. For this to apply the parties must:
make an ‘express stipulation’ in the contract that ‘time is of essence’
the surrounding circumstances show that time of performance is critical, as would be the case in the delivery of perishable goods where delivery on time is obviously critical
where one party has already failed to perform his obligations under the contract. In the case the other party is able to confirm that unless performance is then complete within a stated period, repudiation will occur
A contract is said to be breached when one party performs the contract:
Defectively or differently from the agreement
Not at all (actual breach) or
parties fails to perform the contract
Pilbrow v Pearless De Rougemont (1999)
Where the indicates in advance that they will not be performing as agreed (anticipatory breach).
Where an anticipatory breach occurs, the other party can sue for breach straight away (ie treat the contract as repudiated at that point) - they do not have to wait until performance is due. The situation is usually that one of the parties to the contract gives notice, in advance, that they will not be performing or completing the contract.
This situation gives the innocent party a choice:
(i) sue immediately for breach of contract; or
(ii) wait for time agree for performance of the contract and sue if performance does not take place.
Hochster v De La Tour (1853)