copyright guy harley 2004 discharge of contracts week 9

Copyright Guy Harley 2004

Discharge of Contracts

Week 9


Termination of a contractA contract can be brought to an end by:

1. Performance

2. Agreement

3. A Term of the Contract

4. Frustration

5. Breach

6. Operation of Law


Termination by Performance

Where both parties have performed their obligations, the contract is discharged

Generally, performance must be complete and exact

Re Moore and Co and Landauer & Co (Outline p 9-6)


Termination by Performance

There are 6 exceptions Several contracts Acceptance of part performance Prevention of Performance Substantial performance Time of performance


Several Contracts

Where a contract can be divided into several parts

Payment for the completed parts can be claimed Roberts v Havelock (Outline p 9-6)


Acceptance of Part Performance

Where A has accepted the partial performance of B even though A has an option to reject

B can claim a percentage of the contract price in direct proportion to the percentage of the work completed

Sumpter v Hedges (Outline p 9-6)


Prevention of Performance

Where one party is prevented by the other from performing the contract

They can claim a percentage of the contract price in direct proportion to the percentage of the work completed

Planche v Cockburn (Outline p 9-6)


Substantial performance

Where a contract has been substantially performed

The party can claim the contract price less the cost of deficiencies

Hoenig v Isaacs (Outline p 9-7) Bolton v Mahadeva (Outline p 9-7)


Time of Performance

Generally, time limits in contracts are not strictly enforced unless “time is of the essence”

Time is only of the essence if: The parties expressly agree that time is of the

essence (This makes the term in relation to time a condition)

A party who has delayed their performance of the contract is notified by the other party that the contract will be broken if they if not perform their part of the contract within a reasonable time

Rickards v Oppenheim (Outline p 9-7)


Tender of Performance

Where one party tenders the correct goods, services or

money in accordance with their obligation under the contract

The other party refuses to accept it If money is tendered it must be “legal tender” If the debtor sends money in the post and it is lost it will

have to be paid again unless Payment by post was requested by the creditor, and The debtor took reasonable care


Tender of Performance

Appropriation of Payments Where only part of a number of debts are paid The debtor may tell the creditor which debts are being

repaid If the debtor does not nominate the debt(s), then the

creditor may appropriate payments as he sees fit If the debtor pays the exact amount of a particular debt,

then it is presumed that that is the debt being discharged If there is a current account, then the payments are

appropriated to the oldest debt first


Termination by Agreement

Parties to the contract agree to discharge their obligations to one another

This latter agreement will only be binding if: There is consideration; or Promissory estoppel arises

The contract to terminate the earlier contract is subject to usual contractual rules e.g. economic duress



Bilateral Discharge Where a contract remains uncompleted by both

parties Consideration comes from both as there is a

mutual release of their obligations



Unilateral Discharge Where a contract remains uncompleted by only

one party Consideration

Release by one party of the other from their obligations

Fresh consideration by the other party Called “Accord and Satisfaction”



Novation A new agreement involving a third party C agrees to pay A to release B from B’s debt to

A


Condition Subsequent

Parties may have agreed that the contract would be terminated upon the happening or non-happening of a certain event

The term may be automatic or merely provide an option to terminate

Term may give only one party the option to terminate


Frustration

The general rule is that a person is not relived of their contractual obligations if they are impossible to perform

However, where: An intervening event, Not contemplated by the parties, For which neither party is responsible, and It makes performance

impossible; or Fundamentally different to that originally

contemplated


Frustration

Examples of Frustration If the contract relates to a specific thing that is

destroyed Taylor v Caldwell (Outline p9-9)

A change in the law Rayneon v Fraser (Outline p9-9)

A contract for personal service where the person dies, becomes seriously ill or is called up for military service Condor v Baron Knights (Outline p9-9)


Frustration

Examples of Frustration If the whole basis of the contract is the

occurrence of an event that does not happen Krell v Henry (Outline p9-9)

If the government prohbits performance for so long that the bargain is fundamentally changed FA Tamplin Steamship v Anglo-Mexican

Petroleum (Outline p9-9)


Frustration

There is no frustration of the contract simply becomes harder or more expensive to perform Wilkins v Geraldine Borough (Outline p 9-10)

Frustration does not apply where: Contract makes specific provision for the event The party seeking to rely on frustration foresaw the

event The event was caused by the party seeking to rely on

the frustration The Eugenia (Outline p 9-10)


Termination by Frustration (Cont.) Frustrated Contracts Act 1959 (Vic)

Court may order

a refund of monies paid under a frustrated contract

Compensation for any performance that occurred prior to frustration


Consequences of Frustration

Contract is discharged as to the future but is not made void from the beginning

At common law, the loss lay where it fell Money payable before the frustration

remained payable unless there was a total failure of consideration

Fibrosa v Fairbairn Lawson (Outline p 9-11)


Consequences of Frustration

Frustrated Contracts Act Enacted in some states Court may order

a refund of monies paid under a frustrated contract

Compensation for any performance that occurred prior to frustration


Assignment 1

1. Supreme Court of Queensland

2. De Jersey (Chief JusticeMcPherson (Justice of Appeal)Atkinson (Justice)

3. No, because the judge didn’t write it

4. Appellants: Joyce Anne McEwan & OrsLawyer SC Williams QC & P KimmonsRespondent: John Luke Bowditch by his litigation guardian John Stanley Bowditch


Assignment 1

5. Appellant: Eardley MotterdamRespondent: Garrahy & Associates

6. Lister v Romford Ice and Cold Storage Co Ltd (1957) AC 555

7. Facts directly on the point (negligent driving of a motor vehicle) (see para 4)Australian Supreme Court decision (see para 9)

8. Because it is from a different court hierarchy (NSW)


Assignment 1

9. Lister v Romford Ice and Cold Storage Co LtdCaltex Oil (Australia) Pty ltd v The Dredeg “Willemstad”Perre v Apland (see para 8 – 2nd part)

10. It was a natural extension of the existing law relating to the negligence driving of a motor vehicle (see para 11)

11. Appeal dismissed with costs to be assessed

12. Too short, recited the court judgement, did not give own reasons, suggestions that pregnant women should not drive a car


Assignment 1

Essay Problems Poor referencing Cited US law Poor referencing Descriptive with little analysis Over-focused on

Australian constitution rules of interpretation Procedure for passing an Act of Parliament


Assignment 1

Essay Role of Parliament Role of Courts Why 2 different modes of making law? Doctrine of Separation of Powers

What? Why? How?

copyright guy harley 2004 discharge of contracts week 9

Documents

copyright guy harley

contract price

partial performance

essence time

reasonable care slide

operation of law slide

time limits

bolton v mahadeva outline