Week   7
Discharge   of   contracts
Remedies   for   breach
• How   do   contracts   come   to   an   end?
• What   remedies   are   available   to   the   injured   party   if   the   other   party   is   in   breach   of   contract?
10/27/2011
1.
Agreement
2.
Performance
3.
Frustration
4.
Breach
Term   in   the   contract   may   specify:
– Contract   for   a   fixed   term
– Notice
– Certain   event
Contract   may   be   ended   by   another   agreement   supported   by   fresh   consideration
General   rule: performance   must   be   exactly   in   accordance   with   the   contract
If   not,   contract   is   not   discharged
• Sailor   signed   up   for   voyage   from   Jamica to
Liverpool.
He   was   to   be   paid   30   guineas   upon   arrival   in   Liverpool
• He   died   before   the   end   of   voyage
• His   wife   could   not   recover   any   of   his   wages   for   work   done   before   he   died   as   the   sailor   had   not   completed   the   voyage   so   had   not   fully   performed   his   obligation
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10/27/2011
• Divisible   contracts ‐ Where   in   a   contract   it   is   usual   for   payments   to   be   made   periodically
• Part   f   (S   d )
• Performance   prevented   by   other   party
• Substantial   performance (Hoenig v   Isaacs)
when   events   like...
• Death   or   unavailability   of   the   subject   matter;   or
• Death   or   illness   of   one   of   the   parties;   or
• Supervening   illegality;   or
• The   event   upon   which   the   contract   was   based   fails   to   occur;   or
• A   serious   delay   in   performance occur   through   no   fault   of   the   parties   the   contract   is   said   to   be   frustrated
Limits   to   the   doctrine   of   frustration
1. Possible   alternative   method   of
2. Supervening   event   must   not   be   self   induced
3. Event   must   not   have   been   foreseen   – what   about   a   force   majeure   clause?
1. Possible   alternative   method   of   performance
2 Supervening event must not be self induced
( Maritime   National   Fish   Ltd   v   Ocean
Trawler)
3. Event   must   not   have   been   foreseen
Is   frustration   just   that   performance   is   too   difficult?
• Tsakiroglou v   Noblee Thorl GmbH (1962)
Contract   for   delivery   of   goods,   had   intended   to   use
Suez   Canal.
The   fact   that   it   was   closed   did   not   frustrate the contract as the ship could go the long   way   round   via   Cape   of   Good   Hope.
Davis   Contractors   Ltd   v   Fareham   UDC   (1956)
Shortage   of   resources   and   bad   weather   which   delayed   a   building   contract   was   not   frustration
Consequences   of   Frustration
Contract   ceases   to   exist   from   the   moment   of   frustration
Future   rights   are   extinguished   – ie money   to   be   paid   in   the   future
Rights   that   have   already   arisen   remain   ie
• At   the   discretion   of   the   court   the   parties   may   retain   or   recover   expenses   from   money   paid   or   due   before   the   frustrating   event.
• A   party   who   has   received   a   valuable   benefit   from   the   other   party   before   frustrating   event   may   have   to   pay   for   it.
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10/27/2011
Actual   breach   – it   has   happened
Anticipatory   breach   – party   indicates
(before   the   breach)   that   they   won’t   be   able   to   perform   the   obligation
Hochster v   De   La   Tour   (1853)
• Damages
• Specific   performance ‐ Co ‐ operative   Insurance   Society   Ltd   v   Argyll   Stores   (holdings)   Ltd (1997)
• Injunction ‐ Warner   Bros   v   Nelson   (1937)
•
• Repudiation – treat   contract   as   terminated   and   in   the   contract   for   the   sale   of   goods   this   allows   for   the   goods   to   be   returned   and   a   full   refund   given
Where   there   is   an   anticipatory   breach   the   injured   party   may   sue   for   damages   immediately   or   treat   the   contract   as   continuing   and   perform   his   part   and   wait   until   the   actual   time   for   performance   before   taking   action   even   if,   in   the   event,   his   loss   is   increased   when   he   finally   sues   for   damages.
• White   and   Carter   Ltd.
v   McGregor   ( 1961)
• Aim   to   put   the   party   in   the   position   they   would   have   been   in   had   the   contract   been   properly   performed
• NOT   all   losses   are   recoverable
• Hadley   v   Baxendale
• Damage   that   is   a   natural   usual   consequence   of   the   breach
• Damage    h   i is   a   b bl   l   of f h   breach   if   reasonably   contemplated.
Victoria   Laundry   v   Newham
The   Heron   II
• Party   under   a   duty   to   mitigate   damage.
• Specific   Performance
– Court   Order   requiring   defendant   to   perform   his   contractual   obligations
• Injunction
– Court   Order   stopping   someone   doing   something   or   forcing   him   to   do   something
3

• Simple   contract   ‐ 6   years   from   the   date   of   the   breach
10/27/2011
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