Objective Notes: W300 – Agreements, rights & responsibilities
UNIT 22 - MANUAL THREE
DISCHARGE
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When contracts are discharged
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Parties by agreement may end contract/ release each other from future obligations
subject to basic rule = agreements to end/ vary contracts must themselves be
contracts with offer, acceptance, consid & contractual intention but if agreement is
to accept part payment in settlement of debt, creditor not normally bound since
debtor not provided consid (Foakes v Beer) unless shows common law exceptions
(e.g. earlier than due payment etc - Pinnel’s Case) or Promissory Estoppel (reliance
on promise intended to be relied on - High Trees);
But where parties agreed to release others from o/s obligations each provided
consid, so valid contract discharging original & A cannot subsequently insist B’s
original obligations be carried out but, where A completely discharged his
obligations & agrees to release B from his, agreement not = discharge & not binding
since B not provided consid for promise;
Performance (perf) –
o If parties performed all contractual obligations, have done what is required of
them & contract is at end but, traditionally, contracts subject to entire
obligation rule - where contract entire/ indivisible & B does some work but
then abandons job, cannot sue for payment because A’s obligation entirely
dependent on B carrying out all obligations so where fails so to do, claim
falls foul of rule (Cutter v Powell (1795));
o Exceptions =
 Where B wrongfully prevented A from completing obligations, A
may sue for breach &, in awarding damages courts seek to place A
where would have been had B allowed him to complete or by
Planche v Colburn (1831), A could claim quantum meruit (QM) (= as
much as he deserved) – amount reasonable vis-à-vis work done but
often better to claim damages rather than QM since puts him where
would have been on completion & higher award likely;
 Where B agreed to accept partial perf, A entitled to some payment
provided B had real acceptance choice (Sumpter v Hedges [1898]);
 Where work substantially perf & defect repair cost comparatively
low, guilty party entitled to some payment (Hoenig v Isaacs [1952])
but where work seriously defective (& repair cost accordingly
substantial), not so entitled (Bolton v Mahadeva [1972]);
 Where obligations divisible, contractor entitled to payment on stage
completion even if subsequently abandons work & courts generally
interp contracts without express payment terms to enable party who
has done some work to receive some payment (Roberts v Havelock
(1832)).
Breach by A may entitle B to terminate (term) contract & sue for damages where
condition (major term) broken but if innominate (innom), innocent party can term
on breach only where thereby deprived of substantially entire contract benefit &
where B terms contract, treats it as repudiated, A having committed a repudiatory
breach but breaches of minor terms (warranties) not enable term but entitle innocent
party to sue for damages;
Breach anticipatory (anticip) where A indicates in advance to B not intend to
perform obligations & B’s right to repudiate of immediate effect so may term
straight away –doesn’t have to wait until perf date(s) stated in contract - & may
immediately sue for damages but right at his election – may prefer to wait until due
date, especially if hopes A may still carry out obligations, & then sue (Hochester v
De la Tour (1853));
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Objective Notes: W300 – Agreements, rights & responsibilities
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B has the choice of either term or affirming contract –
o If terms, contract is at end ,all future obligations discharged & normally, B
must communicate decision to A but not always essential as acceptance
requires no particular form provided clearly communicated & unequivocally
conveys B treating contract as at end so not necessarily have to tell A
provided info comes to A’s attention (e.g. via intermediary) since non-perf of
obligation may constitute acceptance depending on contractual relationship &
particular circumstances (Vitol SA v Norelf Ltd [1996]);
o But risk if breach not in fact repudiatory & not give B term rights where B
mistakenly believes A committed breach since acting on belief, B’s action
may result in him breaching own obligations which may enable A to term &/
or claim damages from him but where in good faith so relies, not necessarily
follow B be treated as having repudiated obligations since repudiation drastic
conclusion which should only be held to exist where clear A refused to
perform (Woodmar Investment Development Ltd v Wimpey Construction
UK Ltd [1980]);
o If affirms, contract not at end & both must continue to perf obligations but B
must make it clear is treating contract as continuing &, whilst B entitled to
damages for losses suffered, may continue to perform - despite knowing this
against A’s wishes - & then sue for contract price (White & Carter (Councils)
Ltd v McGregor [1962]);
o But B not absolved from perf own obligations & if fails so to do, can’t rely
on anticip breach to justify this (Fercometal SARL v Mediterranean
Shipping Co SA [1988])
o Where parties agreed time is of the essence (e.g. time clause contract
condition or, if innominate that B deprived of substantially contract’s entire
benefit), B may claim damages & where not originally of the essence but A
has unduly delayed in perf, B can make it of essence if gives A notice perf
required within reasonable time (Charles Rickards Ltd v Oppenheim [1950]).
Discharge effect
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Contact comes to end & no future obligations need to be performed by either party;
Where discharge is by breach, damages may be awarded & court seeks to place
innocent party where would have been had contract been properly performed;
Where substantial perf found, A, having done work, may sue for contract price & B
may counterclaim for defect remedying costs.
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