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Title: CONTRACT – Discharge (lecture 16)
Description: CONTRACT – Discharge (lecture 16): Agreement, performance, breach
Description: CONTRACT – Discharge (lecture 16): Agreement, performance, breach
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CONTRACT – Discharge (lecture 16)
Discharge may occur by agreement, performance and breach and frustration
...
‘Agreement’
may suit both parties but consideration or a deed is required
...
AGREEMENT
PERFORMANCE
BREACH
1
...
Where
agreement to discharge is supported
by consideration
...
Where a party, without lawful excuse fails or refuses to perform
what is due from him under the contract, or performs defectively
or incapacitates himself from performing then that gives the party
right to determinate
...
If wholly executory then
bilateral/mutual waiver of rights is
consideration – The Hannah
Blumenthal
...
The waiver of
rights constitutes consideration for the
release of their obligations – ie
requirement to perform
...
WHERE one party has performed
but other has not, the party who has not
can be released from their performance
if the other is happy to have something
different instead = accord (new
agreement) & satisfaction (new
consideration)
...
By operation of a term in the
contract itself – a condition precedent
or subsequent
...
3
...
1
...
Terms and breach
*Breach of condition – innocent party has right of election –
terminate or affirm contract
...
Substantial performance
*Breach of warranty – innocent party can sue for damages only
*Obligation to pay full contract price
LESS cost of remedying defects – Hoenig
v Isaacs; Bolton v Mahadeva
Right of Election – affirmation (waiting for due date for
performance – if they do not perform by the due date can then
consider the contract repudiated and terminate)
3
...
*Where contract itself allows for
performance of one or more obligations
separately from others – Rose & Frank v
Crompton Bros
...
4
...
*The innocent party is allowed a period of time to decide –
Stocznia Gdanska SA v Latvian Shipping Co (No
...
*Obligations and rights remain on both sides – White & Carter v
McGregor
Limitations to affirmation
1
...
Innocent party must have ‘legitimate interest’ in affirming –
White & Carter v McGregor
Legitimate interest
*No legitimate interest where affirmation ‘wholly unreasonable’
– Clea Shipping v Bulk Oil (The Alaskan Trader)
*Legitimate interest only applies in ‘extreme cases’ where:
damages would be adequate remedy; affirmation would be
‘unreasonable’ – Ocean Marine Navigation Ltd v Koch Carbon
(The Dynamic)
Dangers of affirmation
*Innocent party’s obligations remain; the risk of their own breach
should be considered – The Simona
*A frustrating event may deny a right to damages – Avery v
Bowden
Right of Election – Termination
*Notification of election to terminate required – Vitol SA v Norelf
Ltd
...
But note Peyman v Lanjani (if made
decision to affirm/terminate, they can go back)
...
*C will claim damages occasioned by the breach
...
Title: CONTRACT – Discharge (lecture 16)
Description: CONTRACT – Discharge (lecture 16): Agreement, performance, breach
Description: CONTRACT – Discharge (lecture 16): Agreement, performance, breach