Micro Brewery Industry Evaluation

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LAW OF CONTRACT
2007-08

Topic 6 – BREACH OF CONTRACT

This final topic considers the different consequences of breaching a contract and also the parties who may enforce a contract.

Learning Objectives

• Students should be able to determine when an innocent party will be entitled to terminate the contract as a result of a breach and how they may loose that right • Students should understand what is meant by anticipatory breach • Students should learn the purpose of an award of damages in contract law (as opposed to the law of tort) • Students should be able to quantify the different categories of loss • Students should understand the restrictions on the availability of damages • Students should understand the implications of the doctrine of Privity of Contract • Students should be able to identify the actions available to a “third party” • Students should understand the rational for the exceptions to the doctrine

Part I. BREACH

“Breach” = a failure to perform contractual obligations where there is no lawful excuse.

Lawful Excuse
Conditions Precedent = If A has to perform before B becomes liable, the performance by A is a condition precedent to B’s liability (Re Application of Butler [1970] IR 45).

A breach does not of itself bring the contract to an end. It may give the innocent party the right to terminate the contract, if the innocent party elects to do so. While every breach will give rise to a remedy in damages, not every breach generates a right to terminate further performance of the contract.

A. Right to Terminate for Breach

1. Where the term not fulfilled is a condition or in certain cases an innominate term

2. Termination Clause

3. Repudiation
If non-performance indicates an intention no longer to be bound by the contract, the other party may treat himself as discharged. If the innocent party accepts the repudiation, all his future obligations come to an end as do the obligations of the guilty party.

The repudiation may be expressly given or it may be implied by conduct.

Athlone Rural District Council v Campell [1912] 47 ILTR 142

In Universal Cargo Carriers V Citati [1957] 2 QB 401, Lord Devlin said the test of whether an intention is evidenced by conduct is whether the party repudiating has acted in such a way as to lead a reasonable person to the conclusion that he does not intend to fulfil his part of the contract.

Woodar Investments V Wimpey Construction [1980] 1 AllER 571 Continental Oil v Moynihan [1977] 111 ITLR 5
House of Spring Gardens v Point Blank Ltd [1985] FSR 327

4. Entire Contracts
If a contractual obligation is entire and the first party fails to perform, the injured party can refuse to complete his part of the deal and the party in breach has no claim. A contractual obligation is said (by Treitel) to be entire when the contract requires it to be completely performed before the other party is to pay or render his agreed counter-performance.

Sir Jessel in Hall v Barker (1878) noted “if a man engages to carry a box of cigars from London to Birmingham, it is an entire contract, he cannot through the cigars out of the carriage half way there and ask for half the money.”

Complete performance by A is thus a condition precedent to B’s performance.

Cutter v Powell [1756] 6 Term R 320
Re Moore & Co Ltd v Landauer & Co [1921] 2 KB 519

Sections 2& 3 of the Apportionment Act, 1870

It may be possible to classify it as a contract containing Severable Obligations. Partial performance may thus attract an obligation to provide payment of part of the consideration. Verlome Cork Dockyard v Shannon Atlantic Fisheries Unrep. (HC) Finlay J. 31/7/78

Sumpter v Hedge [1898] 1 QB 673
In Defence of Sumpter v Hedge” (2002) 118 LQR 569, McFarlane and Stevens argue in support of the general rule applied in Sumpter v Hedge that a party in breach cannot claim for the value of services rendered or the...
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