Termination of a Contract - Law

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Part A

A contract may be discharged or brought to an end at any time after formation and there are several ways in which this can happen. One party may avoid a contract – for example, for unconscionable conduct by the other; one party may terminate the contract before performance is complete – for example, for breach; or the contract may be performed to the satisfaction of the parties.
The contract of sale that takes place at a supermarket checkout is for all purposes completed at the time the money is paid and the goods are given to the customer. The rights attached to the contract persist for longer; for example, it is an implied term of the contract that the goods are of merchantable quality and whether this is satisfied might not become known for some time after the check out transaction.

When a contract is terminated, the future rights and obligations of all parties cease, but the contract itself remains in existence in the sense that the rights and liabilities arising prior to termination may still be pursued. Where appropriate, damages are assessed on the basis of the contract and some terms may still be enforced (Pentony, Graw, Lennard & Parker, 1999).

Termination by performance

This is when contractual obligations are fulfilled exactly as stated. Exceptions to the rule are partial and dividable performance, which must be accepted by the parties concerned. Also prevented and substantial performance allows recovery (Khoury & Yamouni, 1998).

In Sumpter v Hedges , Sumpter agreed to build 2 houses on Hedges land for the sum of 656. Work to the value of 336 had been done when Sumpter advised he wished to terminate the contract. Sumpter’s claim was not successful. The contract was a lump sum or an entire contract, and its price could not be recovered until the work was done. The builder could not claim for part payment under a quantum meruit as the owner was not responsible for the builder’s failure to complete, nor part...
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