Types of Discharge: Performance, Breach, Agreement, and Frustration
CONTRACT – DISCHARGE (Pg 161)
Discharge refers to a termination of a contract. After a contract is discharged, the parties are relieved of their obligations under the contract. There are four ways Performance, Breach, Agreement and Frustration.
Performance
Performance – discharging a contract by performing all obligations as stipulated in the contract.
Precise Performance
Cutter v Powell (1795) The court held that payment was conditional upon the completion of the voyage; payment even part payment may not be made.
In Re Moore & Co and Landauer & Co (1921) The court held that the buyer was lawfully entitled to reject the shipment on the basis of less than full and precise performance.
Exceptions to the Precise Performance Rule
Over the years, the courts have acknowledged that this rule of full and precise performance, if applied strictly, may cause unfairness.
De minimis rule
If the deviation in performance is microscopic, then the contract is deemed to have been performed fully and precisely. What is microscopic is depended on the facts of the case. Acros Ltd v E A Ronaasen & Sons (1933) The HOL held that although the staves were of merchantable quality and could be used to manufacture cement barrels, the contract was breached because the staves did not correspond to the description of the goods.
Divisible contracts
A contract may in certain circumstance be viewed as several independent obligations. These may be deemed as severable sub-contracts. e.g. Employment Contracts Cutter v Powell (1795) in this case, the employment contract was needed to be completed in full before payment.
Substantial performance
Boone v Eyre (1779) According to the principle in the case, where a promisor has substantially performed his obligations under a contract, he can claim the agreed payment, less the amount necessary to make good the defect.
TWO cautionary remarks –
1. If the contact is an entire contract (as opposed to a divisible one) and
Discharge refers to a termination of a contract. After a contract is discharged, the parties are relieved of their obligations under the contract. There are four ways Performance, Breach, Agreement and Frustration.
Performance
Performance – discharging a contract by performing all obligations as stipulated in the contract.
Precise Performance
Cutter v Powell (1795) The court held that payment was conditional upon the completion of the voyage; payment even part payment may not be made.
In Re Moore & Co and Landauer & Co (1921) The court held that the buyer was lawfully entitled to reject the shipment on the basis of less than full and precise performance.
Exceptions to the Precise Performance Rule
Over the years, the courts have acknowledged that this rule of full and precise performance, if applied strictly, may cause unfairness.
De minimis rule
If the deviation in performance is microscopic, then the contract is deemed to have been performed fully and precisely. What is microscopic is depended on the facts of the case. Acros Ltd v E A Ronaasen & Sons (1933) The HOL held that although the staves were of merchantable quality and could be used to manufacture cement barrels, the contract was breached because the staves did not correspond to the description of the goods.
Divisible contracts
A contract may in certain circumstance be viewed as several independent obligations. These may be deemed as severable sub-contracts. e.g. Employment Contracts Cutter v Powell (1795) in this case, the employment contract was needed to be completed in full before payment.
Substantial performance
Boone v Eyre (1779) According to the principle in the case, where a promisor has substantially performed his obligations under a contract, he can claim the agreed payment, less the amount necessary to make good the defect.
TWO cautionary remarks –
1. If the contact is an entire contract (as opposed to a divisible one) and