KAMPALA INTERNATIONAL UNIVERSITY

SCHOOL OF LAW
COURSE : LLB
COURSE UNIT : LAW OF CONTRACTS 2
CODE : LLB1204
YEAR : ONE
SEMESTER : TWO
LECTURER : MR. MARTIAL ANDREW

GROUP THREE
NAME REG. NO SIGNATURE

NGIRANI SHADRACH 2024-01-24107

NATAMBA CARLOLINE 2024-01-24269
EYIA FRIDAH FAITH 2024-01-23630
ABUR RONAH SCOVIA 2024-01-24742
NAMYALO HODETAH 2024-01-23639
KIZZA WAMALA 2024-01-23331
MUTONYI HILDAH 2024-01-24216
NANKUMBA MARIA 2024-01-24210
VANESSA
NALUBOWA ROBINAH 2024-01-23884

1
 DISCHARGE OF A CONTRACT.
Discharge of a contract generally means that the obligations of the parties have
come to end. The contract may be discharged in four ways: by performance; by
agreement; by breach; and under the doctrine of frustration.
DISCHARGE OF A CONTRACT BY PERFORMANCE
Section 32(1) of the Contracts Act Cap 284 provides that parties to the contract
shall perform or offer to perform their respective promises, unless the
performance is dispensed with or excused under this Act or any other law.
Where parties to a contract have performed their duties or fulfilled their
respective obligations under the contract, the contract is discharged or brought
to an end. As a general rule, performance must be complete, i.e., in accordance
with the terms of the contract. Anything short of this would amount to a
breach.
This is where both parties have performed the obligations, which the contract
placed upon t hem. Performance must be completed i.e. it must be in
accordance with the terms of the contract if the Performance is incomplete.
(contrary to the terms/the defaulting party may be sued for damages).

GENERAL RULE
The performance must be carried out strictly in accordance
with the terms of the contract. Performance must be precise
and exact.
The effect of the general rule is that where a contract provides for payment by
one party after performance by the other, no. action for payment may be
maintained until performance is complete.
When the parties to a contract fulfil the obligations arising under the contract
within the time and manner prescribed, then the contract is discharged by
performance.
The Act provides that the parties to a contract shall perform or offer to
perform, their respective promises, unless the performance is dispensed with
or excused under this Act or any other law’.2 For example, if Mohamed
contracts to sell to Kenneth 100 bags of white beans, and delivers 80 bags of

2
white beans and 20 bags of brown beans, then Kenneth may allege that the
contract has not been duly performed and reject the goods.
In Re Moore & Co v Landauer & Co, 3 there was a contract for the sale of tins of
canned fruit which were to be packed in cases of 30 tins. On delivery, it was
discovered that a number of cases contained only 24 tins. The court held that
the defendants had a right to reject the whole consignment albeit the total
number of tins delivered was correct.
The general rule that performance should be precise and exact is so strict that
a party who has only partially performed his or her obligations cannot recover
anything for the work he or she has done. The effect of this strict rule is
unjustly to enrich the party who has taken advantage of the partial
performance. In the case of Cutter V Powell, there was a contract by the
seaman to serve on a ship sailing from Jamaica to Liverpool. However, the
seaman died at the sea before reaching Liverpool. The defendant refused to
pay for the work complete before his death and was sued by the widow for a
portion of the agreed sum. Court held that even though the sailor was not to
blame for failure to perform the contract, the express terms of the contract
renders payment conditional on the full performance of the contract. Thus, on
a construction of the express terms of the contract, no payment was due for
partial performance. (it was held that her action would fail since the terms of
the contract meant that he would be paid only if he sailed the ship to
Liverpool.)
Because of the harshness of the rule, over the years the courts and the
legislature developed some mitigating factors by way of exceptions.
1. SUBSTANTIAL PERFORMANCE
The doctrine of substantial performance arises where a person performs his
or her side of the bargain but there are minor defects in the performance of
the contract, under the substantial performance rule, the company would
be paid for the substantial work done on the project.
The doctrine of substantial performance arises where a person performs his or
her side of the bargain but there are minor defects in the performance of the
contract. For example, Charles Co. Ltd, a company dealing in the business of
real estate and construction, agreed to erect a two-storey house for Jennifer at
500,000,000 shillings. Jennifer paid a deposit of 300,000,000 shillings. The
house was supposed to be completed one year from the date of the

3
agreement. The company constructed the house and remained with only
painting, which required about 40,000,000 shillings to complete. Nine months
into the construction, the company experienced financial problems. When the
managing director wrote to Jennifer requesting for the balance, she refused to
pay, arguing that the company had breached the contract by failing to
complete the house. Basing on the strict performance rule, Charles Co. Ltd
would not be entitled to any payment. However, under the substantial
performance rule, the company would be paid for the substantial work done
on the project.
In Hoening V Isaacs (1952)2 ALL ER 176, there was a contract by the plaintiff to
decorate and furnish the defendant's flat for 750 pounds. The defendant
alleged that the workmanship was poor and defective but paid 400 pounds.
The plaintiff sued for the balance. The court found that there were defects in
the work but these could be cured for 55 pounds. The Court awarded the
plaintiff the full amount of the contract less the cost of putting right the defects
plus the amount already paid.

2. PARTIAL PERFORMANCE
This arises where a person only partially performs his or her side of the
contract but the other party rather than reject the work, decides to accept
what has actually been done.
In such a case if the promise accepts the partial work done, he or she will be
obliged to pay for the work on a quantum meruit basis. The Latin principle of
quantum meruit means as much as deserved or what one has earned. It
basically means payment for the actual or reasonable services rendered.

As noted earlier, performance of a contractual obligation must be complete,

and any partial performance would only amount to a breach. Now, where there
is a partial performance, the contractor cannot claim for the value of what he
has done as he is clearly in breach.

In the case of Sumpter v. Hedges, the plaintiff who had agreed to erect upon
the defendant’s land two houses and stable for 565 pounds, did part of the
work worth 333 pounds and then abandoned the contract. The defendant

4
himself completed the buildings. The court held that the plaintiff could not
recover for the value of the work done.

The rule as to complete performance as enunciated in Cutter v. Powell has

been qualified by the following exceptions:
1) Acceptance of partial performance
Where the defendant accepted the partial performance by the plaintiff, then
he would be liable to pay for that part of the contract that was performed, on
the basis of quantum meruit.
In Omoleye v Okeowo, the plaintiff agreed to supply 6,000 yards of textile
materials to the defendant at the rate of 41 shillings per yard. The defendant
deposited 2,500 pounds for this purpose. The plaintiff was unable to obtain the
stipulated material and unilaterally supplied 2,910 ½ yards of a different and
more expensive material at 50 shillings per yard. The defendant was entitled to
reject the goods, but he took delivery of the substituted material and went
ahead to resell it. The court held that the plaintiff was obligated to pay for the
material accepted from the defendant at the contractual rate of 41 shillings per
yard.
2) Prevention of performance or completion:
If in the execution of the contract, the plaintiff was prevented from either
performing or completing the performance of his obligations under the
contract, he shall be entitled to either claim for damages or for what he had
actually done on the basis of quantum meruit. This was the ratio in Planche
v. Colburn111 where the plaintiff was engaged by the defendant to write a
book. "The Juvenile Library” and after he had gone far into the book, the
defendant abandoned the project. The plaintiff was held entitled to the
value of what he had written on the basis of quantum meruit.

3) Severable / Divisible Contract:

Where the contract between the parties is of a severable or divisible nature,
i.e., it is made us of severable parts that can be conveniently dismembered
from the whole, then the performance of some of the parts would entitle the
party to recover the value of what has been performed on quantum meruit

5
basis. For instance, a contract for the supply of stationeries - if the plaintiff was
able to supply notebooks, biros, duplicating papers, and ink, but could net
supply stapler, staple, pins and diaries because these latter items could not be
found anywhere in the market as they were out of stock, then he should be
able to recover the sum due for the items duly supplied. Whether a contract is
divisible or not will depend on the intention of the parties and the nature of
the contract itself.

Accordingly, in Ekwunife Wayne (W/A) Ltd.,112 the appellant was contracted to

lay underground pumps for a petrol station and also to electrify them on
completion. It was subsequently discovered that there was no electricity in that
area and therefore he could not perform this part of the contract. It was held
that he could recover for what he had done under the contract. This principle
could also be applied where the particular contract is illegal or void. Thus, the
Court can severe the lawful or valid aspect of the contract from the unlawful or
illegal contract under the principle of severance.
3. TENDER OF PERFORMANCE
Tender of performance refers to an attempted performance of an obligation. If
a party to a contract attempts or offers to perform but the performance is
rejected by the other party, he would be deemed to have performed and is
discharged from obligations, and may also sue for breach of contract. This is
akin to prevention of performance earlier discussed.
The Sale of Goods and Supply of Services Act, 2017 also provides that it is the
duty of the seller to deliver the goods, and for the buyer to accept and pay for
the goods, in accordance with the terms of the contract of sale. Thus, if the
seller has promised to deliver goods to the buyer and fulfils the promise, and
the buyer refuses to accept delivery, the seller may sue for breach of contract.
However, the seller’s tender of performance must conform to the rules of
delivery, especially the requirement that ‘tender of delivery may be treated as
ineffectual unless made at a reasonable hour and what is a reasonable hour is a
question of fact. The buyer must also have a reasonable opportunity to see
that what is delivered is what the seller was bound to deliver in terms of
quality, description, fitness for purpose, and quantity.
In Startup v. MacDonald the contract was for the supply of oil "within the last
14 days of March". The plaintiff delivered the goods by 8:30p.m on the 31st

6
March which was rejected by the plaintiff as being too late. The Court held the
tender as being valid performance. In commercial contracts “time clauses" are
normally regarded as crucial to the performance obligation and as such are
classified as conditions, breach of which entitle the non-breaching party to
treat his obligations as repudiated.
Bunge Corp v Tradax Export SA [1981] 2 All ER 513 In this case, a contract for
the purchase of 15,000 tons of Soya beans was to be shipped in 3 shipments of
5,000 tons. The buyers were to provide a cargo vessel at the port. Buyer was
also required to give 15 days notice to the readiness of the ship.
On one occasion, they gave this notice four days to late. Breach of contract or
warranty? In these four days, the value decreases by $60.ton The sellers sought
to repudiate for breach. Buyers said no serious consequences here, so no right
to repudiate. Other commercial background reasons exploitation of legal
technicalities. House of Lords said that time clauses were so fundamental to
the contract that they were in fact conditions as to commercial certainty.
Therefore, the seller was entitled to repudiate the contract for breach.
In some consumer contracts this requirement is relaxed and such clauses may
be treated as warranties, breach of which does not discharge the non
breaching party of their performance obligations but instead merely gives a
right to damages.
Where there has been only partial or defective performance, the non
breaching party may be prevented form repudiating the contract under the
doctrine of “substantial performance". This will only operate where the breach
is trivial in the context of the overall guidance. The non-breaching party instead
may claim damages, a set-off against the contract price.
The doctrine is best illustrated by the following case:
Hoenig v Isaacs [1952] 2 All ER 176 Plaintiff agreed to decorate flats for £750.
Some of the work was defective. The defendant had already paid £400, and
refused to pay the balance on the grounds of partial defective performance. To
put this right, would cost £56. Court of Appeal said that the plaintiff was
entitled to the £350 (i.e. the defendant was not able to be discharged because
there was substantial performance) less the £56 cost of the repair.
4 DIVISIBLE CONTRACTS

7
The general rule that performance must be precise and exact does not apply to
divisible contracts. A divisible contract is a contract in which partial
performance attracts an obligation to provide payment of part of the
consideration. For example, X agrees to supply 100 tons of maize to Y in ten
installments of 10 tons each. X delivers only two installments but becomes
broke. Under the notion of divisible contract, Y will be obliged to pay X the
moneys owed under the contract, that is for the two installments.
At common law, where performance is incomplete such party in default is not
entitled to any payment.
In the case of Sumter vs. Hedges (1898) 1 QB 673, CA, also cited in Max and
Young, “Cases and Material in Contract Law” at page 459, on the subject
“partial performance of an entire contract”, the Plaintiff builder who had
contracted with the Defendant to build two houses and stables on the
Defendant's land for the sum of 565 pounds, did part of the work, amounting
to about 333 pounds and had received payment of part of the price. He then
informed the Defendant that he had no money to continue with the work.
Collin LJ found that he had abandoned the contract. In other words, parties
must-fulfill their obligations in line with the terms of the contract and once
they have each done this, they are discharged or relieved from further
responsibilities to each another render the contract.
However, problems may arise where only one party has fully performed his
obligations and the other party is yet to perform his or has only partly
performed.
In such a situation, only the party that has performed fully is discharged the
other is not and may be sued for breach of contract. The party in breach may
allege that he was prevented from performing by the other party.

Further still, each party may blame his inability to perform on the other party
on the ground that by the terms of the contract the other was required to
perform first as a condition precedent lo his own performance, etc.
TIME AND PERFORMANCE
At common law, time was regarded as being of the essence of a contract,
unless agreed otherwise by the parties. Equity, on the other hand, did not
regard time as of the essence and would apply equitable remedies to the

8
contract even where there was failure to comply with the time fixed for
completion in the contract. However, equity regarded time to be of the essence
of the contract where the parties expressly stipulated those conditions as to
time had to be complied with; or the nature of the subject matter of the
contract or the surrounding circumstances showed that time should be
considered to be of the essence. Where time is of the essence of the contract,
any delay will amount to repudiation or avoidance of the contract.
In the case of Sharif Osman v Hajj Haruna Mulagwa the supreme court held
that the performance must be completed in accordance with the date agreed
upon in the contract.
In Adia Mines Vs John Mbiyo Nyonjoand other it was held that when time has
not been made the essence of the contract, its clear that in contracts for sale of
land and grant of leases, one parties cannot avoid the contract on the ground
of unreasonable delay by the other until has been served making time of the
essence.
Under the Sale of Goods and Supply of Services Act, time is not deemed to be
of the essence of the contract of sale or supply of services, unless a different
intention appears in the contract. According to this Act, whether any other
stipulation as to time is of the essence of the contract depends on the terms of
the contract. The Contracts Act also does not regard time as of the essence of
the contract unless the parties agreed that time shall be of essence. According
to the Act, the performance of a promise may be made in any manner and at
any time which a promise prescribes or sanctions and determination of what is
a proper time or place is a question of fact. Where time is not specified, the
promise shall be performed within a reasonable time. The promise may be
performed during hours of business of the agreed day at the agreed place.
Where time is of the essence and a party does not perform within the agreed
time, the other party may avoid or repudiate the contract and or claim
damages. However, the party may extend the time of performance of the
contract.
But as to whether one party is required to perform before the other is a matter
of the intentions of the parties as manifested in the terms or the nature of the
contract; i.e., whether there is a condition precedent or the obligations are
concurrent or to be performed simultaneously.

9
Where the obligations are concurrent, the parties perform at same time and no
one may sue the other for not starting first, unless he has performed his; but
where there is a condition precedent, the party obliged to perform that
condition must so perform before the other could perform his.

Furthermore, besides keeping to the terms of the contracts, the parties are
obliged to perform their respective duties within the agreed time.
If no time was agreed upon, they are required to perform within a reasonable
time - what is a reasonable time will depend "on the circumstances of the case
and the nature of the contract itself.
Whether time ‘is of the essence’ of the contract depends largely on the terms
of the contract. If by the terms of the contract time was stipulated for the
performance of the obligations, then the party performing must act within the
stipulated time. Otherwise, he would be in breach and the other party may
repudiate the contract or sue for damages.
In Panesar v. Popat time was made ‘of the essence’ in the contract for the
supply of furniture. The seller breached the time stipulation, and the buyer
extended the time by some days. The seller still could not supply at the agreed
date, whereupon the buyer repudiated the contract and refused subsequent
delivery. The Court held that the buyer was entitled to refuse delivery since
time was made of the essence of the contract.

10