LAW4004
DISCHARGE OF CONTRACT
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Contracts may be discharged by:
Performance
Breach
PERFORMANCE & BREACH: the mirror image
PERFORMANCE under the common law
General rule: Performance must be exactly according to the terms of the
contract (but note de minimis non curat lex - the law does not concern itself
with trifles - common law principle whereby judges will not sit in judgment of
extremely minor transgressions of the law).
Re Moore & Co and Landauer & Co. (1921) 2 KB 519
Contract to buy 3000 tins of canned fruit in cases containing 30 tins – about half
the consignment was packed in cases containing 24 tins, although in total the
right quantity was delivered.
Held: Although this made no difference to the market value of the goods, the sale
was covered by the Sale of Goods Act, which stated that goods sold by
description must correspond with that description. The delivery sent did not, so
the buyers were entitled to reject the whole consignment.
Partial performance of entire contracts
Payment conditional upon complete performance - so nothing can be recovered
for incomplete performance.
“If a shoemaker agrees to make a pair of shoes, he cannot offer you one shoe
and ask you to pay half the price.”
Sir George Jessel MR in Re Hall & Barker (1878) 9 Ch D 538 at p. 545
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Cutter v Powell (1795) 6 Term Rep 320; 101 ER 573 (KB)
A sailor was to be paid 30 guineas for acting as second mate on a voyage from
Jamaica to Liverpool but he died 19 days out from Liverpool, having completed
most of the voyage (which took about 9 weeks). His widow sued for the value of
the work that he had completed before his death.
Held: the contract required entire performance and, as he had not completed
performance, his widow could claim nothing.
Vigers v Cook [1919] 2KB 475
C funeral directors had failed to vent a lead coffin, used for a body in an
advanced state of decomposition. The coffin burst and the smell was so
offensive that the church service had to proceed without the coffin. D refused to
pay the funeral directors.
Held: A funeral package is unique and if one single component of that package
falls down, then the whole contract has been breached.
EXCEPTIONS TO THE ENTIRE PERFORMANCE RULE:
Although contracts for the sale of goods are usually entire, many other contracts
provide exceptions to the rule:
(1) Contract is not entire but divisible (severable)
E.g. some building contracts where stage payments may be due before the
project is complete. In addition, where an employee is to be paid weekly/monthly
the rule in Cutter v. Powell will not apply.
(2) Voluntarily acceptance of partial performance by other party
Section 30 Sale of Goods Act 1979.
Sumpter v Hedges (1898) 1 QB 673 (CA)
Contract to build 2 houses and stables on D's land for £565. C failed to complete
the work so D completed it himself using materials that C had left on the land. C
claimed payment on a quantum meruit for: (a) The work that he had completed;
and (b) the materials that D had used.
Held: D was not choosing to accept part performance and had no real alternative
but to complete the building. However, he did not have to use the materials left
behind, so C was allowed to claim for these.
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(3) Prevention of performance by other party
Planché v Colburn (1831) 131 ER 305
C agreed to write a book for D on costume and armour, for a fee of £100. The
book was to be part of a series. After C had researched and written about half of
the book, D decided not to publish the series.
Held: C was entitled to a quantum meruit of £50.
(4) Substantial performance
The doctrine in Boone v. Eyre (1779) where C has substantially, though not
exactly, performed his part of the contract. D remains liable to perform (pay) but
he will be able to sue C for damages for C’s deviation from exact performance.
(Compare breach of warranty)
Hoenig v Isaacs (1952) 2 All ER 176 (CA)
C contracted to refurbish a flat for £750 ‘net cash as work proceeds and balance
on completion’. D paid £400 in advance but refused to pay the remaining £350,
arguing that the design and workmanship were defective. The work was slightly
defective but the cost to remedy the defect would only be £56.
CA held: C had substantially performed and was entitled to the balance of the
contract price, less the £56 needed to remedy the defects.
Cf Bolton v Mahadeva (1972) 2 All ER 1322 (CA)
C contracted to install a central heating system in the D’s house for £560. He
installed system but it was unable to heat the house adequately and emitted
fumes. D refused to pay and C sued for the contract price, less £174 on the
basis that he had substantially performed.
CA held: claim was rejected. The proportion of the contract price required to put
the work right was clearly greater than that in Hoenig, and the court considered
that substantial performance had not taken place.
NB Under s49 CRA 2015 there is an implied term that the trader will perform the
service with reasonable care and skill. If the service does not conform to the
contract, s55(1) gives the consumer the right to require the trader to perform the
service again and to bear the costs of this (s55(2)). If the trader fails to do so
within a reasonable time and without significant inconvenience, s56(1) gives the
consumer the right to reduce the payment by an appropriate amount, including
the right to receive a refund for anything already paid above that.
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Offer to perform / Tender of performance
Where one party cannot perform without the other party’s cooperation, rejection
of an offer to perform will release the party tendering performance from any
other obligation.
Startup v Macdonald (1843) 6 M& G 593
C agreed to deliver 10 tons of oil to D during last 14 days of March. Delivery
was tendered late on 31st March and D refused to accept or pay for it.
Held: C had tried to carry out their obligations under the contract. They were
entitled to claim damages from D for their refusal to accept and pay for the
goods.
NB On the same facts a court might take a different approach today, as s29(5)
Sale of Goods Act 1979 provides that delivery must be made at a reasonable
hour. However, the offer to perform principle still applies.
Breach of terms concerning time for performance
Time for performance is not ‘of the essence’ of a contract, unless this is the
intention of the parties. Thus it will be ‘of the essence’ if:
It is expressly agreed in the contract; or
The nature of the contract or the surrounding circumstances show that it is
imperative that the exact date for performance is observed; or
Where a contract is not originally one in which time is of the essence but,
following a delay in performance, a contracting party gives notice of a time
limit on performance. The contract then becomes one where time is of the
essence (see Charles Rickards Ltd v Oppenheim (1950) 1KB 616).
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