Business Law - Discharge of Contract

Discharge of contract

Contract can be discharge in four different ways. They are by performance ,frustration,agreement and repudiation.

the contract discharge by performance is the most common method of bringing a contract to an end is by performance,the general rule is that if a contract is to be discharged by performance , the parties must perform their obligation fully and precisely and we called it precise performance. Over the years the court have noticed that if applied the rule of full and precise performance strictly,may cause unfairness. So here is some exception to precise performance rule which is De minimis rule, Divisible contracts, substantial performance , prevented performance , and acceptance of partial performance.

-Deminimis rule is if the deviation in performance is mocroscopic, then the contract is deemed to have been performed fully and precisely

-Divisible contracts mean each promise can therefore be performed separated and payment can then can be claimed for the part completed

-Substantial performance mean if one party has substantially performed what he promised, with only a minor variation from the term of the contract, then he can claim payment to the value of his part performance.

Where part performance has been voluntarily accepted or complete performance is prevented by the other party, then the plaintiff can claim on quantum meruit for the value of the work completed . In the case of Planche v Colburn could help us more understanding the meaning of quantum meruit. P had a contract to write a volume in a series to be published by C. P had started on the book when C subsequently cancelled the series, It was held that P could recover reasonable remuneration for the work done.

Discharged by agreement can be in 2 way , the first one is as a term of the contract. For example, in a contract of employment, either party has the right to terminate the agreement upon giving the notice required. the second one is in substitutiong the orginal agreement with a new agreement or as a variation. For example, in a situation where the buyer and seller agree to cancel an order for goods yet to be delivered, the seller need not supply the goods and the buyer need not pay for it

Discharge by frustration refers to the situation where a supervening event occurs, for which neither is responsible because of what they had agree is radically different from that orginally comtemplated. Basically when the supervening event occured and no partied fault , the contract must be radical change in circumstances and it will go frustration .Example case will be Davis contractors V Fareham

Duscharge by repudiation also mean breach of contract. This is where one party indicate that he does not intend to carry out the whole or part of his obligation under the  contract, the contract is discharged and the repudiation is clear and in respect of vital obligation in the contract. If he indicate his intention not to carry out the whole or part of his obligation under the contract before the time due for performance of the contract , it will be called an anticipatory breach. If on the other hand, the defaulting party indicate this intention of his only when the time for the performance of the contract arrives, then it will be an actual breach of contact .