6.2 different types of breaches (slides).pptx

Principles of Business Law TOPIC 6: PERFORMANCE AND BREACH TYPES OF BREACH Different kinds of breach  Non-performance.  Partial performance:  Substantial performance.  Less than substantial performance.  Late performance.  Anticipatory breach. All of the above involv...

Principles of Business Law TOPIC 6: PERFORMANCE AND BREACH TYPES OF BREACH Different kinds of breach  Non-performance.  Partial performance:  Substantial performance.  Less than substantial performance.  Late performance.  Anticipatory breach. All of the above involve a breach of contract. In the next topic (week 7 – remedies for breach) we will see that whether a party can terminate depends upon the nature of the term and the type of breach. Different kinds of breach: Non-performance  Non-performance describes a complete failure to perform.  There is non-performance where the time for performance arrives and  nothing at all is done; or  something is done but it bears no relation to what was undertaken.  Varley v Whipp (topic 5) provides an example of non-performance. Different kinds of breach: Partial performance  Anything less than complete performance is partial performance.  Although part of the obligation has been met, partial performance still amounts to breach.  There are two types of partial performance:  Substantial performance;  Less than substantial performance. Substantial Performance: Hoenig v Isaacs FPBCL p 366-7 Facts  H was contracted to paint I’s apartment and supply some furniture for £750.  The painting work was done poorly, and it cost £55 to pay another workman to rectify the defects.  I paid only £400 to H because I believed the work to be defective.  H sued for the balance of the agreed price, which he was only entitled to if he had substantially performed the contract. Issue  Had H substantially performed the contract? Substantial Performance: Hoenig v Isaacs (ctd) Decision/Reasoning  Although H had not performed perfectly, the faults were easily fixed.  Thus, H substantially performed the contract.  Whilst there had been substantial performance, and H was thus entitled to the contract price, I was entitled to deduct the £55 he had paid to have the defects remedied from the amount payable to H. Less than substantial performance: Connor v Stainton FPBCL 339 Facts  S agreed to build a fence for C – the fence was to be three miles long with posts 12 feet apart.  Many of the posts were more than 12 feet apart (and in some cases up to 18 feet apart).  When S claimed payment, C refused on the basis that S had provided less than substantial performance. Issue  Had S substantially performed the contract? Less than substantial performance: Connor v Stainton (ctd) Decision  S had not substantially performed the contract. Reason  It is not sufficient to do something materially different, even if what is done is just as good as what is promised.  Anything more than a trivial shortcoming will involve less than substantial performance. Less than substantial performance: Steele v Tardiani FPBCL p 421 Facts  T was contracted to cut firewood for S.  The contract provided for payment of six shillings per ton of wood cut. The wood was to be cut into six-foot lengths and split six inches in diameter.  T cut the firewood but split it into pieces ranging from six to 15 inches in diameter. Issue  Had T substantially performed the contract? Less than substantial performance: Steele v Tardiani (ctd) Decision  T had not substantially performed the contract. Reason  T’s performance departed from that required by the contract in a significant way. Different kinds of breach: Late performance Failure to perform on time amounts to a breach of contract even if the obligation is performed at a later date. Different kinds of breach: Anticipatory breach  Where a party indicates, before the time for performance, that they are unable or unwilling to perform the contract, this is called an anticipatory breach.  Anticipatory breaches are also sometimes referred to as repudiation.  The consequences for anticipatory breach are the same as for actual breach. Anticipatory breach: Hochster v De La Tour FPBCL p 365 Facts  D engaged H as a courier.  Three weeks before the day H was to commence working for D, D informed H that his services were no longer required.  H sued D for breach of contract a week before the contract was due to commence. Issue  As the time had not yet arrived for performance, had D breached the contract at the time H commenced his action? Anticipatory breach: Hochster v De La Tour Decision/Reason  By informing H that his services were no longer required three weeks before the contract was due to commence, D engaged in an anticipatory breach.  H was entitled to sue for breach even though at the time the action was commenced, there had not been an actual breach (only an anticipatory breach).