Contract Law Notes PDF

A contract can be discharged by: Performance; Agreement; Abandonment; Failure of contingent condition; Operation of Law; Assignment; Novation; Breach; Repudiation; Delay; and Frustration. Time of performance: - Contracts may stipulate a time for performance - Time may be 'of the essence' -...

A contract can be discharged by: Performance; Agreement; Abandonment; Failure of contingent condition; Operation of Law; Assignment; Novation; Breach; Repudiation; Delay; and Frustration. Time of performance: - Contracts may stipulate a time for performance - Time may be 'of the essence' - Where no time is stipulated courts will impose a 'reasonable time'. - What is 'reasonable' depends on the nature of goods, nature of the obligations, etc. Order of performance: - Some contracts stipulate an order in which obligations are to be performed. - If not -- order will be determined by the nature of the obligations. Types of obligations: - Independent obligations: Parties must perform irrespective of the other party's obligations. - Dependent and concurrent: Obligations must be performed at the same time. - Dependent obligations: One party must perform their obligation before the other party. For example, in the case of Julia and Bruce, Julia has to complete all her performances before Bruce 'performs' her benefit of the four months of free classes. Standard of performance: Exact performance: General rule: In order to discharge the contract, performance of the contract must be exact. -- Cutter v Powell (1795) 101 ER 573. Many exceptions to exact performance - Divisible contracts - De minimis rule - Substantial performance - Acceptance of partial performance Divisible obligations - Entire obligations: Where complete and exact performance is required before the contract price is to be paid. - Cutter v Powell (1795) 101 ER 573 - Divisible obligations: Contract split into separate obligations, each one capable of being paid for after completion. - Steele v Tardiani (1946) 72 CLR 386 - Property Law Act 1974 (QLD) ss 231, 232 - Nemeth v Bayswater Road Pty Ltd \[1988\] 2 Qd R 406 De minimis non curat lex - "The law does not concern itself with rifles" - Shipton Anderson & Co v Weil Bros & Co \[1912\] 1 KB 574. Substantial performance - A promisor who substantially performs a contract will be entitled to claim the contract price subject to a deduction for defects in the performance. - Doctrine does not apply to expressly stated entire contracts, which require exact performance (condition precedent). - Hoenig v Isaacs \[1952\] 2 All ER 176. - Facts to consider: - Nature of defects - Cost of rectifying the defect compared to contract price Acceptance of partial performance - A free and willing acceptance of partial performance of the contract implies a promise to pay for the part performance. Alternative remedies to claiming the contract price - Damages for breach of contract. - Quantum Meruit -- for the reasonable value of services performed. Quantum Meruit - Restitutionary claim based on principle of unjust enrichment - Available only where there is no subsisting contract between the parties, i.e. - no contract - void, unenforceable contract - contract with no price stipulated - Elements - Plaintiff (ptf) must provide benefit to the defendant (dft). - Benefit must be provided at the expense of the ptf. - Unjust for dft to retain the benefit. - Dft must have a choice. - Ptf must not be in breach. - Sumpter v Hedges \[1898\] 1 QB 673. - Steele v Tardiani (1946) 72 CLR 386. Discharge by agreement Can occur by: - Abandonment - Prior agreement under the original contract - Subsequent agreement; accord and satisfaction. Prior agreement - By express terms -- may refer to: - Period of notice / termination at will - Procedure to be followed - By implied terms *- Crawford Fitting Co v Sydney Valve & Fitting Co\ (1988) 14 NSWLR 438.* - " the chief purpose of a notice for a reasonable period... is to\ enable the parties to bring to an end, in an orderly way\ \[their\] relationship which has existed for a reasonable period\ so that they will have a reasonable opportunity to enter into\ alternative arrangements and to wind up matters which arise\ out of their relationship." What is meant by discharge of contract by performance. One party is excused from further performance of their obligations under the contract. There is nothing further that the law requires that party to do; Contract has been performed completely to the satisfaction of the parties. Consider time of performance, order of performance and standard of performance. PASS slides: Week 5: **there are 11 types of ways a contract may be discharged... The way it is discharged depends on whether obligations stand, whether damages are awarded or whether the contract is merely set aside.** **1 of 11 ways to discharge a contract** Performance: - Where the contract is performed in the time stipulated by the contract (or a reasonable time), the order of performance is correct, and the standard of performance is exact = discharge - ENTIRE performance (the whole contract is performed) - EXACT performance (each obligation is performed exactly -\> UNLESS: the divisibility rule applies e.g., where a contract was to do something for 6 months but only 5 months were done. The contract can be divided by months and the party is entitled to payment for those 5 months. 1. De minimis (defect only minor) 2. Substantial performance (one party paid contract price minus cost of rectification where the fault is minor) 3. Partial performance (party agrees to accept less money for less work in return) 4. Quantum meruit (where contract not fully performed but it would be unjust to not give the performer any benefit) **2 of 11 ways to discharge a contract** **AGREEMENT** - **May be by prior agreement** - **Where there is a term that states contract can be terminated whenever (e.g., employment contract)** - **Abandonment** - **Where it is implied parties intended to abandon the contract (no performance for a lengthy period etc.)** - **Subsequent Agreement** - **Made after contract formation -- has all the elements of a contract** - **Failure of either a condition precedent or subsequent**