Discharge by Breach

• The general strict rule for discharge of contract is that performance must be complete (Cutter v Powell) and exact (Re Moore) for payment to be made. However, there is a exceptions to this where discharge is a result of breach of contract.
• Discharge by breach of contract occurs when one party fails to perform his obligations under a contract either totally or partly. This can be an 'Actual' breach or 'Anticipatory' breach. The available remedy is dependent on the type of term which his breached.
• Actual breach occurs where a party to a contract fails to perform their contractual obligations. Here, the outcome depends on the type of term that has been breached.

  If the term is a condition of the contract (Poussard v Spiers), this is seen as more serious and gives the claimant a choice of what they can do in the situation;

  • Continue with the contract and sue for damages,
  • Repudiate (withdraw) from the contract or
  • Repudiate AND sue for damages.
• If the claimant wants to repudiate and withdraw from the contract, they must ensure that the breach was of a condition and it was sufficiently serious (Rice v Great Yarmouth). If not, they will be in breach.
• If the term breached is just an ordinary contractual term, the claimant's options are limited.

  Breach of a warranty (Bettini v Guy) or breach of an innominate term (Hong Kong Fir v Kawasaki) will result in a claim for damages only. The claimant is unable to repudiate the contract.
• Anticipatory breach occurs when a breach has not yet happened, but, one of the parties to a contract is aware that the other is going to breach the contract in the future. On discovery of this knowledge, the claimant has a number of options available to them.
• Firstly, they can terminate the contract and sue the defendant for damages immediately (Hochester v de la Tour). As illustrated in Geden Operations v Dry Bulk Handy Holdings, it must be clear that the other party intends to breach the contract. Any uncertainty or ambiguity is not enough for anticipatory breach.
• Alternatively, they can wait for the breach to occur, then sue. However, delay may result in Frustration of the contract, Avery v Bowden.
• Or, they can repudiate and withdraw from the contractual obligations.
• Finally, they can perform the contract anyway; White & Carter v McGregor.