Discharge of contract

• Discharge of contract


  Ending or terminating the contractual obligations or agreement
• Ways a contract can be discharged

  • Discharge by agreement
  • Discharge by breach
  • Discharge by frustration
  • Discharge by performance
• Discharge by agreement


  The parties agree to terminate a contract, so that one or both parties are released from their obligations
• Bilateral agreement


  • The assumption is that both parties are to gain a fresh but different benefit from a new agreement
• Unilateral agreement


  • The benefit is only to be gained by one party, who is therefore trying to convince the other party to let them off the obligations arising under the original agreement
• Discharge by breach


  Whenever a party fails to perform an obligation, or performs defectively (badly/unsatisfactorily) an obligation, or indicates in advance that they will not be performing as agreed
• Discharge by breach- case example:


  • Frost v Knight
• Discharge by frustration


  If after a contract is made, something happens, through no fault of the parties, to make its performance impossible
• Discharge by frustration- case example:


  • Krell v Henry
• Discharge by performance


  All the obligations under the contract have been met, and the obligations match the requirements of the contract completely
• Discharge by performance- case example:


  • Cutter v Powell
• If a contract requires entire performance, and a party fails to perform the contract in its entirety, they are entitled to nothing under the contract from the other party
• If a party has done substantially (largely) what was required under the contract, then the doctrine of substantial performance can apply
• A contract is severable when payment becomes due at various stages of performance, rather than in one lump sum when performance is completed
• If the other party prevents a party from carrying out his or her obligations because of some act or omission, then the rule in Cutter v Powell cannot apply
• Circumstances where the doctrine of frustration will operate

  • Impossibility
  • Illegality
  • Commercial sterilisation
• If the commercial purpose of the contract has disappeared as a result of the intervening event, the contract may be frustrated