chpt 5

• Ways a contract can be discharged

  • Performance
  • Agreement
  • Frustration
• Discharge of contract by performance

  1. Both parties perform their contract duties or obligations according to the terms of the contract

  2. Parties remain on good terms with each other
• Time of contract performance


  • If time is "of the essence", must comply strictly with contract timeline
  • If no specific dates, must be performed within a reasonable time
• General rule for contract performance

  Contracting party must completely perform exactly what was agreed to discharge their contract liability and claim their contract benefit
• Substantial performance of contract


  Court considers the

  1) nature of defects

  2) outstanding work not done

  3) ratio between cost VS contract price

  4) ratio between quality of work done vs contract price
• Discharge of contract by agreement

  1. New contract to replace previous contract

  2. Prior agreement to discharge contract on occurrence of event
• Discharge by new contract

  • Both new and previous contracts must satisfy legal requirements
  • Parties must exchange valuable consideration
• Discharge of contract by frustration

  • Unforeseen circumstances arise making performance impossible or illegal
  • Contract is automatically terminated
  • frustration may occur any time after the contract was made
  • Under Frustrated Contract Act, any money paid before contract was frustrated may be returned
  • if one party enjoys a valuable benefit from the contract -> he has to pay a reasonable sum of it
• Remedies for breach of contract


  Aim to restore the injured party to the position they would have been in if the contract was properly performed

  both parties r still in the contract
• Damages

  • Available as of right to the injured party
  • Amount depends on losses suffered
  • whether the injured party has taken reasonable steps to limit the extent of his loss
  • Based on market price where there is an available market
• Liquidated damages

  • Specific damages agreed in advance as a genuine pre-estimate of likely loss
  • If requirements met, can claim without proving actual loss
• Specific performance

  • Court order commanding performance of contract duties
  • Equitable remedy at court's discretion, not available as of right
  • remedy is not available if the contract involves personal services or constant supervision (eg building construction contract)
• Injunctions

  • Court order forbidding breach of negative contract duty