DISCHARGE OF CONTRACT

• A contract may be discharged by four methods

  i. discharge by performance

  ii. discharge by agreement

  iii. discharge by breach

  iv. discharge by frustration
• describe discharge of contract by performance

  • The parties must perform exactly all the terms in the contract
  • If there is even the slightest variation from the terms of the contract, the other party can claim that the contract had not been performed

  (case)

  Bolton v Mahadeva

  a contractor installed central heating in a house for £560. When finished, the homeowner refused to pay, claiming the work was defective. The court found that the heating system indeed had serious flaws, including a faulty flue causing fumes and uneven heating. The court held that the contractor would not get pay
• describe discharge of contract by agreement

  • if a contract was created by agreement, it can also be ended by agreement
  • when the parties agree to end their contract, they also made a new agreement, which is end the contract
• there are types of agreement

  i. Accord and Satisfaction:

  • Both parties agree: "Let's forget about our old agreement and call it even."
  • This releases both sides from their original obligations.

  ii. Rescission and Substitution:

  • The original contract is canceled
  • A new contract takes its place, often with different terms.

  iii. Variation:

  • This is simply changing parts of the original contract.
  • The core agreement stays, but some details are modified.

  iv. Waiver:

  • "I won't insist that you follow the contract exactly."
  • For example, allowing a late payment without penalties.
• discharge by breach

  • failed to perform the terms of a contract = breach of contract
  • If one party failed or refused to perform any part of the contract, the other party may choose to either accept or reject the breach

  
  

  • rejects: he may then end the contract and take legal action
  • accepts: he cannot end the contract and sue for breach of contract (if he allows the party to continue with the contract)

  but he can still claim damages for losses suffered through the non-performance – section 40
• discharge by frustration

  • Frustration happens when something unexpected makes it impossible to carry out the contract, even though both parties still want to.
  • after the contract is made, something big happens, causing both parties cant continue to perform their contract
  • example: A singer falls seriously ill and can't perform at a scheduled concert.
• explain the impossible act

  section 57 (1) : an agreement to do an act impossible in itself is void

  • performance is impossible from the start
  • example: an agreement to bring a dead person back to life