Advanced Law of Contract Lecture 8 18/11/19
Breakdown and Liability
Discharge of a contractual obligation:
Agreement
Performance
Breach
Frustration
Discharge by agreement
Valid ONLY if freely consented by all parties, ie party to be released provides consideration
for the other party’s promise to release him:
• Bilateral discharge- consideration
• Unilateral discharge – deed, waiver, estoppel
Discharge by performance
Exact performance
Not exact performance
• Discharge depends on whether the term is a condition (we will return to this)
• Discharge depends on whether the obligation demands performance as a whole, or
whether severance is possible
Entire obligation: must be fully performed for discharge (or breach of condition)
Severable obligation: obligations separate from each other (or breach of warranty)
Discharge possible if is ‘substantial performance’
o Hoenig v Isaacs [1952] 2 All ER 176
o In relation to ‘entire’ obligations there is no scope for ‘substantial performance’ –
SWI Ltd v P&I Data Services Ltd [2007] EWCA Civ 663
Discharge by breach
Breach may discharge the other party from their obligation
Breach by A will discharge B from his/her obligation to perform if B’s performance is
conditional on A’s performance and:
• A totally refuses to perform at/before performance is due: repudiate/repudiatory
breach
A is in breach of a term classed as a condition
A’s breach deprives B of ‘substantially the whole benefit which it was intended that he
should receive’
Impact of A’s breach on B
• B is discharged from performing BUT choice is his:
- Choose to ignore A’s breach and performs
- Accepts A’s breach: repudiates the contract, which discharges A from the
obligation to perform
If a breach is committed, the party who is not in breach has a right to claim damages
regardless of the nature, seriousness of the breach, or whether the party responsible is
discharged
, Advanced Law of Contract Lecture 8 18/11/19
Discharge by Frustration
Can identify some elements of shadows- that point us towards mistake but when we look at
frustration, we will see that they are distinguished because mistake is before the contract and
frustration is after
Illustrated is John Walker 1976 case - concerned purchase of an old warehouse, purchasers had big
ideas what they will do to make it more valuable, danger is it a listing building which can affect what
you can do with that building, everyone knew it was an old and not listed building, the listing people
had shown an interest, before completion date the secretary of state listed the building, the impact
was huge, a lot of money difference between the value of what they would have liked to have done,
if was before the contract we look at mistake if after it is frustration- it was considered to be before
Paradine and Jane- established absolute contract
= frustration is a narrow doctrine
Frustration occurs if, after formation, performance is:
• Impossible, illegal, or radically different from expected
• Through no fault of either party
Frustration = a supervening event- the world imposes on contract
When can it be raised?
> Supervening impossibility
> Supervening illegality
> Frustration of commercial purpose
> Event unforeseen/unforseeable
Supervening impossibility:
• Subject matter destroyed – Taylor v Caldwell (1863) 3 B&S 826- music venue where the
performer contracting for a number of dates at the music venue, before we got to the dates,
the theatre burns down, absolute contract would say you still perform even though there is
a situation it does not make sense, look at implied intent- Blackburn looks at this on the
basis there must be an implied notion that the venue will still exist on performance day
• Death of a party to a personal contract- personal contract with employees
• Temporary impossibility – Pioneer Shipping Ltd v BTP Tioxide Ltd [1982] AC 724- delay
sufficient to destroy the commercial outcome- if the contract indicated an urgency and how
long the delay is etc
• Subject matter unavailable – even if only temporary – Jackson v Union Marine Ins. (1874)-
delays vs delays- shipping case- a contract for a ship to be used to transport goods Newport
to San Francisco, was a rush job, contract identified the ship needs to proceed at all cost, hit
a sandbank took months to float off and identify the damages needs to be repaired, couldn’t
set off, gave up on charter and found another vessel, the courts held that in this instance
they were entitled to do so because the clause identified it should proceed at all possible
dispatch and needs to carry out contract asap
Breakdown and Liability
Discharge of a contractual obligation:
Agreement
Performance
Breach
Frustration
Discharge by agreement
Valid ONLY if freely consented by all parties, ie party to be released provides consideration
for the other party’s promise to release him:
• Bilateral discharge- consideration
• Unilateral discharge – deed, waiver, estoppel
Discharge by performance
Exact performance
Not exact performance
• Discharge depends on whether the term is a condition (we will return to this)
• Discharge depends on whether the obligation demands performance as a whole, or
whether severance is possible
Entire obligation: must be fully performed for discharge (or breach of condition)
Severable obligation: obligations separate from each other (or breach of warranty)
Discharge possible if is ‘substantial performance’
o Hoenig v Isaacs [1952] 2 All ER 176
o In relation to ‘entire’ obligations there is no scope for ‘substantial performance’ –
SWI Ltd v P&I Data Services Ltd [2007] EWCA Civ 663
Discharge by breach
Breach may discharge the other party from their obligation
Breach by A will discharge B from his/her obligation to perform if B’s performance is
conditional on A’s performance and:
• A totally refuses to perform at/before performance is due: repudiate/repudiatory
breach
A is in breach of a term classed as a condition
A’s breach deprives B of ‘substantially the whole benefit which it was intended that he
should receive’
Impact of A’s breach on B
• B is discharged from performing BUT choice is his:
- Choose to ignore A’s breach and performs
- Accepts A’s breach: repudiates the contract, which discharges A from the
obligation to perform
If a breach is committed, the party who is not in breach has a right to claim damages
regardless of the nature, seriousness of the breach, or whether the party responsible is
discharged
, Advanced Law of Contract Lecture 8 18/11/19
Discharge by Frustration
Can identify some elements of shadows- that point us towards mistake but when we look at
frustration, we will see that they are distinguished because mistake is before the contract and
frustration is after
Illustrated is John Walker 1976 case - concerned purchase of an old warehouse, purchasers had big
ideas what they will do to make it more valuable, danger is it a listing building which can affect what
you can do with that building, everyone knew it was an old and not listed building, the listing people
had shown an interest, before completion date the secretary of state listed the building, the impact
was huge, a lot of money difference between the value of what they would have liked to have done,
if was before the contract we look at mistake if after it is frustration- it was considered to be before
Paradine and Jane- established absolute contract
= frustration is a narrow doctrine
Frustration occurs if, after formation, performance is:
• Impossible, illegal, or radically different from expected
• Through no fault of either party
Frustration = a supervening event- the world imposes on contract
When can it be raised?
> Supervening impossibility
> Supervening illegality
> Frustration of commercial purpose
> Event unforeseen/unforseeable
Supervening impossibility:
• Subject matter destroyed – Taylor v Caldwell (1863) 3 B&S 826- music venue where the
performer contracting for a number of dates at the music venue, before we got to the dates,
the theatre burns down, absolute contract would say you still perform even though there is
a situation it does not make sense, look at implied intent- Blackburn looks at this on the
basis there must be an implied notion that the venue will still exist on performance day
• Death of a party to a personal contract- personal contract with employees
• Temporary impossibility – Pioneer Shipping Ltd v BTP Tioxide Ltd [1982] AC 724- delay
sufficient to destroy the commercial outcome- if the contract indicated an urgency and how
long the delay is etc
• Subject matter unavailable – even if only temporary – Jackson v Union Marine Ins. (1874)-
delays vs delays- shipping case- a contract for a ship to be used to transport goods Newport
to San Francisco, was a rush job, contract identified the ship needs to proceed at all cost, hit
a sandbank took months to float off and identify the damages needs to be repaired, couldn’t
set off, gave up on charter and found another vessel, the courts held that in this instance
they were entitled to do so because the clause identified it should proceed at all possible
dispatch and needs to carry out contract asap
