Performance and Breach

Week 1

LS372 2008 2

Performance and Breach

What is ‘performance’? Termination by Agreement Failure of a Contingent Condition

LS372 2008 3

LS372 unit structure

Weeks 1 - 3 Termination Weeks 4 & 5 Remedies Weeks 6 - 10 Vitiating Factors Weeks 11 & 12 Illegality Week 13 Review

LS372 2008 4

Termination

Week 1 - Performance, Termination by Agreement, Failure of Contingent Condition

Week 2 - Termination for Breach, Repudiation & Delay

Week 3 - Consequences of Termination, Restrictions

LS372 2008 5

Remedies

Week 4 - Measure of Damages & Limitations on Damages

Week 5 - Liquidated Damages, Debt, Specific Performance & Injunctions

LS372 2008 6

Vitiating Factors

Week 6 - Mistake Week 7 - Misrepresentation Week 8 - Duress & Undue Influence Week 9 - Unconscionability Week 10 - Recission & Remedies

LS372 2008 7

Illegality

Week 11 - Types of Illegality Week 12 - Consequences of Illegality

LS372 2008 8

Performance Terminology

Discharge of a contract - broad meaning. Contract is brought to an end By performance By agreement Through breach Through frustration By operation of law

Termination of a contract - contract is brought to an end by one party for breach etc

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Performance Standard of Performance

Exact Performance Required Re Moore and Landauer Cutter v Powell

Exceptions to Exact Performance Severable contracts De minimus non curat lex doctrine Substantial performance Acceptance of partial performance Obstruction of performance

Methods of Performance

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Exceptions to Exact Performance

Severable Contracts Govt of Newfoundland v Newfoundland Railway Co Performance of a severable part of the contract may be

enforceable, even if there has been a failure to discharge obligations as a whole

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Exceptions to Exact Performance

De Minimus Non Curat Lex The law is not concerned with small things

There once was a lawyer named Rex

Who had a very small sex

When charged with exposure

He replied with composure

‘de minimus non curat lex’

Tramways Advertising v Luna Park Shipton, Anderson v Weil

LS372 2008 12

Exceptions to Exact Performance Substantial Performance

Performance less than enough to invoke de minimus rule Considered enough to justify enforcement of contract Court will look at what is needed to cure the defect If proportionately small, they may require other party to

perform, but allow them damages for defect Similar to claim for breach, but does not allow innocent party

to rescind Cases are inconsistent and confusing

Hoenig v Isaacs Bolton v Mahadeva

LS372 2008 13

Exceptions to Exact Performance Jacob & Youngs v Kent

LS372 2008 14

Exceptions to Exact Performance

Partial Performance Court infers agreement between parties for

partial performance Other party obtained benefit Agreed to accept and pay for benefit obtained Had a choice whether to accept

Sumpter v Hedges

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Exceptions to Exact Performance

Obstruction Where one party prevents the other party from

performance of their duties Innocent party may claim damages and/or

quantum meriut Innocent party won’t be able to claim contract

price

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Methods of Performance

Demand - performance required whether other party demands it or not.

Tender of performance - offer to perform ‘ready willing and able’ to perform Tender of performance can be dispensed

with - eg repudiation

LS372 2008 17

Termination

Express Term of the Contract Subsequent Agreement Implied Agreement

LS372 2008 18

Termination Express Term of the Contract

Procedure must be followed Subsequent Agreement

Does the new agreement terminate the old one or vary it? Concut v Worrell

Rules of formation apply to subsequent agreement Consideration - is the original agreement executory or

executed? Has one party fully performed?

Deed of Release Accord & Satisfaction

LS372 2008 19

Termination By Implied Agreement

Crawford Fitting v Sydney Valve Enduring Contract - no time limit Commercial agreements - court is more likely

to imply a term for termination at will Reasonable notice must be given “to enable the parties to bring to an end in an orderly

way a relationship … so that they will have a reasonable opportunity to enter into alternative arrangement and to wind up matters which arise out of their relationship.”

LS372 2008 20

Contingent Conditions

Terminology Promissory - condition of the contract Not promising the event will occur - contingent

condition McTier v Haupt

LS372 2008 21

Contingent Conditions

Formation of contract Performance of contract

Bias in favour of Performance of Contract

LS372 2008 22

Contingent Conditions

Automatic Termination Right to Terminate

Bias in favour of right to terminate Suttor v Gundowda

Event beyond the control of parties - termination may be automatic

Event within control of parties - party must elect to terminate (even if neither party is in default re non-fulfilment)

LS372 2008 23

Contingent Conditions

Election to terminate - see also week 3 Unequivocal communication Time limit Reasonable time Election to terminate is irrevocable

LS372 2008 24

Contingent Conditions

Duty to Cooperate - see also LS371 topic 11 Duty of Good Faith

Honest Reasonable - Perri v Coolangatta

LS372 2008 25

Contingent Conditions

Loss of Right to Terminate Affirmation Waiver Estoppel

See also week 3

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