Law of Contract 3

7/29/2019 Law of Contract 3

1/17

LAW OF CONTRACT 3Discharge of a ContractRemedies For Breach of Contract


2/17

Discharge of a Contract Discharge of a contract means that the parties to an

agreement are freed from their contractualobligations.

A contract may be discharged by any one of thefollowing ways:

(a) Agreement

(b) Performance

(c) Frustration

(d) breach


3/17

Agreement A contract which has been made by

agreement can be ended by agreement.

The contract itself may contain express orimplied provision for its discharge, either by

the passage of a fixed period of time, or the

occurrence of a particular event. Section 63 and 64 provide for the discharge

of contracts by agreement or consent.


4/17

Performance When the parties to a contract perform their

obligations under it, the contract is discharged

by performance. Section 38(1) states - The parties to a

contract must either perform, or offer to

perform, their respective promises, unless theperformance is dispensed with or excused

under this Act, or of any other law.


5/17

Cont As a general rule, performance must be

strictly in accordance with the terms of the

contract unless the parties have agreedotherwise.

If a contract provides a complete performance

as a condition precedent to payment, the partywho has partly performed the contract is not

entitled to the payment.


6/17

Cont

However where the essential element of an

agreement has been performed and only some

minor part remains to be done, the party whoperformed the act can claim the contract price.

This is known as the doctrine ofsubstantial

performance.


7/17

KP Kunchi Raman v Goh Brothers Sdn

Bhd[1978]1MLJ 89

The plaintiff had agreed to lay pipelines for thedefendant. The plaintiff claimed to have completedthe work but the defendant alleged it was not to

satisfaction. The defendant had incurred expenses in completing

the contract.

It was held that the plaintiff had substantially

completed the contract and was entitled to thebalance sum subject to the defendants cost incompleting the work.


8/17

Frustration A contract is frustrated when subsequent to its

formation, a change of circumstances renders the

contract legally or physically impossible of

performance.

Section 57(2) provides A contract to do an act

which, after the contract is made, becomes

impossible, or by reason of some event which thepromisor could not prevent, unlawful, becomes void

when the act becomes impossible or unlawful.


9/17

Two instances of frustration when the contract becomes impossible anything

which renders performance impossible can be a

frustrating event. This includes destruction of the

subject matter, personal incapacity, non-occurrence

of an event etc.

when the contract becomes unlawful the

performance of the contract may be made illegal bya change in the law or due to the outbreak of war

which make the other party an enemy alien.


10/17

Discharge by Breach A breach of contract occurs where one of the parties

to the agreement fails to comply, either completely

or satisfactorily, with their obligations under it.

Section 40 - When a party to a contract has refused

to perform, or disabled himself from performing, his

promise in its entirety, the promisee may put an end

to the contract, unless he has signified, by words orconducts, his acquiescence in its continuance.


11/17

3 types of a breach of contract

where a party, prior to the time ofperformance, states that they will not fulfilltheir contractual obligation (also known asanticipatory breach).

Where a party fails to performs theircontractual obligation when performance is

due. Where a party performs their obligation in a

defective or unsatisfactory manner.


12/17

Remedies For Breach of Contract

The principle remedies for breach of

contract are:

damages;

specific performance;

injunction.


13/17

Damages

Damages are granted to the innocent party ascompensation for the damage, loss or injury he hassuffered through a breach of contract.

The aim of damages is to put the innocent party inthe position he would have been in if the contracthad been carried out properly.

It is quite common in the business dealings for the

parties to agree in advance the damages that will bepayable in the event of a breach of contract, forexample charges imposed for canceling a ticket.


14/17

Mitigation of loss

Explanation to section 74 states that In

estimating the loss or damage arising from a

breach of contract, the means which existed ofremedying the inconvenience caused by the

non-performance of the contract must be

taken into account.

In other words, the party seeking damages is

under a duty to mitigate or reduce the loss.


15/17

Kabatasan Timber Extraction Co v

Chong Fah Shing[1969] 2 MLJ 6

The appellant failed to deliver logs to the mill butleft them some 500 feet away. The respondent had

purchased timber from other sources to make good

the shortage. The Federal Court held that it was the duty of the

respondent to mitigate the damages, that is, bysimply hauling the logs up to the mill instead of

buying the new one. The damages awarded to therespondent were therefore reduced for failing tomitigate.


16/17

Specific performance Specific performance is a decree of the court

directing that the contract shall be performed.

This remedy is governed by the SpecificRelief Act 1950 and it is given at the

discretion of the court.


17/17

Injunction This is an order of the court restraining a

person from acting in a way which willamount to a breach of contract.

Section 50 of the Specific Relief Act statesthat an injunction is granted at the discretionof the court.

Two types of injunctionTemporary orinterlocutory or interim injunction andperpetual injunction

Law of Contract 3

Documents

Transcript of Law of Contract 3