Chapter 8- Remedies in Contract Cases
Terminating the contract: can be done in various ways
a. Termination by performance: the contract is discharged when parties wholly or substantially perform their obligations under contract
b. Termination by agreement: parties to a contract may agree to discharge their obligations to one another. They can replace old agreement or simply terminate.
c. Termination by a term of the contract: parties may have agreed that their contract would be terminated on happening/non-happening of a particular event.
d. Termination by frustration: contract is said to be frustrated when an event occurs which makes it impossible to perform the contract as contemplated by the parties (more info p.311)
Taylor v Caldwell: T hired concert hall from C. Unfortunately, hall burnt down prior to performance. T sued C for damages. Contract was discharged for frustration, and therefore, T couldn’t get damages.
Davis Contractors Ltd v Fareham Urban District Council: DC won tender to build 78 houses for FUDC in 8 months. But, at the time, there was shortage of labor so took 22 months + additional expense. DC claimed shortage of labor frustrated the contract. Court ruled that contract had not been frustrated because delay cause by labor shortage was foreseeable so DC couldn’t claim damages.
· Frustration will not apply where: contract makes specific provision for supervening event, party seeking to rely on frustration foresaw the event, or event was caused by party seeking to rely on frustration.
· If contract is discharged for frustration, the future obligations of the parties are cancelled immediately.
e. Termination for breach of condition of the contract: Terms in contract can be divided into three types: warranties, conditions, and intermediate terms.
· Breaches of warranty attract damages only
· Breaches of condition attract damages and entitle innocent party to terminate the contract.
· Intermediate terms may be treated as warranty or condition.
· A term is a condition if:
Determined by statute (e.g. sale of goods)
It goes to the very heart of the contract:
Associated Newspapers Ltd v Bancks: JB was leading cartoonist and AN hired him to draw weekly comic strip. Contract was that JB would prepare a weekly comic strip, and AN would publish it in the front. Due to shortage of newsprint, AN put in magazine, and on p3. JB protested and gave notice for termination of contract and signed contract with rival newspaper. AN brought action to restrain B from breaching contract. Court ruled that the condition was the heart or essence of contract, and front page of comic section was a condition, so B was entitled to terminate the contract.
Terms expressly made a condition by the parties: has to be written as “the parties agree that strict compliance with this term is of the essence of the contract”. Merely calling a term a ‘condition’ won’t necessarily make it one. L Schuler AG v Wickman Machine Tool Sales Ltd: S agreed to give W sole selling...