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DISCHARGE OF CONTRACT

Discharge of contract refers to the termination of a contract, whereby contracting

parties are free from further obligations under the contract. Discharge can be

executed by the act of breach, by performance, by agreement and lastly by

frustration.

Discharge by performance means that both parties involved in the contract has

successfully performed as they promised. If there is a time stated in the contract

both parties need to perform according to the time. When there is no time fixed, the

contract need to be performed within reasonable time. If there is money to be paid

then the party performing the payment must the exact sum of money stated in the

contract, not less or more, the contracted sum of money must be paid in order for

performance to be complete. If there is to be delivery of goods the party delivering

the goods, must deliver the exact amount and kind of goods in the arrangement

requested by the other party, if this is not done then the receiving party reserves the

right to reject the goods, this rule is affirmed in the case Re Moore and Launder

where A contract for the sale of 3,100 tins of peaches described the tins as being

packed in cases of 30. When they arrived the tins were packed in cases of 24,

although the agreed overall number of tins was supplied, the purchaser was entitled

to reject the goods, since the contract had been breached, considering the fact that
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the goods delivered were not as prescribed in the contract. This might appear to be

a very stringent rule and as such there are exceptions to the rule, first being the

exception of severable contracts. This exception is enforceable where the contract

is divided into several parts and payments for the parts that have been completed

can be claimed. In the case Richie v Atkinson where by contract the claimant

agreed to carry a cargo of specified quantity of hemp and iron. The price agreed

was £5 per ton for the hemp and 5 shillings per ton of iron. The claimant only

carried part of the agreed quantity. The defendant argued the contract had not been

fully performed and therefore no payment was due. It was held that the contract

could be divided into separate parts as the parties had agreed a price per ton. The

claimant was thus entitled to payment for the amount carried although the

defendant was entitled to damages for non-performance in relation to the amount

not carried. Another exception is where there is acceptance of part performance,

where one party freely agrees to accept partial performance, then a sum is payable

for the work completed, the main focus being on free or willing acceptance by the

party. In the case Sumpter v Hedges, the claimant agreed to build two houses and

stables for the defendant. It was agreed that £565 would be payable on completion.

The claimant began performance and then ran out of money and was unable to

complete. He had performed just over half of the contract, after which the

defendant decided to complete the work himself. The claimant sought to recover
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£333 which is the value of the work that had been completed. He argued that in

completing the work himself, the defendant had thereby accepted partial

performance and prevented the claimant from completing the contract. It was held

that the claimant's action failed. The court held that the defendant had no choice

but to accept partial performance as he was left with a half completed house on his

land therefore it was not a free or willing acceptance of the part performance.

There is also prevention of performance, where one party prevents completion of

the performance then the other party is entitled to payment for the work which has

been completed. This principle is affirmed in Planche v Colburn, where the

claimant agreed to write a book on costume and armor for the defendant as part of

a series called 'the Juvenile Library'. The agreed contract price was £100 to be

payable on completion. The claimant commenced writing and had completed a

great deal of it when the defendant cancelled the series. The defendant refused to

pay the claimant despite his undertaking and the fact that the claimant was still

willing to complete. The claimant brought an action to enforce payment. It was

held that claimant was entitled to recover £50 because the defendant had prevented

the performance. There is also discharge by tender, where a party is willing to

perform and tries to tender performance but the other party does not accept the

performance then the party seeking to tender performance is discharged from the

contract and the non accepting party is liable in damages for non acceptance.
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Secondly there is discharge by frustration, a contract may be frustrated where there

exists a change in circumstances, after the contract was made, which is not the

fault of either of the parties, which renders the contract either impossible to

perform or deprives the contract of its commercial purpose. Where a contract is

found to be frustrated, each party is discharged from future obligations under the

contract and neither party may sue for breach. This principle is affirmed in

paradine v jane plaintiff sued defendant under a lease for years for unpaid rent.

Defendant pleaded that as a result of the invasion of an enemy of the King

Defendant was forced out of possession of the property and was unable to take the

profits. Defendant refused to pay plaintiff rent for the time he was forced out of

possession by the army. Plaintiff demurred and the plea was held to be insufficient.

Furthermore there is discharge by act of breach, where there exists a breach

of condition (as oppose to breach of warranty) this will enable the innocent party

the right to repudiate the contract in addition to claiming damages. A contract

cannot be discharged by a breach of warranty. The leading case for this principle is

Hochester v De La Tour, where the claimant agreed to be a courier for the

defendant for 3 months starting on 1st June 1852. On the 11th May the defendant

wrote to the claimant stating he no longer wanted his services and refused to pay

compensation. The claimant obtained a service contract elsewhere but this was not

to start until 4th July. The claimant brought an action on 22nd May for breach of
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contract. The defendant argued that there was no breach of contract on 22nd May

as the contract was not due to start until 1st of June. It was held that where one

party communicates their intention not to perform the contract, the innocent party

need not wait until the breach has occurred before bringing their claim. They may

sue immediately or they can choose to continue with the contract and wait for the

breach to occur.

Lastly there is discharge by agreement, a contract may be discharged by

agreement when both parties agree to bring the contract to an end and release each

other from their contractual obligations. For a contract to be discharged through

agreement there must be Accord (agreement) and Satisfaction (consideration).

Both parties must also provide consideration. If both parties have continuing

obligations then generally the consideration will be simply each of them giving up

their rights under the contract. The only time consideration becomes an issue is

where one party has fully performed their part of the contract when the other has

not. The non-performing party must then provide consideration to make the

agreement binding. Also if the agreement is made by deed there is no requirement

to provide consideration. There is in effect a contract to end a contract.

Discharge is the termination of a contract and it can be done in various ways

depending on the context and condition of the contract.

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