contract discharge
DISCHARGE
Written by Mardi Szantyr
Discharge of a contract refers to the way in which it comes to an end. Contracts can come to an end in the following ways:
1. by performance
2. by agreement
3. by frustration
4. by breach
Each one of these methods of discharge will be considered.
Discharge by performance
The contract comes to an end when both parties perform their contractual obligations. Performance must substantially correspond with what the parties agreed allowing for minor or trivial defaults.
Discharge by agreement
The parties themselves can agree to end the contract, form a new contract or vary the original one.
Performance of a contract may be subject to a condition precedent allowing for discharge upon the failure of a certain event – e.g. in a contract for the sale of land where the purchaser has been unable to obtain finance.
A contract may contain a term that if some specified event occurs after the contract is formed then it may be terminated at the option of either or one of the parties. This is a condition subsequent e.g. the return of an item that is defective for a refund.
The parties may enter a new contract to end the old one. This is called novation. Obviously the new contract must satisfy all the usual rules for contractual formation.
The parties can also release each other from their remaining obligations – called release and discharge; or they may release each other from some of their obligations and retain or add others – called variation.
Discharge by frustration
A contract automatically comes to an end if it is discharged by frustration.
Four conditions must be satisfied for frustration to discharge a contract:
1. an unforeseeable event – something that the parties did not expect to happen and didn’t make provision for in the contract (See Study Guide p230);
2. that is no fault of either party – it must not be a self-induced impossibility as in Maratime National Fish v Ocean Trawlers
Written by Mardi Szantyr
Discharge of a contract refers to the way in which it comes to an end. Contracts can come to an end in the following ways:
1. by performance
2. by agreement
3. by frustration
4. by breach
Each one of these methods of discharge will be considered.
Discharge by performance
The contract comes to an end when both parties perform their contractual obligations. Performance must substantially correspond with what the parties agreed allowing for minor or trivial defaults.
Discharge by agreement
The parties themselves can agree to end the contract, form a new contract or vary the original one.
Performance of a contract may be subject to a condition precedent allowing for discharge upon the failure of a certain event – e.g. in a contract for the sale of land where the purchaser has been unable to obtain finance.
A contract may contain a term that if some specified event occurs after the contract is formed then it may be terminated at the option of either or one of the parties. This is a condition subsequent e.g. the return of an item that is defective for a refund.
The parties may enter a new contract to end the old one. This is called novation. Obviously the new contract must satisfy all the usual rules for contractual formation.
The parties can also release each other from their remaining obligations – called release and discharge; or they may release each other from some of their obligations and retain or add others – called variation.
Discharge by frustration
A contract automatically comes to an end if it is discharged by frustration.
Four conditions must be satisfied for frustration to discharge a contract:
1. an unforeseeable event – something that the parties did not expect to happen and didn’t make provision for in the contract (See Study Guide p230);
2. that is no fault of either party – it must not be a self-induced impossibility as in Maratime National Fish v Ocean Trawlers