6. Discharge - CONTRACT DISCHARGE Discharge refers to a...

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CONTRACT – DISCHARGE Discharge refers to a termination of a contract. After a contract is discharged, the parties are relieved of their obligations under the contract. There are four ways Performance, Breach, Mutual Agreement and Frustration . Performance Performance – discharging a contract by performing all obligations as stipulated in the contract. Precise Performance Cutter v Powell (1795) Deceased Plaintiff seaman’s estate claimed against master of ship. Deceased agreed to sail from Kingston Jamaica to Liverpool. Journey took from 31 July to 20 September. 3 weeks short of reaching, Plaintiff died. Estate claimed that he was due a portion of his wages. The court held that payment was conditional upon the completion of the voyage; payment even part payment may not be made. In Re Moore & Co and Landauer & Co (1921) The court held that the buyer was lawfully entitled to reject the shipment on the basis of less than full and precise performance. Exceptions to the Precise Performance Rule Over the years, the courts have acknowledged that this rule of full and precise performance, if applied strictly, may cause unfairness. De minimis rule If the deviation in performance is microscopic, then the contract is deemed to have been performed fully and precisely. What is considered microscopic depends on the facts of the case . Acros Ltd v E A Ronaasen & Sons (1933) The HL held that although the staves were of merchantable quality and could be used to manufacture cement barrels, the contract was breached because the staves did not correspond to the description of the goods. Divisible contracts A contract may in certain circumstance be viewed as several independent obligations. These may be deemed as severable sub-contracts. e.g. Employment Contracts Cutter v Powell (1795) in this case, the employment contract was needed to be completed in full before payment. Apportionmen t Act Introduced to prevent situations where one party can potentially gain a benefit from the partial and incomplete performance of the other without having to pay for it Section 3: ‘ rents 1 , annuities 2 , dividends and other periodical payments in the nature of income… shall… be considered as accruing from day to day, and shall be apportionable in respect of time accordingly’ Had the Apportionment Act been around at the time, the judgment of Cutter v Powell (1795) could arguably have been different. 1 Includes all periodical payments or renderings in lieu of or in the nature of rent 2 Includes salaries and pensions
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Substantial performance Boone v Eyre (1779) According to the principle in the case, where a promisor has substantially performed his obligations under a contract, he can claim the agreed payment, less the amount necessary to make good the defect.
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