Discharge by Breach

Discharge by Breach - Discharge by Breach (Mugger Notes) 1....

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1. Introduction According to Treital, Law of Contract (8 th Edition, 1991), at Pg 731, o Definition : A breach of contract is committed when a party without lawful excuse fails or refuses to perform what is due from him under the contract, performs defectively or incapacitates himself from performance. Breach is not dependant upon fault, contractual liabilities are strict. Breach does not automatically bring a contract to an end. Depending on the seriousness of the breach, it gives rise to the following options for the innocent party : o (i) Damages o (ii) Party in breach unable to enforce innocent party’s obligations o (iii) Innocent party entitled to discharge himself from contract NB : Every breach of a valid and enforceable contract entitles the innocent party to sue for damages as compensation for the loss suffered. 2. Entire Obligations A. Dependant Oligations Innocent party’s obligations to perform are conditional upon the breaching party performing all his obligations. Cutter v Powell [1795] 6 TR 320 ( Significance : Party who does not perform all his obligations cannot claim payment or performance from the other party, ie. Partial performance is insufficient. ) Facts : 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. Held : Court held that the contract was an “entire contract”, ie. Deceased had to sail all the way and therefore, having failed this, he was not due any proportionate payment. This provides for a great incentive to perform all contractual obligations . This rule as evidenced above can also be unfairly harsh . Hence the following limiting doctrines were developed. B. Substantial Performance Party in breach can still enforce innocent party’s obligations as long as party in breach has substantially performed his duties. Hoenig v Isaacs [1952] 2 All ER 176 Court of Appeal ( Significance : Party in breach can still enforce innocent party’s obligations as long as party in breach has substantially performed his duties, less any damages for omissions and defects in execution.) Facts : Plaintiff contracted to decorate and furnish the Defendant’s flat for £750. Work finished except for defects in wardrobe and bookshelf. Defendant moved in but refused to pay outstanding £350 although the defects could have been remedied for £55. Held : Court held that the Defendant was entitled to pay because there was substantial performance , but he may deduct damages to which he was entitled. Bolton v Mahadeva [1972] 1 WLR 1009
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Discharge by Breach - Discharge by Breach (Mugger Notes) 1....

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