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Contract Law: Performance and Breach
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Comprehensive notes for Contract law: Performance and Breach.
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CONTRACT LAW: PERFORMANCE & BREACHINTRODUCTION - BRINGING A CONTRACT TO AN END:
There are four possible ways in which a contract may come to an end/ be discharged:
1. Performance: parties perform according to the terms of the contract and essentially
finish the contract.
2. Operation of law: e.g. frustration - see last lecture. The contract comes to an end by
operation of the courts/ law.
3. Parties’ mutual agreement to abandon/ discharge the contract: the parties agree to
end the contract early. As this is a variation of the contract (fundamentally changes the
contract), consideration is needed, or it can be structured as a deed (consideration is not
needed when structured as a deed).
4. Breach: there is a breach of obligations under the contract.
1. PERFORMANCE:
A. STANDARD OF PERFORMANCE:
Different contracts have different standards of performance, which may help us to determine
if a breach has occurred or not.
(i) Contract for sale of goods/ strict liability:
The standard of performance is a STRICT LIABILITY STANDARD: e.g. if you do not
provide exactly 500 mobile phones as promised, there has been a breach. You have to
provide exactly what you promised. The courts do not care why this was, they only care
about meeting exactly what was required.
This is supported by s 13 of the Sale of Goods Act 1979: goods have to correspond to
their descriptions in the contract.
Arcos v Ronaasen [1993]: there was a contract for sale of goods, specifically wooden
sticks/ staves. The staves were supposed to be half an inch thick. However, when they
arrived, not all the sticks were of the required thickness and the variation was
considerable. The shipment was rejected as a result. The seller argued that the the
staves were perfectly sellable. However, the court did not accept this – it does not matter
whether they are useable or not, only that they meet the requirements of the contract.
(ii) Contract for provision of services/ reasonable care and skill:
The standard is qualified, ONE OF REASONABLE CARE AND SKILL: we must ask:
have they used reasonable care and skill in the performance of their contractual
obligations? For example, going for a massage; it is not meant to be perfect every time,
but the masseuse must give reasonable care and skill in giving the massage.
, CONTRACT LAW: PERFORMANCE & BREACH
If you are supposed to be providing services, the standard is QUALIFIED. This is
supported by the Supply of Goods and Services Act 1982: similar to Sale of Goods
Act, but applies to services. With respect to consumers, this has been superseded with
CRA 2015. However, there is not as much case law from the CRA 2015, because it is
fairly recent and so, we use case law from this Act.
Supply of Goods and Services Act 1982:
Section 13: there is an implied term in services contracts that services have to be carried
out with reasonable care and skill.
Section 14: the service has to be carried out in reasonable time.
Section 15: if a price has not been agreed for the service, a reasonable price has to be
paid.
2. DISCHARGE OF CONTRACTS:
As mentioned previously, there are four ways in which contracts can be discharged.
Performance
Agreement/ Abandonment
By operation of law
Breach
(i) Performance:
General rule: parties have to precisely perform/ fulfil all their obligations/ terms under the
contract for the contract to be discharged.
Re Moore and Landauer [1921]: case concerned the sale of tins of peaches; there were
supposed to be 3000 tins of canned peaches and the contract specified that the peaches
must be packaged in cases of 30 tins each. When the cases arrived, there were 3000
tins, but there weren’t exactly 100 boxes; there were more boxes and some of these only
contained 24 tins of canned peaches. Had they fulfilled the terms of contract or not? They
had still provided 3000 tins, but not in the exact manner as promised. CA said the buyer
was allowed to reject this shipment, because the goods had not corresponded entirely
with their description – 30 tins in 100 boxes was not provided.
Cutter v Powel [1795]: a sailor was supposed to be paid wages at end of their voyage,
but died a few days before voyage came to end. The widow was unsuccessful in suing.
The court said the sailor had not fulfilled all of his obligations under the contract and thus,
he was not entitled to be paid.
Exceptions to the general rule:
Divisible contracts:
Contracts can be divisible: an entire contract will specifically say: ‘in order for B to
perform his obligations under the contract, A has to perform all his obligations under the
contract.’ However, in divisible contracts, each party’s obligations are independent. This
means each party can demand performance from the other, without performing their
obligations themselves.
Sumpter v Hudges [1898]: this concerned a construction contract. The plaintiff agreed
to build two houses with stables on the defendant’s land; this contract was priced at
£565. The plaintiff did some work of worth, as he partially built the houses and stables,
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