PERFORMANCE AND BREACH
GENERAL RULE
In common law history, concept of entire obligation contracts is followed in which
payment is only made when entire performance was done and nothing could be
recovered when someone not fulfilled his obligation under the contract [Cutter vs.
Powell (1795)].
Court held that there was no payment until the performance was completed and when
there is partial performance [Bolton vs. Mahadeva (1972)].
EXCEPTIONS
There are three exceptions to the above rule
1. Compensation made for completed part.
Where the contract is in installments then payment can be recovered for the completed part
(quantum merit basis). Law commission report of contract No. 121 Brain Devenport QC
Stated that stipulation of full performance for payment ensure prompt and proper
performance of small buildings works.
Court held that it would be unusual relatively for payment obligation to be entire in
high value commercial contracts [Smales vs. Lea (2011)].
Entire obligation is not necessary when contract is divided into separate parts based
on the agreed prices [Ritchie v Atkinson (1808)].
2. Promisee acceptance of partial performance.
S-30(2A) of sale of goods act 1979 stated that the buyer is not allowed to reject goods
or delivery shortfall which shows slight variation as it would not be reasonable.
S-25(1) of consumer rights act 2015 stated that if a trader delivers the wrong quantity
of goods to the consumer and the consumer accepts it then they must be paid for at the
contract rate.
Where the Promisee accepts part or partial performance, however the Promisee has a
choice whether to accept or not [Sumpter v Hedges (1898)].
, 3. Performance of substantial part of contract.
Where the promisor had performed the substantial part of the contract however this
substantial performance doctrine will not apply to fundamental breach or breach of a
condition.
Court will allow the recovery where the party in breach has substantially performed
its obligations [Hoeing vs. Isaacs (1952)].
WHEN BREACH OF CONTRACT OCCURS
Where performance is not done then it is termed as automatic breach. When performance was
not up to mark then two matters is considered.
STANDARD OF BREACH
Strict liability
A strict standard of performance may be imposed upon seller of goods by the law under
ss.13-15 Sale of Goods Act 1979.
Contract for supply of goods impose strict standards of performance with respect to
quality and quantity of goods as the liability is strict then fault of the party does not
matter and considered immaterial [Arcos vs. Ronaasen (1933)].
Reasonable care and skill
S-13 of supply of goods and services act 1982 stated that it requires a party to exercise
reasonable care and skills in supply of services as breach depends upon excercising
reasonable care and skill and not on the outcome.
TYPE OF TERM BREACHED
Where one party fails to perform his side of obligation under the contract without lawful
excuse than this would constitute as breach of contract. The lawful excuse exists in the form
of doctrine of frustration which is a defense to breach of a contract. Whether all types of
breaches have same effect of discharging the contract. For a breach to discharge the contract
GENERAL RULE
In common law history, concept of entire obligation contracts is followed in which
payment is only made when entire performance was done and nothing could be
recovered when someone not fulfilled his obligation under the contract [Cutter vs.
Powell (1795)].
Court held that there was no payment until the performance was completed and when
there is partial performance [Bolton vs. Mahadeva (1972)].
EXCEPTIONS
There are three exceptions to the above rule
1. Compensation made for completed part.
Where the contract is in installments then payment can be recovered for the completed part
(quantum merit basis). Law commission report of contract No. 121 Brain Devenport QC
Stated that stipulation of full performance for payment ensure prompt and proper
performance of small buildings works.
Court held that it would be unusual relatively for payment obligation to be entire in
high value commercial contracts [Smales vs. Lea (2011)].
Entire obligation is not necessary when contract is divided into separate parts based
on the agreed prices [Ritchie v Atkinson (1808)].
2. Promisee acceptance of partial performance.
S-30(2A) of sale of goods act 1979 stated that the buyer is not allowed to reject goods
or delivery shortfall which shows slight variation as it would not be reasonable.
S-25(1) of consumer rights act 2015 stated that if a trader delivers the wrong quantity
of goods to the consumer and the consumer accepts it then they must be paid for at the
contract rate.
Where the Promisee accepts part or partial performance, however the Promisee has a
choice whether to accept or not [Sumpter v Hedges (1898)].
, 3. Performance of substantial part of contract.
Where the promisor had performed the substantial part of the contract however this
substantial performance doctrine will not apply to fundamental breach or breach of a
condition.
Court will allow the recovery where the party in breach has substantially performed
its obligations [Hoeing vs. Isaacs (1952)].
WHEN BREACH OF CONTRACT OCCURS
Where performance is not done then it is termed as automatic breach. When performance was
not up to mark then two matters is considered.
STANDARD OF BREACH
Strict liability
A strict standard of performance may be imposed upon seller of goods by the law under
ss.13-15 Sale of Goods Act 1979.
Contract for supply of goods impose strict standards of performance with respect to
quality and quantity of goods as the liability is strict then fault of the party does not
matter and considered immaterial [Arcos vs. Ronaasen (1933)].
Reasonable care and skill
S-13 of supply of goods and services act 1982 stated that it requires a party to exercise
reasonable care and skills in supply of services as breach depends upon excercising
reasonable care and skill and not on the outcome.
TYPE OF TERM BREACHED
Where one party fails to perform his side of obligation under the contract without lawful
excuse than this would constitute as breach of contract. The lawful excuse exists in the form
of doctrine of frustration which is a defense to breach of a contract. Whether all types of
breaches have same effect of discharging the contract. For a breach to discharge the contract
