Discharge/Termination of Contract by Breach
Discharge= termination
Breach of contract= party without lawful excuse who refuses to perform his contractual
obligation
Not only upon failure, but breach can also take place when performance is defective
Parties don’t need to be at fault to breach; can occurs when innocent party performance
is defective due to outside event
When does breach occur?
Depends on term that has been breached
Terms can be: conditions, warranties or innominate terms
I) Condition-
Major term of the contract, goes to origin of contract- contract based on it
If this is breached, innocent party is entitled to end/terminate the contract and claim
damages
Poussard v Spiers (1876): Madam Poussard entered into a 3 month contract with Spiers
as an opera singer. However, owing to illness she was not able to perform on the first
four nights and had to be replaced.
Her performance was a condition since it was so fundamental to the contract itself.
Held: claimant was in breach of condition and the defendant was entitled to end the
contract. The opening night was the most important night of the season.
Similar case with different outcome: Bettini v Gye
II) Warranties
Minor terms of the contract, when breach do NOT terminate the contract since is not a
substantial breach
But can claim damages
Bettini v Gye (1876): Bettini agreed by contract to perform as an opera singer for a
three-month period. He became ill and missed 6 days of rehearsals. He was sacked and
replaced by another singer.
He failed to attend rehearsals which was not part of the obligation of the contract and
was not a condition of a contract, hence there is no breach!
Held: the claimant was only in breach of warranty- failure to attend the rehearsals, and
the defendant was not entitled to terminate the contract.
III) Innominate terms
More an approach than a category of breach; which looks at the consequences of the
breaches
Test: whether innocent party was substantially deprived of the benefit of the contract, if
they are substantially deprived then they can terminate the contract
Hong Kong Fir Shipping v Kawasaki Kisen Kaisha (1962): a ship was chartered to the
defendants for a 2 year period and the agreement included a term that stated that the
ship would be seaworthy throughout the period of hire. Problems developed with the
engine of the ship and the engine crew were incompetent. This resulted in the ship
being out of service for a 5 week period and then a further 15 week period. The
defendants treated this as a breach of condition and terminated the contract.
Discharge= termination
Breach of contract= party without lawful excuse who refuses to perform his contractual
obligation
Not only upon failure, but breach can also take place when performance is defective
Parties don’t need to be at fault to breach; can occurs when innocent party performance
is defective due to outside event
When does breach occur?
Depends on term that has been breached
Terms can be: conditions, warranties or innominate terms
I) Condition-
Major term of the contract, goes to origin of contract- contract based on it
If this is breached, innocent party is entitled to end/terminate the contract and claim
damages
Poussard v Spiers (1876): Madam Poussard entered into a 3 month contract with Spiers
as an opera singer. However, owing to illness she was not able to perform on the first
four nights and had to be replaced.
Her performance was a condition since it was so fundamental to the contract itself.
Held: claimant was in breach of condition and the defendant was entitled to end the
contract. The opening night was the most important night of the season.
Similar case with different outcome: Bettini v Gye
II) Warranties
Minor terms of the contract, when breach do NOT terminate the contract since is not a
substantial breach
But can claim damages
Bettini v Gye (1876): Bettini agreed by contract to perform as an opera singer for a
three-month period. He became ill and missed 6 days of rehearsals. He was sacked and
replaced by another singer.
He failed to attend rehearsals which was not part of the obligation of the contract and
was not a condition of a contract, hence there is no breach!
Held: the claimant was only in breach of warranty- failure to attend the rehearsals, and
the defendant was not entitled to terminate the contract.
III) Innominate terms
More an approach than a category of breach; which looks at the consequences of the
breaches
Test: whether innocent party was substantially deprived of the benefit of the contract, if
they are substantially deprived then they can terminate the contract
Hong Kong Fir Shipping v Kawasaki Kisen Kaisha (1962): a ship was chartered to the
defendants for a 2 year period and the agreement included a term that stated that the
ship would be seaworthy throughout the period of hire. Problems developed with the
engine of the ship and the engine crew were incompetent. This resulted in the ship
being out of service for a 5 week period and then a further 15 week period. The
defendants treated this as a breach of condition and terminated the contract.
