6. Performance and Breach of Contract
15/01/19- Lecture 1 and 2
BOC DEF: 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, or performs defectively or
incapacitates himself from performing it (eg: selling something to another party)
(full quote in handout, page 2)
Failed to do what you promised to do in the contract
Where do the obligations (promises) come from?
Express and implied terms (look in topic 5 for examples)
What type of liability does the contract impose? (strict or fault base)
Remedies for Breach of Contract:
Two basic remedies: Damages and termination
Damages
Award of compensation to the party who has lost out, put the innocent party in the position
as if the contract had been performed – forward looking
Claiming the contract price is NOT the same as sueing for damages
Reasonable party has to limit the damage it deserves, tries to be fairer with what the guilty
party owes them based on the circumstances of the breach
Claiming the contract price is different because you get the full amount of money or you
don’t
Termination
Party can tear up the contract and walk away, powerful and advantageous BUT it’s not
always available as a remedy
Conditions of Payment and Performance of Obligations
Condition Precedent: Something that must be done as a condition of the other party’s
performance (payment for something)
Can they only be paid for the whole task? (entire oboligation) OR can they be paid in stages
for little parts of the task? (severable obligation) - depends what is clear in the contract and
the surrounding circumstances (reasonable bystander)
Cutter v Powell (1795)
Mr Powell made Mr Cutter his second man on a ship
High level of pay if the ship got to Liverpool from Jamaica
, He died during the voyage and his wife wanted some of the money for the work he
had done
Court held it was ENTIRE OBLIGATION as he had to get from one place to another for
the pay
The high level of pay implied that he had to carry out the whole voyage, captains
used to do this because otherwise ship crew would leave half way through the
voyage to get money
Wife got nothing
Now a court may give an amount of money for half a voyage/task if the party receives a
benefit from half the work that was wrong
Taylor v Laird 1856
Commander of the ship said pay £50 per month
If a voyage isn’t completed they still get the money for the amount of months they
did do.
Substanital Performance doctrine makes entire obligation less strict
Hoeing v Issacs (1952)
(type)
Quantum Meruit: Courts may award some money for half a job, doesn’t happen a lot
though
If the party accepts to give the other party a benefit, then the court will be fairer and give
them some money Sumpter v Hedges 1898
Anticipatory Breach
Once the contract is made, but before any tasks are carried out, one party announces that it
will walk away and breach the contract because it doesn’t want it
White and Carter (Councils) Ltd. V McGregor 1962
McGregor ‘s agent entered into a contract with the council to advertise his business
son bins for 156 weeks
McGregor found out and didn’t want to be part of the contract
The innocent party (council) can accept the anticipatory breach and terminate the contract
and sue for damages.
Can White and Carter not end the contract and advertise the business anyway?
YES – still an actionable contract
15/01/19- Lecture 1 and 2
BOC DEF: 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, or performs defectively or
incapacitates himself from performing it (eg: selling something to another party)
(full quote in handout, page 2)
Failed to do what you promised to do in the contract
Where do the obligations (promises) come from?
Express and implied terms (look in topic 5 for examples)
What type of liability does the contract impose? (strict or fault base)
Remedies for Breach of Contract:
Two basic remedies: Damages and termination
Damages
Award of compensation to the party who has lost out, put the innocent party in the position
as if the contract had been performed – forward looking
Claiming the contract price is NOT the same as sueing for damages
Reasonable party has to limit the damage it deserves, tries to be fairer with what the guilty
party owes them based on the circumstances of the breach
Claiming the contract price is different because you get the full amount of money or you
don’t
Termination
Party can tear up the contract and walk away, powerful and advantageous BUT it’s not
always available as a remedy
Conditions of Payment and Performance of Obligations
Condition Precedent: Something that must be done as a condition of the other party’s
performance (payment for something)
Can they only be paid for the whole task? (entire oboligation) OR can they be paid in stages
for little parts of the task? (severable obligation) - depends what is clear in the contract and
the surrounding circumstances (reasonable bystander)
Cutter v Powell (1795)
Mr Powell made Mr Cutter his second man on a ship
High level of pay if the ship got to Liverpool from Jamaica
, He died during the voyage and his wife wanted some of the money for the work he
had done
Court held it was ENTIRE OBLIGATION as he had to get from one place to another for
the pay
The high level of pay implied that he had to carry out the whole voyage, captains
used to do this because otherwise ship crew would leave half way through the
voyage to get money
Wife got nothing
Now a court may give an amount of money for half a voyage/task if the party receives a
benefit from half the work that was wrong
Taylor v Laird 1856
Commander of the ship said pay £50 per month
If a voyage isn’t completed they still get the money for the amount of months they
did do.
Substanital Performance doctrine makes entire obligation less strict
Hoeing v Issacs (1952)
(type)
Quantum Meruit: Courts may award some money for half a job, doesn’t happen a lot
though
If the party accepts to give the other party a benefit, then the court will be fairer and give
them some money Sumpter v Hedges 1898
Anticipatory Breach
Once the contract is made, but before any tasks are carried out, one party announces that it
will walk away and breach the contract because it doesn’t want it
White and Carter (Councils) Ltd. V McGregor 1962
McGregor ‘s agent entered into a contract with the council to advertise his business
son bins for 156 weeks
McGregor found out and didn’t want to be part of the contract
The innocent party (council) can accept the anticipatory breach and terminate the contract
and sue for damages.
Can White and Carter not end the contract and advertise the business anyway?
YES – still an actionable contract
