Discharge of a contract

• Discharge of the contract refers to the ending of the obligations under the
contract, so that where we have thought of formation being the beginning of
the contract, discharge represents the end or possibly the completion of the
contract.
• In its simplest form, discharge will be the point at which either:
o all of the primary obligations created by the contract have been met in
a satisfactory manner; or
o one party has failed to complete some or all of their primary
obligations.
Discharge of contract
• Discharge of contract means termination of
the contractual relationship between the
parties.
• A contract is said to be discharged when it
ceases to operate, i.e., when the rights and
obligations created by it come to an end.
 Discharge of contract
• Performance
o The strict contractual obligations
o The qualified contractual obligations
• Agreement
o Eodem modo quo quid constituitur, eodem modo destruitur (the way it started, the way it should be ended)

• Breach
o Actual Breach
o Anticipatory Breach
• Frustration (by Operation of Law)
• Discharge by Impossibility of Performance
o Lexicon cogit ad impossibilia, i.e., the law does not recognize what is impossible,
o Impossibilium nulla obligato est, i.e., what is impossible does not create an obligation.
DISCHARGE BY PERFORMANCE
• For performance to be total, the courts expect it to be exact and complete. In
expecting exact performance, the courts mean that performance must match
contractual obligations.
• Re Moore and Landauer (1921)
Tins of fruit were supplied to a retailer as requested, packed in the wrong size cases. Although
all of the goods had been supplied, the obligations did not match those specified in the
agreement, and the buyer could therefore reject the whole consignment.
• Cutter v Powell (1795)
A sailor died during a voyage. His widow’s claim for payment for the part of the journey
completed was unsuccessful, because although the sailor may have carried out his tasks exactly
according to the agreement, the obligations would not be complete until the end of the voyage.
 Breach
• ‘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’. ( Treitel
(2015, para 17-049))
• Failure to perform the terms of a contract constitutes a breach
• A breach which is serious enough to give the innocent party this option of
treating the contract as discharged can occur in one of two ways
o Actual breach
o Anticipatory breach
ACTUAL BREACH
• Where a party in fact breaks a condition or otherwise break the
contract in such a way that it amounts to a substantial failure of
consideration (however did not explicitly express its intention not
to perform its contractual obligation)
1. A party fails to perform his contractual obligations
2. A party performs his contractual obligations defectively
ANTICIPATORY BREACH
• Where a party explicitly expresses its intention not to perform its contractual
obligation before its performance is due, or acts (implies) in such a way as to
show its intention to break the contract before performance is due, the party
has committed an “anticipatory breach” of the contract.
• A party refuses, or otherwise makes it clear that he will not be able, to fulfil
his contractual obligations before the fixed time for performance.
• One preliminary question, in cases of anticipatory breach, is to ascertain
whether, once repudiation has been communicated to the innocent party,
that party accepts the repudiation or not.
 Hochster v De La Tour (1853)
• It is a landmark English contract law case on anticipatory breach of contract.
• In April 1852, De La Tour (Defendant) agreed to employ Hochster (Plaintiff) who was a courier and
agreed to accompany Defendant on a three-month tour scheduled to begin on June 1.
• On May 11, Defendant wrote to Plaintiff that he had changed his mind, and did not need his
services. Defendant refused to pay Plaintiff any of the promised wages.
• On May 22, Plaintiff sued for breach of the contract. Defendant argued that Plentiff was still under
an obligation to stay ready and willing to perform till the day when performance was due, and
therefore could commence no action before.
• Shortly after, Plaintiff found another position, scheduled to begin July 4. Defendant asserted that it
was not possible for the contract to be breached before June 1.
• It was held that if a contract is repudiated (refused to accept; rejected) before the date of
performance, damages may be claimed immediately.

If a man promises to marry a woman on a future day, and before that day marries another woman, he
is instantly liable to an action for breach of promise of marriage; Short v Stone (1846)
 White & Carter (Councils) Ltd v McGregor (1961)
• In 1954, White & Carter (Councils) Ltd (Plaintiff) entered into a 3 year contract to display
advertisements of McGregor’s (Defendant) garage company for three years on litter bins. The
agreed price was payable by three annual instalments and if one of the payments was late the
whole price became immediately due.
• In 1957, with the contract set to expire, McGregor's sales manager Mr. Ward renewed the
contract, however later that day, when the company learnt of this, they informed White & Carter
that Ward had no authority to enter into such a contract, writing to them saying  "Dear Sirs, we regret
that our Mr. Ward signed an order today continuing the lamp post advertisements for a further period of 3 years. He was unaware that
our proprietor Mr. McGregor does not wish to continue this form of advertisement. Please therefore cancel the order."  

• The claimant ignored the defendant's communication and arranged for the advertising plates to
be made up and placed on the bins. The defendant refused to pay the first instalment and the
claimant submitted a bill for the full three years of advertising.

The House of Lords held, 3 to 2 that the claimants could recover the contract price and were not obliged to take steps to mitigate their loss because there
was an automatic claim in debt. There was no obligation to accept the breach, even though it was unfortunate that the claimants had ‘saddled themselves
with an unwanted contract causing an apparent waste of time and money’. Because it was a claim in debt and not damages, the mitigation rule had no
application. The dissenting judges would have held that the claimants had failed to mitigate their loss.
 Avery v Bowden (1856)
• By contract the claimant was to carry cargo for the defendant.
• The claimant arrived early to collect the cargo and the defendant told them to sale on as
they did not have any cargo for them to carry and would not have by the agreed date.
• The claimant decided to wait around in the hope that the defendant would be able to supply
some cargo.
• However, before the date the cargo was supposed to be shipped the Crimean war broke out
which meant the contract became frustrated. The claimant therefore lost their right to sue
for breach. Had they brought their action immediately they would have had a valid claim.
• The court decided this was anticipatory breach. However as the Claimant decided the wait
until the end of the agreement expired before claiming damages the Crimean war with
Russia then made the contract unenforceable.