Chapter 2.
5
Discharge of contract &
Remedies for breach of
contract
1. Discharge by performance
As a general rule, performance of a
contract must be exact and precise and
should be in accordance with what the
parties had promised.
Under section 38(1), the parties to a
contract must either perform or offer to
perform their respective promises, unless
such performance has been dispensed with
by law.
2.Discharge by Agreement
When both parties to the contract agrees that
the holiday contract should no longer continue,
then both the parties are discharged from their
obligations.
3.Discharge by Frustration
A contract is frustrated when there is a change in
the circumstances which renders a contract
legally or physically impossible of performance
under section 57(2).
For frustration to apply, the impossibility of
performing the contract must arise without
the fault of either party.
Case : Robinson v. Davidson(1871). In this
case the contract was that the defendant
must play the piano at a concert on a
specified date. On the specified date, the
defendant was unable to perform as she
was ill. It was held that the contract was
discharged by frustration.
Effects of Frustration
The contract does not become voidable but is brought
to an end forthwith and automatically under section
57(2)
Remedies :
1. under section 57(3), compensation must be paid by
the promisor to the promisee for loss through non-
performance of act known to be impossible or unlawful.
2. under section 66, any person who has received any
advantage under the agreement is bound to restore it,
or make a compensation for it, to the person from
whom he received it.
4.Discharge by Breach
Where one of the parties to the contract indicates
to the other either by conduct or in clear terms an
intention no to go on with the contract, the party is
said to have repudiated the contract.
A refusal to perform a contract may occur before
the time for the performance is due, or during the
time of performance itself.
A refusal to perform a contract when performance
is due, would amount to a discharge.
Remedies for breach of
contract
1.Damages
Damages are remedy provided by the common
law to provide financial compensation where
there has been breach of contract.
It is the aim of the court in awarding damages,
to place the party who has suffered the loss as
a result of breach, as nearly as possible in the
same position as he or she would have been in
if the breach has not occurred.
2. Specific Performance
Specific performance is a court order requiring the defendant to perform the act
promised in the contract. The Specific Relief Act, 1950 provides for the remedy
of specific performance. Specific performance is a discretionary remedy.
Section 20(1)(a) – the court will exercise its discretion not to decree specific
performance where damages will provide an adequate remedy.
Section 20(1)(c) – specific performance will be refused where the terms of the
contract are uncertain
Section 21(2)(b) –specific performance has a discretion to refuse specific
performance where the granting of it would cause undue hardship to the
defendant.
Section 11(2)- specific performance may be granted in respect of agreements
relating to land transaction where there is a presumption that the breach of a
contract to transfer immovable property cannot be adequately relieved by
compensation in money.
Specific performance may also be granted in respect of executory contracts and
in cases where actual damage cannot be ascertained.
3. Injunction
Types of injunctions are as follows :
1. Interlocutory injunction – is used by a party to maintain the status quo of the
subject matter in a pending suit.
2. Mandatory injunction – is a court order requiring something to be done.
For example, injunction requiring the landlord to keep the water supply open for his
tenants.
Case : Neoh Siew Eng & Anor v. Too Chee Kwong (1963), the court granted a
perpetual injunction by oredering the defendant who was a landlord of the plaintiff to
keep all communication pipes in proper repair and to comply with all regulations of
the Waterworks Department so that water supply to the premises rented by the
plaintiffs wolud not be disconnected
3. Prohibitary injunction – a restraining order – stopping something from being done.
An injunction is an equitable remedy. Thus, it can be varied or dissolved if the court
discovers that the application for injunction was made on suppressed facts or that
the facts upon which the order was granted no longer exist.
4. Quantum Meruit
In particular situations, a claim may be made on a quantum
meruit basis, a an alternative to the action for damages for
breach of contract.
A quantum meruit is an award made where one party has
completed all o part of his side of the bargain before the
other’s breach.
It is a payment of the ‘amount deserved’ for what has been
done up until the breach. It is a restitutory award. The aim of
the award is to put the plaintiff in the position he would have
been in if the contract had been performed. It is a
compensatory award.
