Q.
Obligation to a contract can be discharged by various ways - frustration, performance, breach and agreement. Discuss the various types of performances.
A.
See 2011 Q2 on discharging contract here.
Part V of the Contracts Act 1950 states the various matters regarding performance.
Section 38 (1) states that the parties to a contract must either perform, or offer to perform, their respective promises, unless the performance is dispensed with or excused under this Act, or of any other law.
This is even after the promisor is dead. S.38 (2) states promises bind the representatives of the promisor said in case of the death of the promisor said before performance, unless a contrary intention appears from the contract.
Among discharging a contract by performance, there are in fact, various instances where performance is not complete. This gives rise to various types of performances deviating from the ideal scenario of the written agreement.
THE GENERAL RULE
The general rule is that the parties must perform precisely all the terms of the contract in order to discharge their obligations. However, there could be imperfections and circumstances outside the contract description and although imperfect, it is considered complete. Part of this is *substantial performance.
The leading case law on this is Sumpter v Hedges 1898.
As a result of the decision in Sumpter and other similar decisions, the common law had subsequently recognised some exceptions to the general rule other than that performance of a contract must be exact and complete according to the terms, with the exceptions being:
- substantial performance;
- acceptance of partial performance;
- divisible contracts;
- the law does not concern itself with trivialities (de minimis non curat lex);
- the performance of the contract has been obstructed;
- time for performance
Lawteacher.net has a write up on the various types of performances. See below.
A) DIVISIBLE CONTRACTS
A contract may be entire or divisible. An entire contract is one where the agreement provides that complete performance by one party is a condition precedent to contractual liability on the part of the other party. With a divisible contract, part of the consideration of one party is set off against part of the performance of the other. Contrast:
Sumpter v Hedges [1898] 1 QB 673
B) ACCEPTANCE OF PARTIAL PERFORMANCE
Where the party to whom the promise of performance was made receives the benefit of partial performance of the promise under such circumstances that he is able to accept or reject the work and he accepts the work, then the promisee is obliged to pay a reasonable price for the benefit received.
But it must be possible to infer from the circumstances a fresh agreement by the parties that payment shall be made for the goods or services in fact supplied. See:
Christy v Row (1808) 1 Taunt 300.
C) COMPLETION OF PERFORMANCE PREVENTED BY THE PROMISEE
Where a party to an entire contract is prevented by the promisee from performing all his obligations, then he can recover a reasonable price for what he has in fact done on a
quantum meruit basis in an action in quasi-contract. See:
Planche v Colburn (1831) 8 Bing 14.
D) SUBSTANTIAL PERFORMANCE
When a person fully performs the contract, but subject to such minor defects that he can be said to have substantially performed his promise, it is regarded as far more just to allow him to recover the contract price reduced by the extent to which his breach of contract lessened the value of what was done, than to leave him with no right of recovery at all. Contrast:
Dakin v Lee [1916] 1 KB 566
The defendants promised to build a house according to specification and failed to carry out exactly all the specifications, for example, concrete not four feet deep as specified, wrong joining of certain rolled steel joists and concrete not properly mixed. The Court of Appeal held that the builders were entitled to recover the contract price, less so much as ought to be allowed in respect of the items found to be defective.
Sumpter v Hedges [1898] 1 QB 673
The plaintiff agreed to erect upon the defendant's land two house and stables for £565. He did part of the work to the value of about £333 and then abandoned the contract. The defendant completed the buildings. The Court held that the plaintiff could not recover the value of the work done, as he had abandoned the contract. [However, only the sum expensed for material used was paid].
E) TENDER OF PERFORMANCE
Tender of performance is equivalent to performance in the situation where party (a) cannot complete performance without the assistance of party (b) and party (a) makes an offer to perform which party (b) refuses. See:
Startup v M'Donald (1843) 6 M&G 593.
Ref:
Thanks to Angie Ng for idea in this post.
[x] Own account
Lawteacher.net at,
http://www.lawteacher.net/lecture-notes/contract-law/discharge-lecture.php