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Contract Law

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The order of performance

If a contract sets for the time of the performance, it is binding, or else breach. If no date is set, the rule is one must perform it in a reasonable time.

Working out who comes first and who comes second is ultimately a question of construction.

A dependent obligation is one where you donÐ'ÐŽÐ'Їt have to perform until the other party performs. Historically, courts usually construe performances as independent. Today there is a presumption of dependency. In those cases, one doesnÐ'ÐŽÐ'Їt have to perform where it seems like the other party canÐ'ÐŽÐ'Їt perform. But many obligations are concurrent e.g. order drink/food at café.

Automatic Fire Sprinklers

Watson was employed by AFS, they had a dispute and AFS ended the contract. But they canÐ'ÐŽÐ'Їt unilaterally end the contract. Unilaterally ending an employment relationship is possible, but not employment contract  So Watson still turned up to work and sat on his desk doing nothing. But Watson failed in claiming salary because salary was dependent on his work, not independent.

Prevention of performance

Discharge by performance

Once you have performed your obligations, you are discharged. You have to perform your contractual obligations exactly.

Entire contracts

Simply on where one partyÐ'ÐŽÐ'Їs obligation to perform depends on the other party entirely to perform.

Cutter v Powell – A sailor signed on to sail a ship and died half way through his voyage. Family claimed for half of his wage. This is a question of construction. However, family failed because the contract relied on the sailor to complete the entire voyage. The wage was in excess of the market wage.

Sumpter v Hedges –

Assume you have a contract to build a house for a fixed price. The builder abandons the project halfway through, and says Ð'ÐŽÐ'®pay me half the contract priceÐ'ÐŽÐ'Ї. The court says Ð'ÐŽÐ'®noÐ'ÐŽÐ'Ї. Until you actually delivered a house, youÐ'ÐŽÐ'Їve earned nothing.

The courts however generally do not like the idea of entire obligation. But sometimes they have to  They formed the doctrine of Ð'ÐŽÐ'®substantial performanceÐ'ÐŽÐ'Ї. As long as you have substantially performed your obligations, you get the contract price. However, because youÐ'ÐŽÐ'Їve only substantially performed, youÐ'ÐŽÐ'Їre possibly still in breach of contract, so possibly liable for damages. The doctrine doesnÐ'ÐŽÐ'Їt excuse liability.

So how do you know when you have substantially performed?

Hoenig v Isaacs – Denning J: A simple contract to decorate a flat for 750 pounds. 2 installments of 150 had been paid but the def. refused to pay the rest for faulty design and workmanship. It turned out on the evidence, that some requirements were not fulfilled. Denning said there had been substantial performance, and came up with a little test: Is the breach of contract one that would allow the innocent party to terminate the contract? If not, then there has been substantial performance.

Contrasting case: Bolton v Mahadeva – contract to instill a hot water system in a house. Contract price was 560 pounds. The work was defective and 175 pounds to fix. Question: had the work was substantially performed? Court looked at ratio between contreact price and the price to repair. Price of defection was too large, therefore no substantial performance.

Jacob v Kent – contract to install pipes of a particular brand. Person doing installment used the wrong brand but was just as good. Owner of property did not want to pay. Court held that there was substantial performance, because everything was performed. This contradicts Bolton v Mahadeva because the price to take out the pipe would be significant.

Severable contracts

It is possible to break a contract into components.

Discharge for breach of a term

When has person the right to terminate a contract and abandon it?

Firstly, identify a breach of contract. Breach of contact occurs when a person either fails to perform on time or they fail to perform to the standard acquired by the contract. Standard needs to be identified, sometimes it is absolute, or Ð'ÐŽÐ'®reasonableÐ'ÐŽÐ'Ї, etc.

Breach comes in 3 forms:

 non performance

 defective performance

 late performance

Assume breach is identified. 



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