Power Point Topic6

8/4/2019 Power Point Topic6

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Topic 6Performance and breach of contract:Discharge of contractual obligations


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REVISION


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What to do this week Attend seminar/ Listen to recording Read chapter 8 of First Principles of Business Law Do the tutorial Performance and breach of contract .

NOTE: The principles relating to Divisible contractsand breach of innominate terms are not examinablein this course.


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Learning OutcomesAfter completing this topic you should be able to:

explain what degree of performance isrequired to discharge a contract

explain when and how a breach of contractmay occur

distinguish actual and anticipatory breach.


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1. Performance in context It must be understood that duties of performance

arise from the creation of a contract containing

particular terms.

These terms give rise to legally enforceableobligations (rights and duties).

Performance is then required of the contractualduties owed, so as to discharge them.


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2. Determining the required performance The performance required depends on theparticular terms of the contract. In the event of a dispute this means that theterms of the contract must be interpreted by thecourts. The courts apply an objective approach:

Hide & Skin Trading Pty Ltd v Oceanic Meat Traders Ltd ( 1990) 20 NSWLR310

Australian Broadcasting Commission v Australasian Performing Right Association Ltd ( 1973) 129 CLR 99


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2. Determining the required performanceCompare the following examples and discussexactly what performance is required by the sellerin each case.

A agrees to sell B 100 tons of wheat. A agrees to sell B 100 tons of grade 1 wheat. A agrees to sell 100 tons of the wheat in his

warehouse.


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3. The effect of performance Voluntary performance discharges the

obligations. When all the obligations aredischarged, the contract is at an end.

Performance of contractual promises is requiredunless excused by unusual circumstances.

For example, if a contract can be said to be frustrated due to asupervening event.


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3. The effect of performance Failure to perform voluntarily is a breach of contract. Breach of contract does not discharge the contract:

the obligations in existence and can be enforced bymeans of a legal action.

Sometimes a court may order that specificperformance actually be carried out. But the ordinaryremedy for breach is payment of damages instead of performance. This discharges the outstandingobligations.


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4. Excusing performance: Frustration

Performance of contractual promises may beexcused if the performance is impossible.

If a promise is impossible from the outset it does not

create enforceable obligations (Initial impossibility).


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4. Excusing performance: Frustration When performance is initially possible but changed

circumstances then make it impossible (or fundamentallydifferent from what was originally envisaged) the situation isdescribed as supervening impossibility.

If it can be inferred from the circumstances that thecontracting parties have assumed the risk of changedcircumstances, they remain bound by the contract and mustpay damages for non-performance, even if circumstanceschange to make performance impossible.


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4. Excusing performance: Frustration A contract can be said to be frustrated where:

It cannot be inferred from the circumstances that theparties have assumed the risk of changed

circumstances; and The party seeking relief is not responsible for the

changed circumstances; and It would be unjust in the new circumstances to enforce

the agreement. Maritime National Fish Ltd v Ocean Trawlers [1935] AC 524 Codelfa Construction Pty Ltd v State Rail Authority of NSW

(1982) 149 CLR 337


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5. Breach of contract If performance is not excused, a failure by a

contracting party to do what was promisedconstitutes a breach of contract.

Looked at this initially in Topic 6. Focus was onwhether term was a condition or warranty.Important to review this for this topic. Nowmore detail regarding breach.


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5. Breach of contract Depending on the importance of the term that

is breached, a breach of contract can describedeither as:

a breach of condition a breach of warranty

Associated News v Bancks- newspaper/ginger megs comic stripBettini v Guy - opera singer


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5. Breach of contract

A breach can occur in different ways. These aredescribed separately in the following slides.


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6. Non-performance Non-performance describes a complete failure

to perform , e.g. The time for performance arrives and

nothing at all is done; OR Something is done but it bears no relation to

what was undertaken. Varley v Whipp [1900] 1 QB 513


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7. Partial performance Generally, complete performance is required to

discharge the contract. Anything less is calledpartial performance and amounts to a breachof contract.


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7. Partial performance A breach of a condition (even a small breach)

may justify rejection of the performance andtermination of further performance. Theplaintiff can also claim for damages tocompensate for any loss caused by the breach.


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7. Partial performance A breach of a warranty does not justify rejecting

the performance and terminating furtherperformance: the plaintiff is only entitled toclaim damages to compensate for any losscaused by the breach of warranty.


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8. Substantial performance If a breach of a condition is relatively minor, so

that the plaintiff still gets the expected benefitof the contract, the performance is calledsubstantial performance .

Although this is still a breach of condition,substantial performance cannot be rejected andfurther performance terminated: only damagescan be claimed.


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8. Substantial performance In other words, if performance is substantial, a

breach of condition is treated as a breach of warranty.

Hoenig v Isaacs [1952] 2 All ER 176

Steele v Tardiani (1946) 72 CLR 386


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9. Late performance Performance must be made when agreed.

Otherwise performance is due within areasonable time.

A complete failure to perform or tenderperformance within the required time amounts

to a repudiation of the contract and may justifytermination.

Holland v Wiltshire (1954) 90 CLR 409


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9. Late performance If performance is made or tendered late,

termination might not be justified. This isbecause, although the common law treats timeclauses as conditions, equity treats them only aswarranties unless the parties have expressed a

contrary intention. Legislation now gives preference to the equitable

approach: e.g. see s 41 of the Property Law Act

(Vic).


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10. Breach before performance is due(anticipatory breach)

Breach normally occurs when or afterperformance is due. But sometimes it isobvious in advance that a breach is likely. Thelaw recognises anticipatory breach when:

Performance can no longer be achieved; OR By words or conduct the promissor has

indicated an intention not to perform, i.e.has repudiated or disavowed the contract.


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Repudiation:

Repudiate - to refuse to acceptto denyto

refuse to acknowledge or payto disown


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May refer either to the entire contract, or to acondition: either way, the repudiation allowsthe plaintiff to treat performance asterminated and sue for breach.

Repudiation of a warranty cannot have this effect.


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If the whole contract (or a condition) isrepudiated, the non-defaulting party mayaccept the repudiation, terminate furtherperformance of the contract and sue for

damages.


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NB: Terminating is risky if the facts do not reallyamount to a repudiation, because thenterminating is itself an act of repudiation.


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Documents about Tuqiri sacking reveal nothing10th August 2009, 15:30 WST

The public is no closer to learning the reasons for Lote Tuqiris sacking by the Australian Rugby Union (ARU), with newly rel easedcourt documents revealing no details. The former Wallabies and NSW Waratahs winger had his $1 million a year contract torn upby the ARU on July 1, but the circumstances leading to his sacking were not made public.

The ARU said only that Tuqiri had breached the player code of conduct, but not the law

Consequently, the full statement of claim on behalf of Lote Tuqiri and LT Promotions was revealed, with the exception of paragraph E. The claim says Tuqiris employment with the ARU and the NSW Rugby Union (NSWRU) was fixed for five years fromJanuary 2008 to December 2012.

It is the plaintiffs contention that the terminations were contrary to the provisionsof the player contract and amounted to a repudiation of that contract which the

plaintiffs have accepted, a statement of claim released on Monday said.

The plaintiffs claim damages for loss of bargain and (damages) flowing from thewrongful termination.

The circumstances leading to the termination were not outlined. The parties are due to appear in the NSW Supreme Court on August 11.

SYDNEY

http://au.news.yahoo.com/thewest/sport/a/-/union/


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Tuqiri, ARU settle out of court AAP August 24, 2009, 5:28 pm Send

The drawn-out sacking of Tuqiri ceased on Monday when the partiesannounced a negotiated settlement.

The former NSW Waratahs winger had his contract torn up by the ARU onJuly 1, but the circumstances leading to his sacking were not made public.

The ARU said only that Tuqiri had breached the player code of conduct, butnot the law.

Tuqiri took action against the ARU alleging unfair dismissal and both sidesargued against details being released.

"Following mediation discussions between the parties, an agreedsettlement has been reached and Mr Tuqiri has agreed to discontinue hisproceedings against the ARU and NSWRU," the ARU said in a statementreleased late on Monday.

http://au.news.yahoo.com/thewest/sport/a/-/union/5854331/tuqiri-aru-settle-out-of-court /
http://l.yimg.com/fv/xp/aap/20090824/18/3993387262.jpg


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Hochester v De la Tour (1853) 1 CLR 846; 118

ER 922Employment 3 weeks 22/5 1/6Cont


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Mahoney v Lindsey (1980) 33 ALR 601

Contract M wants out L intended to complete L missed meeting 29/6sale of land


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Topic 7 seminar topic

Performance of a contract


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Case study: The building supplies Andre Paginni, a builder, has a contract to renovate a house for a client. He needs supplies to carry out various different repairs.On Tuesday morning, he telephones Bunnings Warehouse, a

retailer of building materials and hardware. He orders: 30 x 50 kg bags of cement mix for $200, which he needs tobuild a brick wall in the garden; 100 sheets of 2.4 metre x 1.8 meter plasterboard for $2,000,

which he wants to repair various different walls in the house;and 1000 meters of tongue-and-grooved pine floorboards for$2,400, to replace the floor in the kitchen;


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Case study: The building supplies Andre says he needs the materials immediately and theassistant assures him that everything will be deliveredto Andre before the weekend.


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Case study: The building suppliesOn Wednesday the following goods are delivered by BunningsWarehouse to Andre.

30 x 50 kg bags of Victory cement mix 90 sheets of 2.4 metre x 1.8 metre plasterboard No pine floorboards.


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Case study: The building supplies Andre telephones Bunnings Warehouse to ask about thefloorboards and is told that they were mistakenly left off the truc

and will be delivered the following week on Wednesday. Andre is upset at what he thinks is inadequate performance of the contract. He tells the assistant that he wants to reject

delivery of all the goods, and stop any further deliveries fromBunnings Warehouse. Bunnings says that Andre is not entitledto do this. They say that he must keep and pay for what he hasreceived and accept the floorboards when they are delivered.


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Question

Using the four step process, advise BunningsWarehouse of their legal position in thesecircumstances. You will need to determine whatwere the terms of the contract, whether there

was discharge by performance or a breach of contract. If there was a breach, you will need toexplain the type of breach.


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PLANNING STAGE ( or identifying the important facts for issue spotting)

Identify the agreed terms. Has there been discharge by performance or a

breach? This will mean you need to determinewhether the term is a condition or warranty.


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Step 1 Identify the legal issue

The principle (or issue) of law is


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Step 3 Apply the lawto the facts of the question in a detailed and lomanner, to each rule of law explained in step 2


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Step 4 Draw possible conclusions(logical and consistent with whave argued above)

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