Termination Of Contract

Termination of contract Ending contract Frustration Causes (P’s argument) 1 Intervening event 2 Not contemplated by both parties 3 Not fault of both parties 4 Impossible or radically different to original

Termination

Rescission

1Breach of condition (Clearly expressed as condition/Statutory implied as condition/P would have not entered without strict or substantial assurance)

1 Mistake (Each party made the same mistake about a fundamental matter)

2 Serious breach of intermediate term (Substantially deprived of P’s benefit)

2 Undue influence (Absence of a free and voluntary act of a party/Could be caused by special relationship) Exceptions: Husband and wife/ P got independent advice 3 Economic duress (Pressure exerted goes beyond legitimate)

Potential defence

Results

Negate 4 conditions above

Negate P’s argument (Not serious enough to terminate)

1All outstanding obligation discharged

L Schuler AG v Wickman Machine Tool Sales 1 Ends from time election is made

2 Benefits and Liabilities equalised between both parties

2 Relieved from performing future obligation 3 Does not affect obligations already accrued

Process

1P makes an election to treat breach as ending the

4 Unconscionable conduct (Covered in part 2) Negate P’s argument/Use exemption rule

Ends from its beginning Note : Rescission is not available in scenarios below 1 Contract has been affirmed 2 Restitution is not available 3 Third party’s legal rights are affected Same

contract 2 Must not be unequivocal and be communicated to the party in breach 3 Party terminating proves to be ready and willing to perform their part of contract

Cases

Taylor v Caldwell

4 Cant not be revoked Associated Newspaper Ltd v Bancks

Taylor v Johnson

Remedies Caused by breach of warranty or slight intermediate condition Types Damages

P

D

Damage can be awarded

Damage cant be awarded

1 Must be a type damage can be awarded (Exception: provision of entertainment or enjoyment)

P would have not suffered loss but by D

P’s loss is not caused by D

2 Loss must be caused by breach 3 Loss must not be too remote 4 Innocent party has to mitigate loss

First limb: loss is in contemplation of usual course of business Second limb: within reasonable contemplation of parties as a probable result of the breach

Recovery of the contract price

(Consequential damage only if notice is given) Performed obligation under the contract

Specific performance

Entitled to recover the agreed price Dongan v Ley

1Only when damage is not adequate 2 Never ordered for contracts involving personal service

Injunction Stop a party from doing an act

Show the contravening conduct will continue or happen again

Loss is outside the usual course of business and unreasonable P’s contributory act counts for reduction of damage

Stipulates precise completion Requires substantial performance Lumley v Wagner

Restitution Prevent unjust enrichment

Lumley v Wagner D has been enriched at the expense of P, it is unjust for D to keep the benefit Fair and just compensation to P Fibrosa v Fairbairn

Rectification Mistake common to both paties Seek order to rectify incorrect terms Third party’s legal right must not be affected

Time limitation Legal action for simple contract is within 6 yrs Legal action for formal contract is within 15 yrs Legal action for unconscionable conduct is within 6 yrs

Baltic Shipping v Dillon