Contracts Law: Chapter 7: Performance, Breach, and Discharge

Types of Contract Performance. Understanding the various types of contract performance is essential for law students to grasp the complexities of contract law. Contracts can be performed in several ways: a) Complete Performance: This occurs when both parties fulfill their contractual obligations as specified in the contract. The contract is then discharged, and both parties are relieved of further obligations. b) Substantial Performance: In cases of substantial performance, one party has mostly fulfilled their obligations under the contract, but there may be minor, non-material deviations from the contract terms. The non-breaching party is generally entitled to the contract price minus any damages resulting from the deviations. c) Partial Performance: Partial performance involves one party performing only some of their contractual obligations. In such cases, the non-breaching party may be entitled to partial payment or specific performance of the remaining obligations. d) Inferior Performance: Inferior performance occurs when one party fails to meet the contract's standards or specifications. The non-breaching party can typically seek damages for any harm caused by the inferior performance. Material and Anticipatory Breach. Understanding the concepts of material breach and anticipatory breach is critical for law students: a) Material Breach: A material breach is a substantial failure to perform a significant aspect of the contract. When a material breach occurs, the non-breaching party is generally relieved of their contractual obligations and can seek damages for the harm caused by the breach. b) Anticipatory Breach. Anticipatory breach happens when one party indicates, through words or actions, that they do not intend to fulfill their contractual obligations before the performance is due. The non-breaching party can treat this as an immediate breach and seek remedies. Excuses for Non-Performance. Law students should be familiar with the various excuses for non-performance in contract law: a) Impossibility of Performance: If it becomes impossible to perform the contract due to unforeseen circumstances beyond the control of the parties (for example, natural disasters, death of a key party), the contract may be discharged. b) Impracticability: Impracticability arises when performance is still possible but becomes extremely burdensome or costly due to unforeseen circumstances. In such cases, the affected party may be excused from performance. c) Frustration of Purpose. Frustration of purpose occurs when an unforeseen event undermines the fundamental purpose of the contract, making it senseless to continue. This can lead to contract discharge. d) Mutual Rescission: Parties may mutually agree to cancel or rescind the contract, releasing both parties from their obligations. e) Accord and Satisfaction: Parties may reach a new agreement (accord) to substitute for the original contract, and once the new agreement is performed (satisfaction), the original contract is discharged. f) Novation: Novation involves substituting a new party for one of the original parties, with the consent of all parties involved. The original contract is discharged, and the new party assumes the obligations. Landmark Case: Jacob & Youngs, Inc v Kent (1921). This case illustrates the importance of substantial performance and the impact of minor deviations from contract specifications. In this case, a builder used the wrong brand of pipes, which was a minor deviation from the contract specifications. The court held that this did not constitute a material breach, and the builder was entitled to payment minus any damages caused by the deviation.