Introduction: What Does "Discharge" Actually Mean?
Welcome to one of the most important parts of Contract Law! You’ve already learned how a contract is made (Offer, Acceptance, Consideration). Now, we are looking at the finish line. Discharge of a contract simply means that the contract has come to an end. The parties are no longer bound by their legal promises.
Think of it like a subscription to a streaming service. When you cancel it or when the month ends, the "contract" is discharged. In the Cambridge 9084 syllabus, there are four main ways a contract ends: Performance, Agreement, Breach, and Frustration. Let’s break these down step-by-step!
1. Discharge by Performance
This is the "happy ending." Both people did exactly what they promised to do. However, the law is quite strict here. The general rule is the Perfect Performance Rule: performance must be total and exact.
The Strict Rule
In the case of Cutter v Powell, a sailor was promised payment at the end of a voyage. He died just before the ship reached port. Because he didn't complete the entire journey, his widow got nothing. Harsh, right?
The Exceptions (Making it Fairer)
Don't worry if that seems too strict! The law created exceptions so people don't get cheated out of money for minor mistakes:
A. Substantial Performance: If someone does most of the work with only minor defects, they can still get paid (minus the cost of fixing the mistake).
Example: If a builder paints your whole house but forgets one window sill, they have substantially performed.
Case: Hoenig v Isaacs (The decorator finished the flat but some furniture was wonky; he still got paid most of the money).
B. Divisible Contracts: If a contract is made of separate parts (like being paid per ton of coal delivered), you get paid for each part you finish.
Case: Ritchie v Atkinson.
C. Prevention of Performance: If the other person stops you from finishing your job, you can sue for the work you’ve already done (this is called Quantum Meruit - "as much as he deserves").
Case: Planche v Colburn.
D. Acceptance of Partial Performance: If one party does half the job and the other person voluntarily accepts it, they must pay for that half.
Common Mistake to Avoid: It must be a free choice! If a builder leaves half-finished walls on your land, you have no choice but to keep them, so you don't have to pay (Sumpter v Hedges).
Quick Review: Performance
• Rule: Performance must be 100% exact.
• Exceptions: Substantial performance, divisible parts, being prevented from finishing, or the other side agreeing to take half.
2. Discharge by Agreement
Sometimes, both parties just decide to call it quits. This is like two friends agreeing to cancel a lunch date. There are two ways this happens:
Bilateral Discharge: Both sides still have things to do, so they agree to release each other. My "giving up" my right to your work is my consideration for you "giving up" your right to my money.
Unilateral Discharge: One person has finished their job, but the other hasn't. The person who finished can agree to let the other person off the hook. This needs Accord and Satisfaction (a fancy way of saying an agreement and a new "price" or "token" to make the cancellation legally binding).
3. Discharge by Frustration
Sometimes, something happens that is nobody's fault, but it makes the contract impossible to complete. This is the Doctrine of Frustration.
When is a contract frustrated?
1. Destruction of the Subject Matter: If you hire a hall for a concert and it burns down the night before, the contract is frustrated.
Case: Taylor v Caldwell.
2. Personal Incapacity: In a contract for personal services (like a lead singer), if the person becomes too ill to perform.
Case: Condor v The Barron Knights.
3. The "Main Event" is Cancelled: If the whole reason for the contract disappears.
Case: Krell v Henry (Hiring a room specifically to watch a King’s coronation which was then postponed).
4. Government Interference or Illegality: If the law changes and makes your contract illegal to perform.
When is it NOT frustration?
Be careful! Judges don't like letting people out of contracts easily. It is not frustration if:
• It’s just "too expensive" now (Davis Contractors v Fareham UDC).
• You caused the problem yourself (Self-induced frustration).
• The event was foreseeable (you knew it might happen).
What happens to the money? (The 1943 Act)
Under the Law Reform (Frustrated Contracts) Act 1943:
• Money paid before the event can be recovered.
• Money owed before the event no longer has to be paid.
• The court can allow a party to keep some money to cover expenses they already spent.
Memory Aid for Frustration
Think of the "3 I's": Is it Impossible? Is it Illegal? Is it radically Ineffective?
4. Discharge by Breach
A breach happens when one party fails to do what they promised. But not every breach ends the contract!
A. Actual Breach: You don't do the job on the day it was supposed to happen.
B. Anticipatory Breach: You tell the other person before the deadline that you aren't going to do it.
Case: Hochster v De La Tour. (A courier was told he wasn't needed anymore weeks before the job started. He was allowed to sue for compensation immediately).
The Effect of a Breach
If someone breaches a condition (a really important term), the "innocent" party has a choice:
1. Repudiate: End the contract and sue for damages.
2. Affirm: Keep the contract going but still sue for damages for the mistake.
Summary Checklist for the Exam
When looking at a problem question, ask yourself:
1. Did they finish the job? (Performance - look for "substantial").
2. Did they both agree to stop? (Agreement).
3. Did something crazy happen that made it impossible? (Frustration - check if it was just "bad luck" or "impossible").
4. Did someone refuse to do the work? (Breach).
Final Tip: Always mention the case names! Even if you forget the year, Hoenig v Isaacs or Taylor v Caldwell will get you those vital marks.