1. WHEN A CONTRACT COULD BE DISCHARGED?

DISCUSS

When an agreement, which was binding on the parties to it, ceases to bind them, the contact is
said to be discharged. A contract may be discharged in the following ways:
1. By Performance of the contract ;
2. By breach of the contract ;
3. By impossibility of performance ;
4. By Agreement.

DISCHARGE BY PERFORMANCE
Under a contract each party is bound to perform his part of the obligation. After the parties have
made due performance of the contract, their liability under the contract comes to an end. In such
a case the contract is said to be discharged by performance.

DISCHARGE BY BREACH OF CONTRACT
When a party having a duty to perform a contract fails to do that, or does an act whereby the
performance of the contract by him becomes impossible, or he refuses to perform the contract,
there is said to be a breach of contract on his part. On the breach of contract by one party, the
other party is discharged from his obligation to perform his part of the obligation, and he also
gets a right to sue the party making the breach of contract for damages for the loss occasioned
to him due to the breach of contract. The breach of contract may be either actual, i.e., non-
performance of the contract on the due date of performance, or anticipatory, i.e., before the due
date of performance has come. For example, A is to supply certain goods to B on 1st January.
On 1st January A does not supply the goods. He has made actual breach of contract. On the
other hand, if A informs B on 1st December that he will not perform the contract on 1st January
next, A has made anticipatory breach of contract.

a. Anticipatory Breach Of Contract
It means the repudiation of a contract by one party to it before the due date of its performance
has arrived. Section 39, which contains law relating to anticipatory breach of contract is as
follows: When a party to a contract has refused to perform, or disabled himself from
performing, his promise in its entirety, the promisee may put an end to the contract, unless he
has signified, by words or conduct, his acquiescence in its continuance. Anticipatory breach of
contract could be made by promisor, either by refusing to perform the contract, or disabling
himself from performing the contract in its entirety, before the due date of performance has
arrived. When the refusal to perform the contract in its entirety is not there, it is not to be
considered to be a case of anticipatory breach within the meaning of section 39.
b. Effect Of Anticipatory Breach Of Contract
When the promisor has made anticipatory breach of contract, the promisee may put an end to
the contract, unless he has signified by words or conduct his acquiescence in its continuance. It
means that on the breach of contract by one party, the other party has two alternatives open to
him, viz.,
(i) He may rescind the contract immediately, i.e., he may treat the contract as an end, and may
bring an action for the breach of contract without waiting for the appointed date of the
performance of the contract,
(ii) He may not put an end to the contract but treat it as still subsisting and alive and wait for the
performance of the contract on the appointed date.

DISCHARGE BY IMPOSSIBILITY OF PERFORMANCE
Both under the English and Indian law a contract the performance of which is impossible the
same is void for that reason. Section 56, which deals with this question, mentions two kinds of
impossibility. Firstly, impossibility existing at the time of the making of the contract. Secondly, a
contract which is possible ofperformance and lawful when made, but the same becomes
impossible or unlawful thereafter due to some supervening event.


DISCHARGE BY AGREEMENT
There is nothing preventing parties to a contractual relationship to vary or discharge the
agreement, and can do so in the following ways:
Mutual discharge: is where both parties agree to release one another from what was
agreed upon before either party has performed any of the acts promised.
Release by one party: is where one party has completed their contractual promise, and
agrees to release the other party from further performance of the contract.
Novation: putting a new contract in place of the old one and can be done between the
original contracting parties or different parties.
Merger of lesser agreement into a greater agreement: is where parties to a simple
contract enter into a formal contract or deed, and the simple contract has been merged
by the formal contract which has become enforceable. Merger may also operate in such
a way where the obligations under the agreement will have the effect of discharge.
Discharge by accord and satisfaction: arises where one party is in breach of the
contractual agreement and the other party agrees to release the party who is in breach
by requiring performance of another promise, which would then mean that the previous
agreement has been discharged by accord (the new promise) and satisfaction
(performance).
Waiver of a contract: is where the strict performance of the contract is no longer
required, even though strict performance of the contractual agreement can still be
claimed by one of the parties.

DISCHARGE OF A CONTRACT BY FRUSTRATION
There may instances where performance of the contract is impossible and it isnt the fault of any
of the parties that there are no provisions dealing with a circumstance arisen, therefore, allowing
the parties to be released from further performance of the contract.
Frustration as a concept can be difficult to define and the test of frustration was stated by Lord
Radcliffe inDavis Contractors Ltd v Fareham Urban District Council [1956] AC 696, and
approved by the High Court of Australia in Codelfa Construction Pty Ltd v State Rail Authority of
New South Wales (1982) 149 CLR 336.
Lord Radcliffe in reference to the test of frustration stated:
frustration occurs whenever the law recognises that without default of either party a
contractual obligation has become incapable of being performed because the circumstances in
which performance is called for would render it a thing radically different from that which was
undertaken by the contractit was not this that I promised to do.
His Lordship further observed the importance in regards to unexpected events in terms of
frustration by stating: There must be as well such a change in the significance of the obligation
that the thing undertaken would, if performed, be a different thing from that contracted for.
Alternatively, there are three limitations to the doctrine of frustration:
the frustrating event was not caused by either party to the contract;
the frustrating event must not be one where it was reasonably foreseeable or
contemplated by either party;
the occurrence of the frustrating event was not caused by the party who is seeking to
rely on frustration.
Under the common law, a contract which is frustrated automatically comes to an end, however,
any liabilities prior to the frustrating event may still be enforceable but in terms of future
obligations (termination in futuro), the parties will be discharged.


2. DOES SILENCE AMOUNT TO ACCEPTANCE?KINDLY SUPPORT YOUR ANSWER WITH
EVIDENCE

Silent amount is not acceptable.

Evidence :
Paul the uncle and John the nephew were negotiating about the sale of farming stock.
Following a misunderstanding about the price of a horse, the uncle wrote to the nephew
saying, if I hear no more about him, I consider the horse mine at 30-15. The nephew did
not reply but told the auctioneer that the horse had been sold. However, the auctioneer then
went ahead and sold the horse by mistake. The uncle then sued the auctioneer in
conversion-an action in which P claims that D had improperly dealt with his property.

HELD Willes J
Although the nephew intended the uncle to have the horse, he had done nothing to
communicate this intention to the uncle, or to bind himself. Therefore there was no contract to
pass the property in the horse to the uncle.
The court ruled that Felthouse did not have ownership of the horse as there was no
acceptance of the contract. Acceptance must be communicated clearly and cannot be imposed
due to silence of one of the parties. The uncle had no right to impose a sale through silence
whereby the contract would only fail by repudiation. Though the nephew expressed interest in
completing the sale there was no communication of that intention. The case clearly indicates
that a person who makes an offer, cannot impose a bargain on the other merely by stating that
silence indicates consent.





3. "A consideration must be adequate". Do you agree with statement? Is a contract
without adequate consideration void? Support your answer with cases and statutes
whenever necessary.

Consideration must be sufficient but need not be adequate:
Consideration is concerned with the bargain of the contract. A contract is based on an exchange
of promises. Each party to a contract must be both a promisor and a promisee. They must each
receive a benefit and each suffers a detriment. This benefit or detriment is referred to as
consideration. There is no requirement that the consideration must be market value, providing
something of value is given eg 1 given in exchange for a house would be valid. The courts are
notconcerned with whether the parties have made a good or bad bargain isscussionFor
consideration to be good consideration, it must be of some value, even if it is minimalvalue.
There is no requirement that the consideration be commensurate in economic terms tothe
original promise. Nominal consideration will suffice as good consideration for a contract,Courts
will not measure the adequacy of the consideration as it is up to the parties to decidethe
subjective worth of each promise.
Chappell & Co Ltd v. Nestle Co Ltd [1960] AC 87, Lord Somervell, A contracting party
can stipulate for what consideration he chooses. A peppercorn does not cease to be good
consideration if it is established that the promisor does not like pepper and will throw away the
corn.

How does consideration become acknowledged by the courts?
Consideration, in some way, must be acknowledged, and the legal term for this is sufficient,
therefore the consideration must be sufficient and is usually of monetary value. Another legal
term used here is adequate, this means fair price. However, the consideration does not needto
be adequate, but needs to be sufficient to form a contract. An example of this occurred inthe
case of Thomas v Thomas (1842), where the decision was made that a woman wasallowed to
reside in a property for 1 a year. Consideration must be given at the time of agreement, but it
does not include previous acts. For example, in the case of Re McArdle (1951), previous work
was not seen as considerationin that particular contract for a future arrangement. However, if
there is an agreement between parties that previous work is to be included, then that
consideration would be seen as valid, this was apparent in Lampleigh v Braithwaite (1615) an in
Re Caseys Patents (1892). Consideration in a contract must not be illegal, in the case of Foster
v Driscoll (1929), this iswhere goods were smuggled into the USA, and therefore the
consideration became illegal.Consideration should not be a duty which exists currently. For
instance, in the case of Collinsv Godefroy (1831), a lawyer who attended court as a witness,
could not also agree to appear in court. Another case is Stilk v Myrick (1809), this is where
sailors had a duty to sail theship short-handed, therefore, when they promised the captain they
would do this, this was nota consideration because it was their duty to do this anyway.


















4. IS AN INVITATION TO TREAT AN OFFER? SUPPORT YOUR ANSWER WITH CASES,
WHENEVER NECESSARY.

According to Un Convention on contracts for the International Sale of Goods applies,
explanation for the rights and liabilities of the parties that involved.
Contract is an agreement of a two parties especially once it is written its enforced law.
Anagreement refers to a "meeting of the minds". There is no magic language necessary
toinform an agreement. However, there is an offer must be made by a person to another and
soacceptance. In other words, the sides (parties) of a contract must agree given basic terms
inorder to avoid any misunderstandings which come up after making contract. There are few
factors for the existence of a contract. One of the basics is an offer and an acceptance of that
offer.
An offer
An offer can basically be illustrated as a clear statement of the terms on which a party (the
offeror) is prepared to make a business with other party (the offeree). In other words making (by
offeror) an offer is promising to do or not to do something which is depending onacceptance by
other person (by offeree). An offer is perfomered by an offeror to an offeree. In contract, offer
can be bilateral or unilateral; bilateral offer - means two sides' promise to each other, therefore
contract made by agreement with respect of two sides (offeror and offeree) in other words, type
of contract which requires agreement and performance from both sides (parties) to the contract.
One party promises to do A and the other party promises to do B. Unsimilarly, unilateral contract
occurs when only one side (party) makes an offer to another party and the other party might
accept by action instead of by offering something back. For example, (bilateral offer situation) if
somebody offers 20 to a person who will bring him a hotdog, a unilateral contract is formed
when a person performs the condition andsupplies him with a hotdog. To ensure that made offer
is legal, it must include all 3 points shown below:
Stated terms must be shown clearly
Intention to make a business
Communication of that intention

Once an offer is made by the party, it might:
Lapse;
Rejected;
A counter-offer may be made, which automatically rejects the offer preceding it.
These events are important in the context of contract disputes as it is the order of events
thatdetermines the extent of any contractual relationship between the parties in the
circumstances.
An invitation to treat
The essential feature of an offer is that the person making it must (actually or objectively) intend
to be bound without further negotiation, by a simple acceptance of his terms. Thus there is no
offer where the owner of a house, in response to an enquiry from a person who wishes to buy it,
states the price at which he might be prepared to sell; nor even where the owner wishes to sell
and invites offer at or about a specified price. In the latter case he is said to make an "invitation
to treat", and he is not bound to accept the highest or nay other offer. In border - line cases it is
obviously hard to determine with what intention the statement was made: but the difficulty is
mitigated in two days. First, it is enough to show that the statement was reasonably understood
by the person to whom it was addressed as indicating an intention to be bound; and secondly,
the character of certain frequently-recurring types of statements issettled by rules of law, at any
rate in the absence of clear evidence of contrary intention.Thus it is generally accepted in
England that a display of price-marked goods in a shop-window, or on the shelves of a self -
service shop, is merely an invitation to treat. The offer in such a case comes from the customer.
An indication of the price at which petrol is to be sold at a filling station is, similarly, only an
invitation to treat. Likewise, advertisements in newspapers or in tradesmen's circulars are
commonly held not to amount to offers. These rules may apply even though the person making
the statement calls it an offer: a shop's"special offer" may well be nothing more than an
invitation to treat. But it should not be supposed that all displays and advertisements are only
invitations to treat. For example, it has been said that a notice displayed at the entrance to an
automatic car-park was an offer, presumably because no further act of acceptance on the part
of the proprietor was contemplated after the customer drove in. For the same reason,
advertisements of rewards for the return of (for example) lost property are commonly held to be
offers. Similarly, in Carlillv Carbolic Smoke Ball Co the manufacturers of carbolic smoke balls
promised to pay 100 to any person who caught influenza after using the appliance as directed;
and they added that they had deposited 1000 with a name bank "shewing our sincerity in the
matter". It was held that the advertisement wan an offer.


CASES
1. Facts of Pharmaceutical Society of Great Britain v.Boots Cash Chemist Ltd (1953) :
The defendants were charged under the Pharmacy and Poison Act 1933 (UK) which provided
that it was unlawful to sell Cain poisons unless such sale was supervised by aregisrtered
pharmacist.
2. Held for of Pharmaceutical Society of Great Britain v.Boots Cash Chemist Ltd (1953) :
The court ruled that the display was only an invitation to treat. A proposal to buy was made
when the customer placed the articles in the basket. Hence the contract of sale would only
bemade at the cashier's desk.


5. WHAT IS DEFINITION OF 'CONTRACT OF SALE OF GOODS' UNDER THE LAW?

Formal contract by which a seller agrees to sell and a buyer agrees to buy, under certain terms
and conditions spelled out in writing in the document signed by both parties. An invoice, for
example, is a contract of sale. Also called agreement of sale, contract for sale, sale agreement,
or sale contract. A contract of sale of goods is a contract whereby the seller transfers or agrees
to transfer the property in goods to the buyer for a money consideration, called the price. There
may be a contract of sale between one part owner and another.



6. STATE THE DIFFERENCES BETWEEN CONDITION AND WARRANTY IN THE TERMS
OF A CONTRACT

The definitions of a condition and a warranty are very specific in the context of insurance law. A
warranty can be a condition but a condition may not be a warranty. Generally, a condition is an
essential part of a contract, and if breached, the party that has been deprived is permitted to
claim damages and even terminate the contract because the breach has in effect repudiated the
contract. On the other hand, a warranty would not be considered a vital part of the contract. In
the event that one of the parties to the contract is found to be in breach of the contract, he or
she is at liberty to make a claim in damages but this does not mean that the party who did not
breach the contract could terminate the contract. The meaning of these terms is reversed in
insurance law.
Warranties play a greater part in insurance law than conditions. A warranty is a term of
insurance contract that if the insured has breached, the insurer is no longer held to be liable as
of the date of the breach. So a breach of a warranty would invalidate the insurance claim.


7. WHAT IS THE STATUTORY DEFINITION OF PARTNERSHIP AS PROVIDED UNDER THE
MALAYSIAN LAW?

Partnership is defined by Section 3(1) of the Partnership Act 1961 as the relation, which
subsists between persons carrying on a business in common with a view of profit. No person
may be a partner with himself. There must be at least two or more persons to form a
partnership. Section 3(2) excludes from statutory definition of partnership.