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Learning outcomes
After completing this topic you should be able to:
Performance in context
The terms of a contract create legally
enforceable obligations (rights and duties) for
each of the parties to it.
To meet these obligations and discharge them,
each of the parties must perform under the
contract.
This involves them doing what they have said
they are going to do in the contract.
CONTRACT
ABC is to pay APRA
an annual licence fee
for certain musical
works performed on
the radio and TV.
FORMULA
APRA
I would like to
charter the St
Cuthbert from
you to use for
fishing.
Sure!
Codelfa Constructions
NOI
SE!
BANG!
Breach of contract
If a party does not perform as agreed, there will
be a breach of contract, which will entitle the
innocent party to claim a remedy.
It is important to establish what term of the
contract has been breached, and whether it is
a condition or warranty, as this will determine
what remedy will be available.
Breach of contract
We will now look at the different ways that a
breach of contract can occur:
non-performance;
partial performance; and
substantial performance.
Non-performance
Where one of the parties has completely
failed to perform their obligations under the
contract, by either:
Not taking any actions to satisfy their
obligations under the contract; or
Doing something that was completely
different to what they were required to do
under the contract.
Varley v Whipp [1900] 1 QB 513
Whipp,
would you
HUDDERSFIELD
The machine is in the
like to buy my
town of Upjohn. It is
second-hand
a year old andSound
has good!
reaping machine
only cut 50 or so
for 21 pounds?
acres of crops.
Partial performance
Where some level of performance has been
rendered by a contracting party, but as a
whole, performance of their contractual
obligations is incomplete.
Because complete performance is required
to discharge a contract, rendering
incomplete performance will constitute a
breach of contract.
Partial performance
Where there has only been partial
performance of a contract, the innocent
party will be entitled to terminate the
contract and to claim damages.
In essence, partial performance of a
contract amounts to a significant breach of
condition.
Substantial performance
If the breach of contract is minor, and the
innocent party still receives the expected
benefit of the contract, this amounts to
substantial performance.
When substantial performance has been
rendered, the innocent party is entitled to claim
damages to compensate for the minor breach,
but they cannot terminate the contract.
Substantial performance
In essence, substantial performance of a
contract only involves a breach of warranty.
Hoenig v Isaacs [1952] 2 All ER 176
Degree of performance
NON
PERFORMANCE
PERFORMANCE
PARTIAL
PERFORMANCE
OR
SUBSTANTIAL
PERFORMANCE
Late performance
Late performance occurs when performance
takes place after the time that is specified in the
contract.
If complete performance is not tendered on time
or within a reasonable time after it is due, it may
amount to a repudiation of the contract that
would entitle the innocent party to terminate the
contract and claim damages:
Holland v Wiltshire (1954) 90 CLR 409
Holland, if you do
not settle by March
Whitshire, Ican
do not
we
28, I willOk.
take action
please
intend to
extend
proceed
the
for a breach of
with deadline?
the sale at all.
contract then.
Late performance
The inclusion of a time clause in a contract
could make the consequences of late
performance more severe.
Termination for late performance might not be
justified because, although the common law
treats time clauses as conditions, equity treats
them only as warranties, unless the parties
have expressed a contrary intention.
Anticipatory breach
Is a breach that occurs after the contract is made
but before, or at the time, performance is due.
This type of breach may be evidenced by the
words or inaction of a party, who does not intend
to undertake performance of their contractual
obligations.
Where there has been an anticipatory breach, the
innocent party may rescind the contract and claim
damages.
Anticipatory breach
Upon being informed of an unwillingness to perform
under the contract, the innocent party can apply to
the court for a remedy (they do not have to wait
until performance is due).
A party wishing to terminate a contract on the basis
of anticipatory breach must ensure that the other
partys actions constitute repudiation of the
contract, otherwise the actions taken to terminate
the contract may themselves amount to an
anticipatory breach.
CONTRACT
SALE
OF LAND
MAHONEY
WANTS OUT
LINDSEY
INTENDS TO
COMPLETE
LINDSEY
MISSED
MEETING
29 JUNE
ENTERED
INTO CONTRACT
LATE PERFORMANCE
PERFORMANCE