FULL SET OF REVISION NOTES FOR CONTRACT LAW (2ND YEAR LAW LLB)
Includes
- contractual breach
- terms of a contract
- damages for breach of contract
- limitations to compensation
- equitable remedies
- discharge by performance
- discharge by frustration
- doctrine of mistake
CONTRACT LAW COMPLETE REVISION GUIDE
CONTRACTUAL BREACH AND REMEDIES
What is a legally binding contract?
Types of terms of contracts that can be breached
Discharge by repudiatory breach or anticipatory breach
Types of remedies for breach of contract
DISCHARGE OF CONTRACT (a contract is valid but ends because it is performed, or
breached, or frustrated)
DISCHARGE OF CONTRACT BY BREACH
Occurs when one or both contractual parties fail to perform their contractual obligations
fully and/or precisely
As a result of a breach, an innocent party may be entitled to:
o Damages
o Seek an order for performance of the contract
o Terminate the contract
o Ask for a combination of these remedies
1. Is it a contractual term?
Pre-contractual statement OR contractual term?
Are they express terms & have the express terms been incorporated?
Have terms been implied?
2. What type of term is it?
Condition
o Conditions are referred to as “fundamental terms” and are the MOST
important terms of a contract
o Conditions of contracts are:
1. Essential stipulations – which the party guarantees will be
performed
2. Go to the root of the contract – they are terms which were
essential for the contract to be formed in the first place
3. Breach of the contractual term would frustrate the commercial
purpose of the contract for one of the parties
o Factors which point towards a term being a condition include:
Whether the innocent party thought the term would be strictly
complied with
The likely effects of any breach of the term
How important it was to the innocent party
o The innocent party may claim damages for the breach as well as terminate
the contract = repudiatory breach of contract
o Breaches of conditions are so serious, that it justifies the innocent party
ending the contract
Poussard v Spiers [1876]
Bannerman v White [1861] – “common understanding”
, Bentsen v Taylor, Sons & Co. (No.2) [1893] – “There is
no way of deciding that question except by looking at
the contract in the light of the surrounding
circumstances, and then making up one's mind whether
the intention of the parties, as gathered from the
contract itself, will best be carried out by treating the
promise as a warranty sounding only in damages, or as a
condition precedent by the failure to perform which the
other party is relieved of his liability”
C21 London Estates Limited v Maurice Macneill Iona
[2017] – a term will be a condition of a contract when:
o legislation states that the term will be a
condition
o case law says that the type of term will be a
"condition"
o the contract itself describes it as a
"condition", on a correct reading of a
contract
o the innocent party may terminate the
contract for breach of the term, no matter
what the factual consequences
o it’s intended to operate as a condition as a
matter of interpretation of the contract.
Warranties
o Warranties are lesser or minor terms of the contract – collateral to the main
purpose of the contract
o The lesser status of importance means the innocent party can only claim
damages when a warranty is breached but NOT terminate the contract
o If the term is not a condition or an innominate term, it is a warranty
Bettini v Gye [1876]
Innominate terms
o Also known as “intermediate” terms
o Whether or not a party can terminate a contract depends on the seriousness
of the consequences of the breach of the term – NOT the status or
importance of the term itself (as with warranties and conditions)
o Seriousness of breach is assessed at the time of the termination, having
regard for:
1. What happened leading up to the breach of the term
2. What is likely to happen next, if the contract is not terminated
Hong Kong Fir Shipping Co v Kawasaki Kisen Kaisha Ltd
[1962]
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