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Contract: Discharge

Discharge by performance and the entire obligations rule

  • 3 things to know
  • A2 Units 3 and 4

Overview

Required for discharge by performance, entire obligations rule and quantum meruit claim.

What you need to know

Answer each one before you reveal it.

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Key term

What is required for discharge by performance?

Key term

State the entire obligations rule.

Key term

Explain why the entire obligations rule can operate harshly.

Questions from this subtopic

Each one with the model answer underneath.

  1. 1

    What does it mean to say that a contract has been discharged?

    Model answer

    It means the parties are freed from their outstanding obligations under the contract, which may happen by performance, by agreement, by breach or by frustration.

  2. 2

    What is required for discharge by performance?

    Model answer

    Performance must be complete and exact, so a party must do precisely what the contract required before the other side's obligation to pay arises.

  3. 3

    State the entire obligations rule.

    Model answer

    Where the contract treats performance as a single entire obligation, the party must complete the whole of it before becoming entitled to payment, and incomplete performance earns nothing.

  4. 4

    What did Cutter v Powell (1795) decide?

    Model answer

    A sailor engaged for a lump sum payable on completing the voyage died before the ship reached port, and his widow recovered nothing because the obligation was entire and had not been performed.

  5. 5

    Explain why the entire obligations rule can operate harshly.

    Model answer

    A party who has performed almost the whole of a substantial obligation may recover nothing at all, so the other side receives real value for free because of a shortfall at the very end.

  6. 6

    Why does the entire obligations rule exist?

    Model answer

    Where the parties agree a single price for a complete job, the promise of the completed job is what was bought, and the risk of not finishing is the risk the performing party accepted.

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