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Contract: Discharge

Evaluating the rules on discharge

  • 3 things to know
  • A2 Units 3 and 4

Overview

Main criticism of the entire obligations rule, case for retaining the entire obligations rule and case for keeping frustration narrow.

What you need to know

Answer each one before you reveal it.

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Key term

Is the doctrine of frustration too narrow?

Key term

State the case for keeping frustration narrow.

Key term

Is the doctrine of substantial performance too uncertain?

Questions from this subtopic

Each one with the model answer underneath.

  1. 1

    State the main criticism of the entire obligations rule.

    Model answer

    It can leave a party who has done most of the work with nothing while the other side keeps the benefit, which is a forfeiture out of all proportion to the shortfall in performance.

  2. 2

    State the case for retaining the entire obligations rule.

    Model answer

    It gives effect to what the parties actually agreed when they fixed a single price for a completed job, and it gives the performing party a strong incentive to finish rather than to abandon the work half done.

  3. 3

    Is the doctrine of substantial performance too uncertain?

    Model answer

    It softens the harshness of the entire obligations rule, but nobody can say in advance how large a defect will defeat the claim, so a contractor cannot know whether stopping work will earn the price less a deduction or nothing at all.

  4. 4

    Criticise the outcome in Sumpter v Hedges (1898).

    Model answer

    The landowner kept the value of substantial building work for nothing, and the reasoning that he had no choice about accepting it rewards the party who ends up with the benefit simply because the work was done on his land.

  5. 5

    Explain the criticism of allowing an innocent party to affirm and claim the price after White and Carter (Councils) v McGregor (1962).

    Model answer

    It allows a party to press on with performance nobody wants, wasting resources and increasing the loss, when damages would fully protect its interest and the duty to mitigate would otherwise require it to stop.

  6. 6

    State the case in favour of the decision in White and Carter (Councils) v McGregor (1962).

    Model answer

    A party who has contracted for performance should not be forced into a damages claim by the other side's wrongful cancellation, and later cases limit the principle to situations where the innocent party has a legitimate interest in performing.

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Law Making in Wales and the UK
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Pecuniary loss is financial and measurable.
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