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Contract: Discharge

Exceptions to the entire obligations rule and standards of performance

  • 3 things to know
  • A2 Units 3 and 4

Overview

Four exceptions to the entire obligations rule, doctrine of substantial performance and effect of one party preventing the other from completing performance.

What you need to know

Answer each one before you reveal it.

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Key term

Why was there no substantial performance in Bolton v Mahadeva (1972)?

Key term

What is the position where a contract does not fix a time for performance?

Key term

State four exceptions to the entire obligations rule.

Questions from this subtopic

Each one with the model answer underneath.

  1. 1

    State four exceptions to the entire obligations rule.

    Model answer

    The rule is displaced where the obligation is divisible, where performance is substantial, where the other party freely accepts partial performance, and where that party prevents completion.

  2. 2

    What is the doctrine of substantial performance?

    Model answer

    Where a party has performed the essential part of an entire obligation and only minor defects remain, that party may claim the contract price less the cost of putting the defects right.

  3. 3

    What did Hoenig v Isaacs (1952) decide?

    Model answer

    A decorator who had completed the work on a flat apart from defects costing about fifty five pounds to remedy, on a contract price of seven hundred and fifty pounds, had substantially performed and recovered the price less that cost.

  4. 4

    Why was there no substantial performance in Bolton v Mahadeva (1972)?

    Model answer

    The heating system gave off fumes and produced far too little heat, and the cost of putting it right was a large proportion of the contract price, so the central purpose of the work had not been achieved and nothing was payable.

  5. 5

    How does a court decide whether performance has been substantial?

    Model answer

    The court compares the cost of remedying the defects with the contract price and asks whether the defects go to the root of what was promised, so a small proportion needing minor correction is substantial and a fundamental failure is not.

  6. 6

    When does acceptance of partial performance entitle a party to payment?

    Model answer

    Where the other party had a genuine choice about whether to accept the incomplete performance and chose to take the benefit of it, a promise to pay a reasonable sum will be implied.

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