1. Explain the different ways in which a contract may come to an end.

Contracts normally come to an end when the obligations arising under it are performed.
However, under certain circumstances, a contract may be discharged before performance is
complete.
a. Discharge by performance
If all the contractual obligations as defined by the terms of the contract are fully
performed, the contract is brought to an end or ‘discharged’ by performance.
b. Discharge by agreement
First, just as parties are free to agree to bind themselves to a contract, they are free to
negotiate with each other to release themselves from the obligations of that contract.
Such agreement may well have been built into the original contract, for example,
where parties agree that their original agreement be terminable by giving notice of
termination, or upon lapse of a specified period of time. Alternatively, contracting
parties may release themselves from the obligations of the original contract by
entering into a subsequent contract of release.
c. Discharge by breach
A breach of contract is committed when a party without lawful excuse fails or refuses
to perform what is due from them under the contract, or performs defectively or
incapacitates themselves from performing.
d. Discharge by frustration
Frustration occurs when a supervening event, due to no fault of the parties, renders
the contract entered into radically different from that which the parties originally
undertook.

2. Explain the rule of “precise performance”. What is the impact of this rule on the claim for
payment in relation to work done under a contract?
Precise Performance Rule is a party must perform his precise and exact obligations under
a contract before he is entitled to claim payment or performance from the other party. This
has the following consequences:
a. In an ‘entire’ contract payment only has to be made when performance is fully
completed - there is no paymenet for partial performace, unless:
‒ The other party has prevented completion of performance
‒ The partial performance has been accepted or
‒ The court deems there to have been ‘substantial performance’.
b. A party may be entitled to paymenet for completion of particular stages.

3. Identify and explain the situations under which payment for work done may be claimed
even in the absence of precise performance. What are the rights of the parties in each of
these situations?
In recent years, the courts have been a little more flexible in the application of this section,
and section 15A of the 1979 Sales of Goods Act now prevents a business purchaser from
unreasonably rejecting goods which are only slightly different from the contract description.

4. Explain the difference between actual and anticipatory breaches of contract. What are the
differences in how the law treats these two types of breaches?
Actual breach is when the party has failed to perform on the date that the performance is
due. When a breach does occur, there are several types of remedies the other party may
pursue. These include compensatory damages to address direct economic losses stemming
 from the breach, and consequential losses, which are indirect losses that go beyond the
value of the contract itself but are the result of the breach.

In an anticipatory breach of contract, a party fails to perform an obligation under the

contract before the performance is due. In the case of an Anticipatory Breach, an actual
breach has not yet occurred, but one of the parties has indicated that they will not fulfill
their obligations under the contract. This can occur if the breaching party explicitly notifies
the other party that they will not fulfill their obligations, but such a claim could also be
based on actions that indicate one of the parties does not intend to or will not be able to
deliver.

5. When can an innocent party end a contract on the grounds of breach of contract? What are
the rights of the innocent party in such a situation and what are the options available to the
innocent party?
A breach of contract will have a range of consequences. It may entitle the innocent party to
seek an order for performance of the contract, to claim damages, or to terminate the
contract, or some combination of these. Where the innocent party terminates a contract as
a result of a breach by the other side, it is in fact likely to be indicating three things: (1) that
it will not perform any of its outstanding obligations under the contract; (2) that it will not
expect the other party to perform any of its outstanding obligations, and will reject
performance if it is tendered; and (3) that it may seek financial compensation (damages) for
losses resulting from the other party’s breach.

6. Explain the concept of frustration in contracts. What are the situations in which the law will
recognise that a contract has been frustrated?
Under the doctrine of frustration a contract may be discharged if, after its formation, events
occur making its performance impossible or illegal and in certain analogous situations.
There are three main situation in which a contract might become frustrated:
‒ Imposibility (e.g. subject is destroyed, subject becomes unavailable, etc.)
‒ Illegality (e.g. changes in law that makes the contract illegal)
‒ Change in circumstances (e.g. there is an event destroys the purpose of the contract)
Elements:
a. Supervening event which is not expected, foresee nor even foreseeable
b. Neither party at fault
c. Radically different performance
d. Timing of frustration: The effect of a supervening event is determined at the time the
event occurs, or a reasonable time thereafter

7. What are the effects of frustration at common law? How does the Frustrated Contracts Act
change the common law position?
At common law, the contract ends at the actual point at which it is frustrated – that is, from the
frustrating event. Therefore the parties are released from any contractual obligations from that
point forward. However, they are still bound by any obligations that arose before the contract
was frustrated.

However, this can lead to unfairness. The outcome of frustration of a contract would depend
entirely on the point in the contract at which frustration took place.
Chandler v. Webster [1904] 1 KB 493
Concerning: Frustration – Strict Common Law Rule

Facts
As in Krell v. Henry, the claimant rented a hotel room from the defendant to watch the
coronation of King Edward VII. He paid a deposit and agreed to pay the balance on the day. After
the cancellation of the coronation, the claimant argued that the contract was frustrated, and
claimed the return of his deposit.

Legal principle
As in Krell v. Henry, the court held that the contract was frustrated. However, the crucial
difference here is that the room was paid in advance (before the frustrating event), whereas in
Krell v. Henry it was to be paid on the day of the coronation procession. The court therefore
would not allow the claimant to recover the money already paid.

Fibrosa Spolka Akcyjna v. Fairbairn Lawson Combe Barbour Ltd [1943] AC 32

Concerning: Frustration – Modified Common Law Rule

Facts
A contract for manufacture and delivery of machinery to a Polish company was frustrated by the
invasion of Poland which precipitated the Second World War. The Polish company had made a
contractual advance payment of £1,000.

Legal principle
The House of Lords held that a party could recover payments made prior to a frustrating event,
provided that there was a total failure of consideration.

This is an improvement over the position from Chandler v. Webster. However, it is still not ideal:
for instance, in Fibrosa the manufacturer received no payment for any work that it had done in
advance of the contract.

The Law Reform (Frustrated Contracts) Act 1943

The Act deals with three areas:
 recovery of money paid in advance
This provision confirms the Fibrosa principle that money already paid is recoverable and
that money due under the contract ceases to be payable
 recovery of work already completed
Under section 1(2) the court also has discretion to reward a party who has already carried
out work under or in preparation for the contract. However, this is discretionary and
therefore does not automatically guarantee that all actual expenses will be recoverable.
 recovery for a benefit gained through partial performance.
The court must first consider whether a valuable benefit has been conferred.