DISCHARGE OF

CONTRACT
C

LAW299
LAW OF CONTRACT
• The termination of a contractual
relationship between parties
• The contract ceases to operate
• The rights and obligations created by the What is discharge
contract come to an end. of contract?
• The parties are no more liable in the
contract
Method to discharge a
contract
1) DISCHARGE BY PERFORMANCE
2) DISCHARGE BY AGREEMENT
3) DISCHARGE BY FRUSTRATION/
IMPOSSIBILITY
4) DISCHARGE BY BREACH
DISCHARGE BY PERFORMANCE
• IF BOTH PARTIES TO THE CONTRACT HAVE PERFORMED WHAT THEY HAVE AGREED TO
DO, THE CONTRACT IS DISCHARGED
• PERFORMANCE OF OBLIGATION BY PARTIES TO THE CONTRACT PUTS AN END TO THE
CONTRACT
DISCHARGE BY
PERFORMANCE
• if both have carried out their obligations-complete discharge
• if only one party carried out his obligations-he alone is
discharged
GENERAL PRINCIPLE
SECTION 40 CA 1950

• The contract must be strictly performed

in accordance with the terms of the
contract unless the parties have agreed
otherwise
CASE:- CUTTER v. POWELL

• Powell employed Cutter as sailor of a ship sailing from

Jamaica to Liverpool at a wages of 30 guineas for the
complete voyage. Cutter died at sea when he had
completed about three quarters of the voyage. Cutter’s
widow take a legal action to claim proportion of her
husband remuneration.
• Court:- Cutter’s widow has no right to claim the
remuneration because her husband failed to complete the
voyage.
• The party who has not completely
fulfilled his obligations cannot
recover anything for work done if
the term specifically imposed such
obligation upon the party.
EXCEPTION 1] DIVISIBLE CONTRACT

TO
GENERAL A contract may provide for performance by
PRINCIPLES instalment with separate payment for each
of them. Known as “divisible contract”
 2] SUBSTANTIAL PERFORMANCE

When a person fully performs the contract, but subject to such minor defects that he can be
said to have substantially performed his promise, it is regarded as far more just to allow
him to recover the contract price reduced by the extent to which his breach of contract
lessened the value of what was done, than to leave him with no right of recovery at all.

Party to the contract performed his obligations defectively, but substantially, may enforce
the contract price less an abatement for deficiencies.
 3] ACCEPTANCE BY PARTIAL PERFORMANCE

Where the party to whom the promise of performance was made

receives the benefit of partial performance of the promise under such
circumstances that he is able to accept or reject the work and he
accepts the work, then the promisee is obliged to pay a reasonable
price for the benefit received.
 COMPLETION OF PERFORMANCE PREVENTED BY THE PROMISOR

Where a party to an entire contract is prevented by the promisor from performing all his obligations, then he can recover
a reasonable price for what he has in fact done on a quantum meruit basis

one of the parties is prevented from performing his obligations under a contract without his fault.
 Plaintiff agreed to write a book to be published by

CASE:-
defendant in a series. Plaintiff was to be paid f100 on
completion of the book. He collected material and wrote
part of the book. Unfortunately, defendant later decided
to abandon the series.

PLANCE v.
COLBURN
Court:- plaintiff was awarded f50 on a quantum meruit
basis.
DISCHARGE BY AGREEMENT

• SECTION 63
The original contract need not be performed if both parties agreed to
substitute the original contract with a new one, to rescind it, or to
alter it.
• However, it should be noted that
discharge by agreement requires
consent of all parties to a
contract.
1)Novation
2)Alteration METHODS TO
3)Remission DISCHARGE BY
AGREEMENT
4)Waiver
5)Rescission
 NOVATION
C

SUBSTITUTION OF NEW CONTRACT FOR THE

EXISTING ONE
 ALTERATION
C

CHANGE IN ONE OR MORE OF

MATERIAL TERMS OF THE CONTRACT
 REMISSION
C

ACCEPTANCE OF LESSER
AMOUNT THAN WHAT WAS
CONTRACTED
 1 2
ABANDONMENT OF A A PARTY WAIVES HIS RIGHT
RIGHT WHICH A PERSON IS UNDER THE CONTRACT,
ENTITLED TO THE OTHER PARTY IS
RELEASED OF HIS
OBLIGATION

WAIVER
RESCISSION
C
CANCELATION OF
THE CONTRACT
DISCHAERGE BY FRUSTRATION

the parties made a

contract but due to
some supervening
SECTIO a contract becomes DOCTRINE event, during the
void if after the OF currency of the
N 57(2) contract is made, it
FRUSTRATIO
contract, without the
becomes impossible to fault of either party, all
CA 1950 be performed N the parties are excused
from further
performing their
obligations.
EXAMPLE
• Comel and Sayang love each others and entered into betrothal
contract.
• However, due to some reason, Comel becomes insane before
the the marriage takes place.
• The insanity of Comel becomes a basis to excuse Sayang from
marrying him.
 CIRCUMSTANCES IN WHICH
SUPERVENING IMPOSSIBILITY
OR ILLEGALITY DISCHARGE A
C

CONTRACT
 Case:-Taylor v. Caldwell
1.DESTRUCTIO
N OF THE
SUBJECT-
MATTER
OF CONTRACT Defendant agreed to let the plaintiffs to use a music hall for the
purpose of giving a series of concert. After making this agreement
and before the date fixed for the first contract, the hall was destroyed
by fire. Court held that plaintiff could not recover damages as
without default of either party, fire broke out and destroyed the hall.
 2] SUPERVENING
EVENTS DEFEAT THE
WHOLE PURPOSE OR
OBJECT OF THE C
CONTRACT
 Plaintiff and Defendant entered into a contract for the Defendant to rent a flat to watch the coronation of the
King. Defendant was induced to contract by an announcement in the window of Plaintiff’s flat renting
windows to view the coronation.

The contract, however, did not have any express reference to the coronation. The coronation never took place
since the King became ill, therefore, Defendant refused payment. Plaintiff sued for the remaining money due
under the contract. Defendant denied liability and counterclaimed for the 25 pounds previously paid on the
theory that the coronation did not take place, and thus there was a total failure of consideration for the
contract entered into.

Case:- Krell v.
Issue. When the subject of the contract is frustrated is nonperformance of one of the parties excused?

Henry Held. Yes.

Defendant is excused from performance because his purpose for entering into the contract
was frustrated. Defendant’s purpose of entering into the contract was to view the coronation
of the King. This purpose was understood by both of the parties and regarded as the
foundation of the contract.

Further, the rooms were taken by their reason to suitability for viewing the coronation
processions and thus this is the purpose of the contract.
 • Case:- Condor v. Barron Knights
DEATH OR
• Plaintiff, aged 16, entered into contract with defendant to
PERSONAL perform as a drummer in a pop group. His duties, when
INCAPACITY the group had to work, were to play on every night of the
work. He fell ill and his doctor advised him to restrict his
WHERE THE performance to 4 nights per week. The group terminated
PARTY HAS his contract

TAKEN A
• Court:- a contract of personal service is based on the
PERSONAL assumption that the employee’s health will permit him to
OBLIGATION discharge by frustration.
THERE IS GOVERNMENT INTERVENTION OR
SUPERVENING ILLEGALITY

• CASE:- LEE KIN V. CHAN SUAN ENG

a lease for 5 yearly renewal was held to be frustrated by the enactment of a new
law prescribing annual renewals
• SECTION 57(2)
A contract becomes void when the act
becomes impossible or unlawful to be
performed. CONSEQUENCES
AND EFFECT OF
• SECTION 66 FRUSTRATION
When a contract becomes void, any person
who has received any advantage under the
contract must make compensation or restore
the benefit back to the other party.
• Comel and Sayang love each others and entered into betrothal
contract.
• However, due to some reason, Comel becomes insane before the the
marriage takes place.
• The insanity of Comel becomes a basis to excuse Sayang from
marrying him.
• Prior to this, Sayang had received from Comel a diamond ring and
RM5000 to be used for the wedding ceremony.
• She need to return all the items back to Comel’s family.
 • SECTION 40
• The contract must be strictly performed
in accordance with the terms of the
contract unless the parties have agreed
DISCHARGE otherwise
BY BREACH • If one of the party refused from
performing his obligation, the obligation
of the other party is discharged.
DISCHARGE BY BREACH
• Where the promisor neither performs his contract nor tender his performance

OR

where the performance is defective, there is a breach of contract.

• It occurs when a party to the contract does not fulfil his contractual obligation.
EXAMPLE:
• Comel and Sayang love each others and entered into betrothal
contract.
• However, before the the marriage takes place, Sayang run away
with a handsome actor
• The contract becomes void due to breach.
 Effect of breach of
contract

• SECTION 65

• When the aggrieved party chooses to rescind the

contract, the other party need not perform any
promise therein. The party who rescind the contract
shall, if he received benefit under the contract, restore
or give the benefit to the party in breach.
THANK YOU
C