Ending the contact

CRICOS Provider Number 00103D

 Termination of contract
• A contract may be terminated:
• by performance
• by agreement
• by breach
• by operation of law
• by frustration

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 Performance
• Each party fully performs all of their
obligations under the contract.
• Contractual obligations must be
performed exactly as agreed.
• Case: In Re Moore & Co and Landauer &
Co (1921)

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 Agreement
• Obligations under a contract can be
discharged by an agreement
between the same parties.

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 Operation of law
• Where one party fraudulently and
materially alters the written
contract, it is no longer enforceable
by that party.

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 Frustration
• A contract is frustrated when after formation of
the contract something unexpected happens that
makes performance impossible.
• Case: Taylor v Caldwell (1863)
• A contract may be discharged by frustration even
where performance is not really impossible.
• Case: Codelfa Constructions Pty Ltd v State
Rail Authority (NSW) (1982) 149 CLR 337
• Frustration may also occur because of a
change to the law that makes it illegal

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 Remedies for breach
• Termination of the contract
• Damages

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 Termination
• When one party completely fails to
perform their obligations (repudiation)
the other party is entitled to terminate the
contract.
• They are also entitled to terminate for
breach of a condition (an
important/essential term) or for breach of
an intermediate term (a term that is not
important but where the breach has a
significant impact on the contract)

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 Damages
• Every breach of contract gives the
innocent party a right to claim
damages (compensation) for the
injury or loss they have suffered as a
result of the breach.
• Compensation will not be awarded
for damages that are too remote.
• Case: Hadley v Baxendale (1854)

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 Damages
• The innocent party has a duty to mitigate their
losses.
• Damages are not recoverable for inconvenience
or mental distress, except where the main
purpose of the contract is to provide relaxation
and enjoyment.
• Case: Baltic Shipping Co v Dillon (1993)
• Where no actual loss can be proved, nominal
damages will be awarded.

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 Other remedies
• Specific performance: The court
requires a party to perform their
contractual obligations.
• Injunction: The court prohibits a party
from doing something or compels a party
to do something.
• Rectification: The court corrects a
written document.
• Restitution: The court orders the return
of property or the payment of money.
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 So that is contract
• Contracts are important because they
form the basis for one-off and continuing
commercial relationships
• For that reason, it is very important for
the parties to get things right from the
outset
• Rights
• Remedies
• Obligations
• Terms

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