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Elements in a Contact XIV - End of contract - expiration and breach

Updated on July 12, 2017

There are four ways in which a contract can come to an end. They are as follows –

i) When a contract expires or expiration

ii) Termination

iii) Vitiation

iv) Frustration

Expiration

A contract expires or meets a natural demise when all the terms in the contract have been fulfilled or complied with. Let’s say for example that Alex contracted to supply Fred with 10 tonnes of coal on the 1st of June and the delivery was to be made by the 30th of June. On the 15th of June, Alex delivered 10 tonnes of coal to Fred’s residence and was reimbursed accordingly. The contract has ended or has run its course and no further action needs to be taken by any of the parties in the contract.

Termination

A contract can be terminated when there has been a breach. A breach of a condition for example allows the innocent party to terminate the contract. A breach of contract can be divided into actual breaches and anticipatory breaches.

Actual Breach

An actual breach occurs when a party in a contract fails to perform that which is expected of him or her or the duty that is expected of him or her.

In Poussard v Spiers (1876), the plaintiff an opera singer of some note was contracted by the defended to perform at an opera but a week prior to the opening, she fell ill and the defendants subsequently had her replaced. Once the plaintiff had recovered she contacted the defendants wanting her spot back but the defendants refused stating that the contract had been terminated. The plaintiff sued.

The court held that, the plaintiff’s performance on the stipulated date was a condition in the contract and therefore the defendants were entitled to terminate the contract.

Similarly in The Mihalis Angelos (1970), a ship was hired out to the defendants to ferry goods with the stipulation that the ship would be ready for loading by a specific date. The ship was not ready by the stipulated date and there was an unusually long delay before the ship could be loaded. The defendants cancelled the contract because of the delay and the plaintiff sued.

It was held that the term that the ship must be ready by a specific date was a condition in the contract and as a result the defendants were entitled to terminate the contract.

In Pilbrow v Pearless de Rougemont & Co (1999) the appellants a legal firm brought an action against the defendant for outstanding fees. The defendant had made an appointment via telephone with the firm to seek legal advice and when he arrived he was attended to by a legally trained employee of the firm who was not a qualified solicitor. The defendant was dissatisfied with the service that he received and refused to pay the outstanding fees.

The defendant’s argument was based on the fact that he had entered into the agreement with the view that he would receive advice from a legally trained solicitor, which he clearly did not.

The court held that despite the fact that the advice given to the defendant was legally sound, it was a condition in the contract that the defendant be attended to by a legally trained solicitor and therefore the defendant was entitled to terminate the contract.

Actual breach also includes breaches of terms that are nominated as warranties and innominate terms. The remedy for a breach of a warranty is normally damages. When it comes to innominate terms it depends on the extent of the breach.

Anticipatory Breach

An anticipatory breach occurs prior to when a party in a contract is due to perform that which is expected of him or her or the duty that is expected of him or her.

In Bowdell v Parsons the plaintiff contracted to move hay from the defendant’s premises, at the plaintiff’s convenience, and in return the plaintiff would pay the defendant an agreed sum for each load. The plaintiff moved 1 load after which the defendant sold the remaining 11 loads to a third party. The plaintiff sued and was successful.

In Hochster v De la Tour (1853) the plaintiff was contracted to be a tour guide to assist the defendants during their tour of Europe. The agreement was made a month before the tour was to start. Three weeks later, the defendants informed the plaintiff that his services were no longer required. The plaintiff sued and the court held that he was entitled to damages.

In Frost v Knight (1872) the defendant promised to marry the plaintiff after his father had passed on. The defendant later called off the engagement, while his father was alive and the plaintiff sued for breach of promise. The plaintiff was successful and the court held that the plaintiff was entitled to damages.

© 2017 Kathiresan Ramachanderam and Dyarne Jessica Ward

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