e-lawresources
Providing resources for studying law
 
Custom Search
Home            Discharge through performance
  
 
Discharge through performance
 
 
 
 
 
A contract becomes discharged through performance where both parties have fully performed their contractual obligations. If one party does not fully perform the contract this will amount to a breach of contract and the other party may have a claim for damages unless the contract has been frustrated. If the non-performance amounts to a repudiatory breach (breach of condition) the other party will be released from their obligations. Where a contract is one where the price is payable on completion, then completion is generally required in order to discharge the contract. This is often expressed in the terms of being a condition precedent. Completion triggers the requirement of payment: no completion, no payment. This general rule was established in Cutter v Powell and is obviously capable of causing injustice:
 
 
 
Cutter v Powell [1795] EWHC KB J13     (Case summary)
 
 
 
The harshness of this rule relating to discharge through performance has been mitigated by the creation of various exceptions:
 
 
 
 
Divisible/Severable contracts
 
 
The rule relating to discharge through full performance applies where there exists an entire contract. Where it is possible to divide a contract into separate parts, eg. if a sum is agreed to be payable per week or hour, then the courts can award a sum for the separate parts of the contract which have been completed:
 
 
 
Ritchie v Atkinson (1808) 10 East 295               (Case summary)
 
 
 
Substantial performance
 
 
A further exception exists where a court is satisfied that substantial performance is present. The court may then award the contractually agreed price and deduct sums to reflect the amount not performed. If however, the performance is not held to amount to substantial performance the claimant is entitled to nothing. Difficulty arises as to what amounts to substantial performance. There is no precise limit set down but is to be determined on the facts of individual cases.
 
 
Compare:

 
 
 
Hoenig v Isaacs [1952] 2 All ER 176 (Case summary)
 
 
 
 
 
Acceptance of partial performance
 
 
Where one party freely agrees to accept partial performance, then a sum is payable for the work completed. The main focus is on free acceptance:
 
 
 
 
Sumpter v Hedges (1898) 1 QB 673                  (Case Summary)
 
 
 
 
 
 
 
Tender of performance

 
Where a party is willing to perform and tries to tender performance but the other party does not accept the performance then the party seeking to tender performance is discharged from the contract and the non accepting party is liable in damages for non acceptance:
 
 
Startup v Macdonald (1843) 6 Mann & G 593              (Case Summary)
 
 
 
 
 
Performance prevented by the promisee
 
 
Where the promisee prevents completion of the performance then the promisor is entitled to payment for the work which has been completed:
 

Planche v Colburn [1831] EWHC KB J56                    (Case Summary)

 
 
 
 Discharge of a contract through performance