Discharge of Contract in Law of Contract Examples

Introduction Area of law for this case is law of contract. Contract is defined of section 2(h) of the Contract Act (CA) as a contract is an agreement entered into voluntarily by two parties or more with the intention of creating a legal obligation, which may have elements in writing, though contracts can be made orally. A contract is a legally enforceable promise or undertaking that something will or will not occur. The word promise can be used as a legal synonym for contract.

Although care is required as a promise may not have the full standing of a contract, as when it is an agreement without consideration. Legal Issue Has Jacko breach the contract between him and London Night Club? Is there a discharge of contract between them? Legal Law A contract may come to an end or discharged various ways. When a contract is said to be discharged means the right of the others are extinguished. The relevant law of this case is about discharge by impossibility of performance.

According to Section 40 of the Contracts Act 1950, when a party to a contract has refused to perform, or disable himself from performing, his promise in its entirety, the promise may could an end to the contract, unless he has signified, by words or conduct, his acquiescence in its continuance. The relevant law of this case is discharge by impossibility of performance. According to Section 57, there are two categories of impossibility of performance; first, impossibility of performance at the time a contract is made and impossibility after it has been made.

The second category concerns contracts that have become impossible to perform subsequent to their making. In the words of section 57(2), a contract ‘becomes impossible, or by reason of some event the promisor could not prevent, unlawful’. This covers the common law doctrine of frustration. The doctrine of frustration provides for the termination of a contract if events occur which radically change the circumstances contemplated by the parties. The related case for discharge by impossibility of performance is Caldwell (D) contracted to permit Taylor (P) the use of the Musical Hall at Newington.

Caldwell was to retain possession of the hall and Taylor merely had the use of it for four days to present four concerts in exchange for 100 pounds per day. The contract stated that the Hall must be fit for a concert but there was no express stipulation regarding disasters. The Hall was destroyed by fire before the first concert was to be held and neither party was at fault. The concerts could not be performed at any other location and Taylor sued for breach and sought reimbursement for costs in preparing for the concerts. The Taylor’s action for breach of contract failed.

The contract had been frustrated as the fire meant the contract was impossible to perform. The other related case is Berney v Tronoh Mines Ltd (1949), a contract of employment was discharged by frustration on the outbreak of war when Japan invaded Malaysia. Discharge by doctrine of frustration is under discharge by impossibility of performance. Frustration terminates the contract automatically and since the contract is void, section 66 of the Contract Act applies, so that any person who has received any advantage under the agreement or contract is bound to restore it, or make compensation for it, to the person from whom he receive it.

Frustration of a contract takes places when there supervenes an event (without default of either party and for which the contract makes no sufficient provision) which so significantly changes the nature (not merely the expense or onerousness) of the outstanding contractual rights and/or obligations from what the parties could reasonably have contemplated at the time of its execution that it would be unjust to hold them to the literal sense of its stipulations in the new circumstances; in such case the law declares both parties to be discharged from further performance.

Apply Jacko was employed to sing at London Night Club for two weeks. London Night Club paid Jacko an advance of RM 5,000 and agreed to pay another RM 5,000 after the performance of the whole contract. On the day he was due to perform, he had a bad sore throat because of the hot weather and was unable to sing. In advising Jacko, the contract between him and London Night Club is voidable by discharge of impossibility of performance. He should return back the RM 5,000 to London Night Club because he did not fulfill his duty.

In advising London Night Club, they should not take action against Jacko because their contract is discharged by impossibility of performance. Besides, Jacko will return back the advance of RM5,000 that was paid them. Conclusion In our opinion, Jacko was not guilty because he had a bad sore throat because of the hot weather that make he become incapable of being performed because of the change in the circumstances. London Night Club cannot take action on Jacko because Jacko was discharged the contract by impossibility of performance.