11125_Him Ppt on Discahrge

8/13/2019 11125_Him Ppt on Discahrge

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Performance of Contract

Fulfillment of legal obligation created by a

contract.

Chapter IV


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Performance by whom?

By the parties

Promisor- Sec.40-

Representatives- A promises to deliver goodsto B on a certain day on payment of Rs 1,000.A dies before that day. As representaives arebound to deliver the goods to B, and B is

bound to pay Rs.1,000 to As representaive. The agent

Third person


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Cont.

Performance of contracts involving personal

service


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Actual and attempted performance

Actual performance

Attempted Performance or tender


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Essentials of a valid Tender

Unconditional

At proper time

At proper place Provide a reasonable opportunity to

promisee.

For entire obligation Made to the proper person


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Discharge of Contracts

When the rights and the obligations created

by a contract come to an end, the contract is

said to be discharged or terminated.

Termination of the contractual relationship

b/w the parties.


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Modes of discharge

By performance- actual and attempted

By impossibility of performance

By agreement. By breach of contract

By operation of law- death,

merger,insolvency By lapse of time.


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A thing may be destroyed in the same

manner in which it is constituted.


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By agreement.

Novation- Substituting a new contract for the existingone.-Sec.42

Alteration- terms are altered by mutual consent

Rescission- when all or some of the terms of contractare cancelled.

Remission- acceptance of a lesser performance thanthat required for the discharge of the contract

Accord and satisfaction- Waiver-mutual abandonment of rights.

Merger- inferior right merged with superior right.


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Accord and satisfaction-

English Law-Promise to accept less than what

is due under an existing contract, is

unenforceable because it is not supported by

consideration.

But where a lesser sum is actually paid, then

what is due under the existing contract, the

new contract is called accord and actualpayment is called satisfaction


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Discharge by breach of contract

Breaking the obligation which a contract

imposes

Parties to a contract are expected to perform

their respective promises. If a party refuses

to perform without lawful excuse


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Cont.

When performance is actually due or

While performing the contract, or

Prior to the date of performance, calledanticipatory breach


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Cont.

A agrees to deliver to B, 5 bags of wheat on

1stJanuary. A fails to deliver on 1stJanuary.

There is a breach of contract.

A promises to marry B on Ist January, A

marries C.- anticipatory breach by

impossible.

Hochter v De La Tour (1853)

Avery v Bowden


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By operation of law-

Death

Merger

Insolvency Unauthorized alteration of terms of contract

Rights and liabilities vesting in the same

person


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Discharge by impossibility of

performance

Initial impossibility -

Subsequent (supervening) Impossibility


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Initial Impossibility

At the time of formation of contract

May or may not known to the parties

A agrees to pay B Rs. 1,000/ and promises to

discover treasure by magic. The agreement isvoid on account of impossibility known to theparties at the time formation of the contract.

A agrees to sell his house to B for Rs.50,000.Unknown to the parties, the house had beenburnt before the formation of the contract


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Subsequent Impossibility

When contract entered into it was capable of

being performed, but some subsequent event

renders the performance impossible. In such

a case also, the contract becomes void.

A and B contract to marry each other. Before

the time fixed for the marriage, A goes mad.

The contract becomes void.


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Doctrine of supervening impossibility

Destruction of the subject matter of the

contract

Failure of ultimate purpose

Death or personal incapacity

Change of law

Declaration of war Non-existence or non-occurrence of

particular state of things

frustration


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Destruction of the subject matter of the

contract

Taylor v Caldwell- one party agreed to allow

other the use of their hall for holding music

concerts (performance). Before the first day

of concerts, the hall was destroyed by fire

without the fault of either party.

Held contract had become void


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Failure of ultimate purpose

Krell v Henery


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Krell v Henry 1903

The plaintiff had agreed to let a room to the

defendant for viewing the coronation procession

of King Edward VII. The procession was

cancelled owing to the Kings illness. The plaintiff brought an action against the

defendant for the recovery of rent. The court

held that the cancellation of the processiondischarged the parties as the existence of the

procession was the basis of the contract.


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James Scott.&Sons v.Deisel 1922

A tiger had escaped from a travelling

(exhibition van) menagerie. Out of fear one

milk girl failed to deliver the milk.


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Destruction of subject-matter of

contract

C let a music hall to T for a series of concerts

for certain days. The hall was accidently

brunt down before the date of first concert.

(contract was void) Taylor v Caldwell 1863


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Cases not covered by supervening

impossibility

As a rule, impossibility of performance is no

excuse from performance.

Unless its performance has become

absolutely impossible due to circumstances

beyond his control.


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Not an excuse

Difficulty in performance

Commercial impossibility

Failure of a third person relied upon by thepromisor

Strikes, lock outs, riots, civil disturbances

Partial Impossibility-failure of one of theobjects


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Satyabrata Ghose v Mugneeram

Bangur & Co. 1953

In 1940 a development scheme of an

extensive area of land started by the

defendant.

Entered into contract for the sale of plot of

land

The transfer was to be completed soon after

the construction of roads.

Area is acquired by the Government fro

military purpose in 1941


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Decision and reason

No

The events which have happened here

cannot be said to have made the

performance of the contract impossible and

the contract has not been frustrated at all.


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Case Study

A contracts to marry B in two years time.

Shortly afterwards he breaks off the

engagement without Bs consent. B writes

repeatedly begging him to adhere to thecontract. Just before the expiry of two years,

a change in law makes it illegal for A to

marry B. on the expiry of two years, B suesfor the breach of the contract. Will she

succeed?


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Decision & reason

Decision- No

B will not succeed because when she files the

suit for breach, the contract has already been

discharged by subsequent illegality and A is

entitled to advantage of that.


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Abdul Aziz vs. Masum Ali, (1914).

The secretary of a Mosque Committee filed a

suit to enforce a promise which the promisor

had made to subscribe Rs. 500 to the re-

building of a mosque.


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Decision and reason

Held: the promise was not enforceable

because there was no consideration in the

sense of benefit, as the person who made

the promise gained nothing in return for thepromise made, and the secretary of the

Committee to whom the promise was made,

suffered no detriment as nothing had beendone to carry out the repairs. Hence the suit

was dismissed.


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Kedar Nath vs. Gauri Mohamed,

(1886)

The facts of this case were almost similar to

those of the above case, but the secretary in

this case incurred a liability on the strength

of the promise.


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Decision and Reason

Held: The amount could be recovered, as the

promise resulted in a sufficient detriment to

the secretary. The promise could, however,

be enforced only to the extent of the liability(detriment) incurred by the secretary. In this

case, the promise, even though it was

gratuitous, became enforceable because onthe faith of the promise secretary had

incurred a detriment.


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Durga Prasad vs. Baldeo, (1880)

B spent some money on the improvement of

a market at the desire of the Collector of the

district. In consideration of this D who was

using the market promised to pay somemoney to B.

Held: The agreement was void being without

consideration as it had not moved at thedesire of D.


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4.Chinnaya vs. Ramayya, (1882)

An old lady, by a deed of gift, made over certain

property to her daughter D, under the

direction that she should pay her aunt, P

(sister of the old lady), a certain sum of moneyannually. The same day D entered into an

agreement with P to pay her the agreed

amount. Later, D refused to pay the amounton the plea that no consideration had moved

from P to D.


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Decision and reason

Held: P was entitled to maintain suit as

consideration had moved from the old lady,

sister of P, to the daughter, D.


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Debi Radha Rani vs. Ram Dass,

(1941)

D is ready to sue her husband for maintenance

allowance. On husbands agreeing to pay her

a monthly allowance by way of maintenance,

she forbears to sue.Held: The wifes forbearance to sue amount

to consideration for the husbands agreement

for payment of maintenance allowance.


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Ramchandra Chintaman vs. Kalu

Raju, (1877)

There was a promise to pay to the Vakil an

additional sum if the suit was successful.


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Decision and reason

The promise was void for want of

consideration. The Vakil was under a pre-

existing contractual obligation to render the

best of his services under the originalcontract.

l d


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Dunlop Pneumatic Tyres Co. Ltd.

Vs. Selfridge & Co. Ltd., (1915)

S bought tyres from the Dunlop Rubber Co. &

sold them to D, a sub-dealer, who agreed

with S not to sell these tyres below Dunlops

list price D sold two tyres at less than the listprice and thereupon the Dunlop Co. Sued

him for the breach.

Held: The Dunlop Co. Could not maintain thesuit as it was stranger to the contract.


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Capacity to Contract

Mohiri Bibi vs. Dharmodas Ghose, (1903)

In this case, a minor mortgaged his house in

favour of a money-lender to secure a loan of

Rs. 20,000 out of which the mortgagee (themoney-lender) paid the minor a sum of Rs.

8,000. Subsequently the minor sued for

setting aside the mortgage, stating that hewas underage when he executed the

mortgage.


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Decision and reason

Held: The mortgage was void and, therefore, it

was cancelled. Further the money-lenders

request for the repayment of the amount

advanced to the minor as part of theconsideration for the mortgage was also not

accepted.


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Mistake of Law

Solle vs. Butcher, (1950)

Ignorantia juris non excusat, i.e., ignorance of

law is no excuse, is a well settled rule of law.

A party cannot be allowed to get any relief onthe ground that it had done a particular act in

ignorance of law. A mistake of law is,

therefore, no excuse, and the contract cannotbe avoided.


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Mistake as to the Subject-Matter

Couturier vs. Hastie, (1856)

A agreed to sell a cargo of corn supposed at

the time of contract to be in transit fromSalonica to the United Kingdom. Unknown to

the parties, the corn had become fermented

and had already been sold by the master ofthe ship at Tunis.

Held: The agreement was void and the buyer

was not liable for the price.

Mi k h Id i f h


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Mistake as to the Identity of the

Subject-Matter

Raffles vs. Wichelhaus, (1864)

W agreed to buy from R a cargo of cotton to

arrive ex-peerless from Bombay. There weretwo ships of that name sailing from Bombay,

one sailing in October and the other in

December. W meant the former ship but Rmeant the latter contract.


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Case

A manufacturer of pens distributing his pens

free to all the visitors to an exhibition. The

pens were defective and leaking. The pens

spoiled the clothes of many visitors. Sweta isone of the person whose clothes were spoilt

due to one of the defective pens. Is she is a

consumer? Where she can file the case? Givereasons.


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Frustration

Common object of a contract can no longer

be carried out, the court may declare the

contract to be at an end.

Lex no cogit ad-impossibilla -law does not

compel the impossible.


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Cont.

An event occurs which the parties could not

contemplate (think) when they made out the

contract

The event is one for which neither party is

responsible.- act of God

The contract if performed, would be

something entirely different from the bargainmade by the parties.


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Remedies for Breach of Contract

When a party breaks the contract by refusing

to perform his promise- breach of contract

takes place.

Several courses of action which the injured or

aggrieved party may pursue

The party who is not in breach


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Cont.

Suit for Damages- monetary compensation

awarded to the injured party for the loss

occasioned to him.

Suit for Rescission- (rescind- cancel, repeal)


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Types of Damages

Ordinary, General or Compensatory

Special Damages-

Vindictive, Exemplary or Punitive Damages

Nominal damages

Vi di ti E l P iti


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Vindictive, Exemplary or Punitive

Damages

Not given by way of compensation for loss

suffered, but are given by way of punishment

for wrong inflicted.

Breach of promise to marry

On bankers refusal to honors the cheque


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Nominal Damages

These damages are of small amount and are

awarded simply to recognize the right of the

injured party to claim damages


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Cont.

S, claimed damages for his loss of profits at

the exhibition.

Held company was liable as it had the

knowledge of the special circumstances, thatthe equipment were to be exhibited at the

exhibition, and must have contemplated that

a delay in delivery might result in such loss.


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Hadley v. Baxendale, (1854).

A shaft in Hadleys (P) mill broke rendering the millinoperable.

Hadley hired Baxendale (D) to transport the broken millshaft to an engineer.

Hadley told Baxendale that the shaft must be sentimmediately and Baxendale promised to deliver it thenext day.

Baxendale did not know that the mill would be inoperable

until the new shaft arrived. Baxendale was negligent and did not transport the shaft

as promised, causing the mill to remain shut down for anadditional five days.


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Cont.

The plaintiff filled a suit against the

defendant claiming damages for loss of

profits because of mill due to non-

availability of the crank shaft.


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Issue

What is the amount of damages to which an

injured party is entitled for breach of

contract?


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Decision

An injured party may recover those damages

reasonably considered to arise naturally from

a breach of contract, or those damages

within the reasonable contemplation of theparties at the time of contracting.


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Cont.

The court held that if there were special

circumstances under which the contract had

been made, and these circumstances were

known to both parties at the time they madethe contract, then any breach of the contract

would result in damages that would naturally

flow from those special circumstances.


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Cont.

Damages for special circumstances are

assessed against a party only when they were

reasonably within the contemplation of both

parties as a probable consequence of abreach.

Baxendale did not know that the mill was

shut down and would remain closed until thenew shaft arrived.

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11125_Him Ppt on Discahrge