A presentation about the methods fo discharging or terminating contracts

1. Methods of
Discharge/Termination of
Contracts
PREPARED BY
SANDREA BUTCHER

2. When a contract is discharged or
terminated it can no longer be
enforced
 This means that it has come to an end and the parties are
freed from their obligations

3. Methods of
discharge

4. Termination or discharge through…
1. Performance
The parties involved have fulfilled the terms
of the contract
Generally, all parties will be satisfied

5. Types of performance
•Where a party accepts an element of the performance of the other
party.
Partial
•A degree of performance of a contract which is not full and complete
performance, but is so nearly equivalent that it would be unfair to deny
the contractor the payment agreed upon in the contract.
Substantial
•Every term and warranty has been
•discharged.
Complete

6. 2. Breach
 This occurs when agreed terms are broken by one party.

7. 2. Breach cont’d
1. Anticipatory breach
 Anticipatory breach takes place
when one party declares that they
will not fulfil all of their obligations
in the contract.
 They declare this before the end of
the contract (before the
performance is due).
2. Actual breach
 This takes place when one party
does not fulfil all of their
obligations at the end of the
contract (on the date it is due), or
terms within the contract are only
partially met.
 It is necessary for the innocent
party to show that the breach
affects a vital part of the contract
to prove actual breach.
 Breach typically fits into two categories:

8. 3. Agreement
Accord and satisfaction
- after partial
performance with
agreement from all sides
Release - one party
completes obligations
and is willing to
remit/release the other.

9. 4. Impossibility/Frustration
 This discharge occurs when the contract
obligations cannot be met because of
unforeseen circumstances.
 Examples:
A house being built by a contractor burns
down
A law is passed making the contract illegal

10. 5. Lapse of time
 A contract will be deemed to be
discharged if it is not enforced
within a specified period of time.
 This period of time is called the
‘period of limitation’.
 Countries have different time
limits for completion of
contracts.
 Contracts cannot last
indefinitely.

11. 6. Death
 If one party dies the other parties cannot enforce the
contract obligations.

12. Other methods

13. Bankruptcy
 Contracts are discharged if one party
declares bankruptcy and is therefore
unable to fulfill financial obligations

14.  Waiver - both parties
agree not to proceed.
 Merger - a new contract
is agreed on by all