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QUESTION 1 ISSUES Whether or not Cindy is in breach of contract? RELEVANT LAW Case law ANALYSIS A contract is said to be discharged by performance when both the parties perform all the primary obligations both express and implied which are set out under the contract. The obligation is considered performed only if the performance complies with the standard of performance required. A failure to do so constitutes a breach. The strict rule on performance is to the effect that there should be complete performance of all the obligations under the contract. In the case above. The contract provided for change in mode of performance and time to be adjusted to be suitable for the circumstances and was agreed upon by Cindy and the Event organizers. This bounds her to perform the contract in the manner in which the contract provided in case of change of circumstances. However, a contract can be discharged due to frustration. This is a doctrine developed in the 19 th^ century whereby a party bound by a contractual promise was prevented from keeping the promise because of an unforeseeable intervening event and would be relieved of the strict obligation. As a result, the party would not be liable for breach of contract. In the case TAYLOR V CALDWELL^1 Justice Blackburn does state that this will not always be the case, as he points out in this case it was “absolute and positive “that there were no express or implied terms of the contract that the obligations should carry on. Therefore, this means that if such a contract had, had a term in it- be it express or implied- that even in the event of the accidental damage the obligations of the parties were to carry on, then they wouldn’t have been discharged. This is a key principle from the case because while it brings into existence the doctrine of frustration it puts a caveat on it. Justice Blackburn also sets out the example principle of when this type of situation can (^1) Taylor V Caldwell [1863] 3 B&S 826.
where the courts devised a modern test for assessing whether or not the doctrine of frustration ought to apply. In accordance with this test, the courts adopt an approach whereby they seek to interpret the contract in light of the surrounding circumstances. This approach is aimed at discerning the parties’ true intentions when entering the contract. The rationale is that the court shall then be better placed to conduct an assessment of contract in order to conclude whether or not the supervening events had changed. It ought to also be mentioned here that it is not the change in circumstances so much that invokes the doctrine of frustration, but it is the radical change in the obligations, as found in the form of the terms of the contract, which instigates the application of the doctrine. COCLUSION Cindy would be liable to breach of contract as though there was change in circumstances there was no change in obligation and she was still bound by the terms of the contract to perform under new the new mode provided. QUESTION 2
The strict rule on performance (also known as the ‘perfect tender’ rule) is to the effect that that there should be complete performance of all of the obligations under the contract. In the case CARTER V POWELL^3 Mr. Cutter, a sailor, was hired for a voyage and given a promissory note from his employment that ten days after the ship arrives at Liverpool, he will pay Mr. Cutter a certain sum, “provided he proceeds, continues and does his duty as second mate in said ship from hence to the port of Liverpool.” Mr. Cutter began sailing the ship as second mate for about six weeks, yet died before its arrival in Liverpool. Mr. Cutter’s wife brought an action for a proportionate part of his due wages for the substantial amount of the voyage on which he acted as second mate. The Court stipulated that, where parties conclude an express contract, no terms can be implied into the contract. On the facts, the contract between the parties expressly provided that the payment was conditional upon the completion of the voyage and only payable after the ship’s arrival. Thus, under the express terms of the contract, the sailor was entitled to receive the payment if the whole duty of the contract was performed, and not entitled to any payment if the contract was only partially performed. The Court noted that the contract made payment conditional on performance of the full voyage as a form of insurance for the employer. Accordingly, the Court held that, even though the sailor was not to blame for failure to perform the contract, the express terms of the contract render payment conditional on the full performance of the contract. Thus, on a construction of the express terms of the contract, no payment was due for partial performance. There are various exceptions to this rule such as divisible contracts where contracts are made up of various parts each capable of being discharged separately. In the case TAYLOR V WEBB^4 – it was held that an innocent party may not sue for further obligations under a contract after accepting a repudiatory breach Where there is an acceptance of part performance as seen in the case SUMPTER V HEDGES^5 (^3) Cutter v Powell (1795) 6 TR 320. (^4) “No 4:17-CV-2902 JMB” Taylor v Webb, No 4:17-CV-2902 JMB, (ED Mo Dec 21, 2017). (^5) Sumpter v Hedges [1898] 1 QB 673.
payment. Court held that the claimant was entitled to recover £50 because the defendant had prevented the performance. Tender of Performance Substantial performance where a party has offered to complete his obligations but the other side has unreasonably refused performance as illustrated in the case STARTUP V MCDONALD^8 - A contract stated that 10 tons of oil were to be delivered to the defendant within the last 14 days of March. The claimant delivered the oil at 8.30pm Saturday March 31st. The defendant refused to accept the delivery because of the lateness of the hour. Court held that the claimant had tendered performance within the agreed contractual period and was thus entitled to damages for non acceptance. SECTION B QUESTION 5 (^8) Startup v Macdonald (1843).
Damages is a sum of money that is paid by the defendant to the claimant where liability is established in compensation for the harm suffered by the claimant. It is traditionally a common law remedy although the court may at times award equitable remedies as well. When parties make an agreement, they will hope that they both fulfil their obligations. Therefore, the intentions of the parties cannot usually be used in order to calculate a number of damages that should be awarded under the contract. Instead, the number of damages will be awarded based on the value of the interest the innocent party has in the contract. In order to assess damages, there must be a causal link between the defendant’s breach of contract and damage suffered by the defendant. In the case STANSBIE V TROMAN^9 Stansbie was decorating at Troman’s home. He was alone at the property and left the house to purchase some wallpaper. He left the door unlocked and was absent from the house for two hours. During his absence, a thief entered the house and stole several items of value. Troman sought to recover the cost of these items from Stansbie. Stansbie was liable for the cost of the stolen items. He was under a duty to take reasonable care when he left the premises unoccupied. Leaving the house unoccupied for two hours with the door unlocked amounted to a failure to take reasonable care and as a direct result, Troman suffered losses for which Stansbie was liable. The general principle is damages will never be awarded in respect of a loss that is too remote a consequence of the defendant’s breach. In the case HADLEY V BLAXENDALE^10 The Court found for the defendant, viewing that a party could only successfully claim for losses stemming from breach of contract where the loss is reasonably viewed to have resulted naturally from the breach, or where the fact such losses would result from breach ought (^9) Stansbie v Troman [1948] 2 KB 48. (^10) Hadley v Baxendale (1854) 9 Exch 341.
entered the competition and came first in her group thereby affording her the opportunity to be considered as a finalist. The letter inviting her to attend the next stage of the contest arrived too late, and as a result she was denied the opportunity to be considered. She sought damages. Chaplin successfully recovered 100k in damages. Under the contract, she had the right to be considered within a limited class. Hicks’ breach of contract meant she could no longer be so considered. The loss of the chance of winning such a lucrative prize was a breach which afforded her the right to substantial, and not merely nominal damages. Such damages were not necessarily incapable of assessment. A claimant is entitled also to recover for expenses he has been required to spend in advance of a contract that has been breached. Such a claim will normally be made where any loss of profit is too speculative to be able to calculate effectively. Generally, it is not possible to claim for both loss of profit and reliance loss since it is said to be compensating twice for the same loss. ANGLIA TELEVISION LTD V REED^13 An actor and a media company entered into a contract for the actor to star in a film of a play for television. The actor had to repudiate the contract, and a question as to the damages owed by the actor to the media company arose. They are entitled to their costs, both prior to and after the contract was consummated if those costs were such "as would reasonably be in the contemplation of the parties as likely to be wasted if the contract was broken." The judge rejected the Defendant's argument that the Plaintiff was entitled to only expenses incurred after the contract was concluded. The victim of a breach of contract is under a duty to mitigate loss. The claimant must take all reasonable steps to reduce or contain the loss. He must not act unreasonably to increase the loss. BRITISH WESTINGHOUSE V UNDERGROUND ELECTRIC RAILWAYS^14 Underground Electric Railways (UER) purchased turbines from British Westinghouse Electric Co. The turbines were faulty in that they were deficient in power. UER used the defective turbines (^13) ANGLIA TELEVISION V REED 3 All ER 690 (House of Lords 1971). (^14) British Westinghouse Electric Co Ltd v Underground Electric Railways Co of London Ltd [1912] AC 673.
for a time and then purchased new turbines which were more efficient than the defective ones would have been even if they had not been faulty. UER brought an action for breach of contract. UER could not claim for the cost of the new turbines. Damages for breach of contract were to place the injured party so far as possible in the position they would have been had the contract been performed. Any additional profits made because of acts done in mitigation should be considered when quantifying damages. The savings made by using the new turbines exceeded the cost of the old turbines and as damages were a question of fact, the cost of the new turbines was not recoverable. Judgment may be given in a currency other than the sterling depending on the rules of conflict of interest and the general principles of the law of contract. When the court has determined appropriate currency for the award, it will calculate in that currency the claimant’s loss, generally at the date of breach, thereby effectively ignoring subsequent currency movements. MILIANGOS V GEORGE FRANK TEXTILES^15 The House of Lords held that damages can be awarded in the currency of any foreign country specified in the contract. A new rule was needed because of changes in foreign exchange conditions, and especially the instability of sterling, since 1961. Award of damages by the trial court must be final. Rules applies to losses flowing from a particular cause of action. If a single act gives rise to more than one cause of action, a separate action may be maintained in respect of each cause of action MURPHY V STONE-WALLWORK^16 It had been assumed at the trial and in the Court of Appeal that the defendants would continue to employ the plaintiff and the assessment of future loss had been based upon that assumption. Shortly after the decision of the case by the Court of Appeal, the defendants (^15) Miliangos v George Frank (Textiles) Ltd [1976] AC 433. (^16) Murphy v Stone-Wallwork (Charlton) Ltd: HL 1969.
made. The claimant responded she had been unaware of the clause as she had not properly read the agreement and it ought not apply. The Court of Appeal found for the defendant, determining that the express provisions of the contract were binding and effectively excluded the relevance of statutory sales provisions. Furthermore, the fact that the claimant had not properly read the contract did not impact its validity, as in signing the contract she consented to be bound by its contents. Significantly this case emphasizes the Court’s respect for sanctity of contract. A signature on a contractual document or other written agreement, demonstrates that a party has read, understood and consents to the terms and conditions in a contract. A party to an agreement is bound by his signature, regardless of whether he has actually read the contract or not. Exceptions to this rule apply in instances where the signature has been obtained unfairly through misrepresentation, duress or undue influence. It is therefore of undeniable importance to read through something before you sign it and thus agree to be bound by it. This is a general rule to the principle non Est factum non Est factum, defined as a doctrine in contract law that allows a signing party to escape performance of the agreement. A claim of non est factum means that the signature on the contract was signed by mistake, without knowledge of its meaning, but was not done so negligently. A successful plea would make the contract void. This happens generally with fraud for example in the case SAUNDERS V ANGLO BUILDING SOCIETY^17 The old woman thought she was going to sign the house as a gift to her nephew, but in fact nothing of the sort. The concept of non est factum in early 16th century in some cases is not involving fraud, the blind, illiterate and are unable to (incapacity) of the contracts. But it does not apply to negligent or careless in some situations, Even as Lord Reid in Saunders v. Anglia Building Society (1971) A.C. 1004 [8] said: “The plea cannot be available to anyone who was content to sign without the trouble to try to find out at least the general effect of the document.” (^17) Saunders v Anglia Building Society (1971) AC 1004.
Scrutton, LJ held in L’Estrange v E. Graucob Ltd [1934] 2 KB 394 “When a document containing contractual terms is signed, then, in the absence of fraud, or, I will add, misrepresentation, the party signing is bound, and it is wholly immaterial whether he has read the document or not.” And this became the general rule governing signatures in binding contracts. This is so because it is assumed that the parties to the contract have taken caution to check the authenticity of the document they are signing. The reason for this position is due to the fact that if the plea is not limited, people would take advantage of it in order to unnecessarily escape liability. In the case of illiterates who make enquiries concerning the content of the document, the plea would be applicable. In the case LEWIS V CLAY^18 the defendants signed as witness in a particular deed by a third party. They couldn’t see the full documents and when they asked to see, they were told that they didn’t need to see the full documents, only their signature was needed. What they were actually signing was a promissory note to pay Lewis as sum of 11000 pounds. Their plea of non est factum was successful because they were not negligent in the sense that they made steps to be sure of what they signed although they were misled. BIBLIOGRAPHY Allied Maples Group Ltd v Simmons & Simmons [1995] 4 All ER 907 ANGLIA TELEVISION V REED 3 All ER 690 (House of Lords 1971) British Westinghouse Electric Co Ltd v Underground Electric Railways Co of London Ltd [1912] AC 673 Chaplin v Hicks [1911] 2 KB 786 Cutter v Powell (1795) 6 TR 320 Dakin v Lee [1916] 1 KB 566 Hadley v Baxendale (1854) 9 Exch 341 (^18) LEWIS V CLAY “Case No 4:16-cv-00287-LSC-HGD” Lewis v Clay, Case No 4:16-cv-00287-LSC-HGD, (ND Ala Nov 1, 2016).
