intended, they would have discharged their contract by agreement.
Discharge by agreement arises when a contract is abandoned, or the terms
within it are changed, and both parties are in agreement over this. Really
both parties have provided consideration for a new contract to end or to vary
the old one. Where there are special formalities, such as where written
evidence is required in a contract of sale of land, there is likely to be a
similar requirement to vary the contract.
Breach
Where one party fails to perform their contractual obligations, or
performance is defective, or a lie is found within a contract, the party at
fault is said to have breached the contract. Breach of contract leads to two
main remedies.
Returning to the example of the coach hire above, the trip begins in working
hours and another coach is readily available, the innocent party may wish to
end the contract and use the money to obtain a coach from another firm.
This is repudiation, or ending the agreement. If, on the other hand, the trip
begins during the night, and another coach is not readily available, the hirer
may wish to continue, but seek compensation for inconvenience. This is
obtaining damages. Whether an innocent party is allowed to end the contract
or not depends on the type of term breached (see Chapter 7). The following
remedies are generally available:
- For breach of a condition, a major term, the innocent party can either
repudiate, or claim damages. - For breach of a warranty, a minor term, the innocent party can only claim
damages.
(See Bettini v Guy and Poussard v Spiers and Pond, p. 109, on these issues.)
Similarly, where one party has lied within a contract, the remedy will
depend on whether the lie amounts to a breach of condition or warranty.
There is a fine dividing line, however, between a lie within a contract, leading
to breach, and a lie before a contract, which may lead to misrepresentation.
Breach may be actual or anticipatory, which means that it may have
already happened, or it may be about to happen. If a supplier of goods does
not deliver on the agreed date, this is actual breach of contract, and the
injured party would then be able to sue the supplier. If some time before the
Discharge of a contract 215If, in the above example of coach hire, the coach does not turn up at all, what
would be a suitable remedy?