146 Chapter 5Discharge of contracts and remedies for breach
nothing. In BP Exploration Co (Libya) Ltdv Hunt (No. 2) (1982)it was held that the value
of any benefit is considered immediately after the frustrating event. So in the example above
the contractor would receive nothing for the work already done.
Figure 5.3 gives an overview of frustration.Discharge by breach
In Chapter 3 we considered the extent to which a party is entitled to treat a contract as
discharged on account of the other party’s breach of contract. (See conditions, warranties
and innominate terms on pp. 75 – 6.)
If a party shows an intention not to be bound by the contract this is known as a repudia-
tion of the contract. When one of the parties repudiates the contract before the time for
performance of the contract is due, this is known as an anticipatory breach. The injured
party can either accept the breach or keep the contract open. If the breach is accepted the
injured party can treat the contract as terminated and sue for damages. If the anticipatory
breach is not accepted, the contract is still alive. The position then depends upon whether
the anticipatory breach becomes an actual breach (because the contract is not performed
when performance becomes due). If it does not become an actual breach (because the con-
tract is properly performed in time) then there is no problem. If it does become an actual
breach, the injured party can sue for damages for breach of contract. The following case
demonstrates these principles.In Hochsterv De La Tourthe claimant could have chosen to wait until the anticipatory
breach became an actual breach. If the defendant had then changed his mind, and decided
to employ the claimant after all, there would have been no breach of contract and no prob-
lem. If the defendant did not change his mind, and did not employ the claimant after all,
then there would have been an actual breach on 1 June. However, there is a slight risk in
waiting until an anticipatory breach becomes an actual breach. The contract might become
frustrated, as the following case shows.Hochster vDe La Tour (1853)In April 1852 the defendant contracted to employ the claimant as a courier for a three-
month period which was to begin on 1 June. On 11 May the defendant told the claimant
that he was not in fact going to employ him. The claimant immediately sued for damages.
HeldThe claimant was entitled to sue for damages because he had accepted the anti-
cipatory breach. The claimant did not need to wait until the breach became an actual
breach (which it would have done on 1 June).Avery vBowden (1856)The defendant contracted to supply the claimant’s ship with a cargo. The cargo was to be
supplied at Odessa within 45 days. When the claimant’s ship reached Odessa the defend-
ant repeatedly told the claimant that no cargo would be delivered. The claimant kept his
ship in Odessa, hoping that the defendant would change his mind. The Crimean War broke
out before the 45 days had expired.