BUSN7052 Chap.9 Discharge, Frustration and Contract Remedies
Discharge, Frustration and Contract Remedies
Contracts end by performance, agreement, breach or frustration, and the remedies that follow depend on how they ended. This chapter explains the exact performance rule and its exceptions, the five ways parties end a contract by agreement, the difference between conditions, warranties and intermediate terms, repudiation, and the three elements of frustration with Taylor v Caldwell, Krell v Henry and Codelfa.
It finishes with damages, distress, remoteness under Hadley v Baxendale, specific performance, injunctions, quantum meruit and limitation periods.
What this chapter covers
- 01
Exact performance and its exceptions
- 02
Conditions, warranties and intermediate terms
- 03
Repudiation and Laundry Hotels v Dyco
- 04
Three elements of frustration
- 05
Consequences of frustration in the ACT and NSW
- 06
Damages, remoteness and equitable remedies
Worked example · free
A caterer who brings food for 85 of 100 guests
- +1Exact performance is the general rule (Re Moore and Landauer), and the caterer fell short.
- +1An exception applies where substantial performance is freely accepted; food for 85 of 100 guests, served and eaten, is arguably substantial performance freely accepted.
- +2The client must pay but may claim damages for the breach: the $400 spent to obtain what was promised.
Key terms
- Repudiation
- A party's indication before performance is due that it will not perform.
- Intermediate term
- A term whose breach permits termination only if its consequences are serious.
- Remoteness
- The limit excluding losses that do not flow naturally from a breach or were not contemplated.
- Specific performance
- An equitable order requiring a party to perform the contract.
- Quantum meruit
- A claim for a reasonable price for work done where no enforceable contract governs payment.
Discharge, Frustration and Contract Remedies FAQ
When can a party terminate for breach?
When the other party breaches a condition, repudiates the contract, or breaches an intermediate term with serious consequences. Breach of a warranty gives damages only, as Bettini v Gye shows: a singer who arrived late for rehearsals but before the concerts breached only a warranty, so the contract continued.
What happens to money paid before a contract is frustrated in the ACT?
The common law applies in the ACT. Frustration releases both parties from future obligations, but past losses stay where they fell unless consideration has failed completely, for example where nothing at all was received for a payment. New South Wales instead lets courts adjust the parties' positions by statute.
Can I recover damages for disappointment?
Generally not, unless enjoyment or relaxation was the heart of the contract. In Moore v Scenic Tours, passengers on a luxury river cruise that barely sailed recovered damages for disappointment and distress, because a pleasurable holiday was exactly what they paid for.
When will a court order specific performance?
Rarely, because it is discretionary. It is refused where damages are adequate, for contracts of personal service, where performance would need constant supervision, where the court cannot be sure the other party will also perform, or where the order would be harsh. An injunction is likewise refused if it would amount to specific performance of a personal service, as Buckenara v Hawthorn Football Club illustrates.
Exam move
Map every discharge problem onto the four routes before writing: was there performance, agreement, breach or frustration? Then attach the remedy that follows. For breach, practise classifying terms by asking first whether the contract labels the term, then whether the consequences of this breach are serious, using Bettini and Hong Kong Fir as anchors.
For frustration, learn the three elements and test each against invented events, varying how far the event changes what each party must do, so you can explain in your own words why Codelfa turned on performance becoming radically different from what both sides contemplated.
Note the jurisdiction point every time: the slides stress that where acceptance occurred decides whether ACT common law or the New South Wales Act applies to the consequences. For remedies, write a short calculation in every damages answer, because a figure makes the expectation principle concrete, and add a sentence on remoteness when a consequential loss looks unusual.
Finally, keep a list of when equity will not order specific performance, since a single sentence on that list often completes an otherwise strong answer.
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