Discharge and Frustration

• Author: Carolyn MacLean/Alex Colangelo
• Pages: 273-292

273

Introduction ........................... 274

Discharge of Contract ................... 274

Discharge by Performance .............. 274

Discharge by Agreement ................ 277

Discharge as of Right ................... 279

Discharge or Termination by

Operation of Law .................. 281

Frustration ............................ 281

Factors Affecting Frustration

of Contracts ...................... 282

Frustration Based on Implied

Term Theory ...................... 283

Frustration Based on Construction

Theory .......................... 285

Distinguishing Between Impossibility

and Frustration .................... 285

Common Law Remedies for Frustration .... 287

Legislation Governing Frustration

of Contracts ...................... 288

Chapter Summary ...................... 290

Key Terms ............................. 290

Review Questions ...................... 290

Exercises .............................. 291

Learning Outcomes

After completing this chapter, you should be able to:

• Explain how parties can terminate a contract without

performing the obligations set out underit.

• Define “condition precedent” and explain how it

affects the operation of a contract.

• Understand how some contracts are discharged or

terminated by the operation of law.

• List at least three ways in which a contract can be

discharged.

Discharge and

Frustration

15

© [2023] Emond Montgomery Publications. All Rights Reserved.

274 PART II CONTRACT LAW

Introduction

In this chapter, you will learn about how contracts are discharged and how the obliga-

tions under a contract are extinguished or wound up. In some cases, the parties may

disagree about which actions will effectively discharge contract obligations or about

whether the rights under a contract have in fact been extinguished, or both. Com-

monproblems with contract discharge are discussed below.

Discharge of Contract

The obligations under contract are cancelled once that contract has been discharged,

and the contract itself is null and void. See Figure 15.1, below.

discharged

released, extinguished; a

discharge of a contract

occurs when the parties

have complied with their

obligations or other events

have occurred that release

one or both parties from

performing their obligations

null and void

of no force, validity, or effect

As of right

Discharge

of Contract

Performance

Operation of law Breach

Agreement

Frustration

FIGURE 15.1 Discharge of Contract

Contracts may be discharged:

• by performance,

• by agreement,

• as of right,

• by operation of law,

• by frustration, or

• by breach.

Breach will bediscussed in Chapter 17.

Discharge by Performance

The most common way to discharge a contract is by performing and fulfilling the

obligations under the contract. Performance may consist of performing services, pay-

ing money, delivering goods, and so on. Offering to perform the obligations under a

contract is called tender of performance. Each party must only tender performance

once to be in compliance with the contract. If one party tenders performance and the

other party does not accept it, the refusing party is in breach of contract unless they

have a valid and lawful reason. At that point, the party who tendered performance

tender of performance

offering to perform that

which the contracted party

is obligated to perform

under a contract

© [2023] Emond Montgomery Publications. All Rights Reserved.