A contract is a “promise or a set of promises from one party to another that is recognized and enforced by law”. When a person enters into a contract, he acquires obligations that are enforceable in a court of law. The law of contract works as facilitative law. Nonetheless, if it is enforced by a court of law it becomes command law and becomes binding to both parties. Discharge of a contract means “termination of any contractual relation existing between the parties to a contract”. This means that the contract ceases to operate to both parties’ obligations and rights acquired are terminated. There are six main ways to discharge a contract. These include by consent, by lapse of time, by operation of law, performance, by impossibility and breach of contract.
Advice to Olive
Advice for Riv
A contract does not become discharged merely because expectations of profits will not be materialized. Harry and Riv entered into a valid contract. The terms of the contract were that Harry provides a Lorry for use by Riv while Riv pays him $ 4000 per month as consideration. Breach of any these fundamental terms will entitle the innocent part to redress in the form of damages. The court can also grant the party equitable remedies. When the lorry broke down, Harry had an obligation to repair it. However, he expressively refused to repair it and demanded more money, he was in breach of their contract. This entitles Riv to damages. Damages for breach of the contract are available to Riv as a right. If he proves to the court that there was a breach he automatically should be awarded liquidated damages. There are two main categories of damages available to him; nominal damages and substantial damages. For Riv to be awarded substantial damages, he must prove damage following the breach of contract. Lack of damage will only entitle him to nominal damages. The purpose of remedies is “to put the innocent party to the position he would have been if the contract had been fully performed”. The reason why Harry should pay Riv damages is that he anticipated breaching the contract. Harry’s statement that he can neither repair the lorry nor offer its replacement is a clear indication of intention to breach the terms of the contracts. This is because the contractual price was $ 4000 per month and it is immaterial whether the price is not adequate. The law of contract requires that consideration must only be sufficient not adequate. Hence, $ 4000 is sufficient consideration. This demonstrates that Riv suffered loss. In the case of Payless Travel Ltd v Baba Krupa Holidays, the court ruled that, in all contract cases, the cause of loss should be directly attributed to the breach of contract. The defence of difficulty of performance will not be available to Harry. If a contract loses it commercial viability, the courts can mitigate these by allowing the parties to negotiate new terms. The law is that a contract is not discharged merely because a party finds it less profitable or expensive to fulfill his obligations under the contract. In the case of Blackburn Bobbins Ltd v Allen & sons, it was held that a party will be held to be in breach and, therefore, liable to pay the other party damages if he fails to honor his bargain in the contract.
References
Chen-Wishart Mindy, Contract law, (Oxford University Press, 2012)
Young Max, Understanding Contract law (Routledge, 2009)
Stone Richard, The Modern Law of Contract (Taylor & Francis, 2011)
McKendrick Ewan Contract Law: Text, Cases, and Materials (Oxford University Press, 2012)
Pollock Fredrick Pollock's principles of contract (13th Stevens)
