Business Law Essay

Topic: Contract Law – Performance and Termination

This essay is discussing about how to terminate a contract in Australia and how
effective of the enforcement of the law to the real incidents by comparing with Indian
contract act.

In Australia, all contracts will eventually come to an end. However, the termination
might occur when the parties are discharge from the obligations that they agreed in
the contract. There are some ways will impact on the termination such as:
performance of the parties, agreement between parties, pursuant to the term in the
contract, frustration, operation of law, assignment of contractual obligations and
benefits, non-performance, the election to discharge or affirm, the election to
discharge the contract, the election to affirm the contract.

Firstly, performance of the parties within the contract is considered in 2 ways, which
are actual performance and attempted performance. In the actual performance, it
contains many factors that allow a contract to be terminated: Is the payment paid on
time as in the contract? Is there any act performed like what the promisor promised
to do? Depends on the situations, the compensation will be paid for the party who
performed better. Besides that, a failure in attempted performance is also one of
reasons causing a termination of a contract. The rejection of creditor may not erase
the debt but will release debtor from the duty of looking for the creditor to pay.

What if there is an agreement between the parties about terminating the contract, will
the contract be discharged? The answer is “What has been created by agreement
can be terminated by agreement”. However, the decision could be too hasty so the
law also gives the parties a chance for consideration. It means each party has to
prove sufficient consideration to end up with the decision. There is also possibilities
might happen when the parties want to release the contract which are substitution or
variation contract. The parties feel do not like to keep going with the original contract
so the contract is renew. Besides that, there is also ‘waiver’ situation when one of the
parties completed all obligations under the contract and feel like want to release
other party from contracted obligation. Contract is also terminated because of a term
in the contract.
Under Australian common law, a contract can be voided without agreement of the
parties because of a material alteration of written document. A merger of a simple
contract to a formal contract is also counted as a termination.

The contract could be destroyed by an act of God, which is natural or human force
beyond the control of the parties. Or we call this frustration. According to the
definition of frustration, when an unexpected event happens after the contract has
been formed that changes the way it can be performed. As in the case law Taylor v
Caldwell (1863),

Frustration

Development of the doctrine (chủ nghĩa)

Definition of ‘frustration’

The basis of the doctrine

Examples of frustration

The effect of frustration (depends on states) <- see text book page 393

Assignment of contractual obligations and benefits

Assignment of obligation by the parties

Assignment of benefits by the parties

Assignment by operation of law

Non-performance

The election to discharge or affirm

Discharge

Repudiation: Express or implied

The election to discharge the contract

The common law election to discharge

The contractual or statutory right to discharge

The risk of unjustified discharge

The interpretation of contractual default clauses

Restrictions on the right to discharge

The contract after discharge

The election to affirm the contract

The consequences of an election to affirm

Australian

Performance

In Australian contract law, when a contractor wants to stop the contract, there are
always a numbers of ways, most often through performance.

A contract may be discharged in a number of ways; most commonly through

performance, by the parties, of their contractual obligations. As a general rule, for a
contract to be discharged by performance the contractual obligations must be
performed completely and exactly; it is not sufficient to 'substantially' perform a
contract. There are, however, some exceptions to the rule that exact performance is
required. The parties may also modify this requirement - by expressly or implicitly
providing that exact performance is not required. Determining the relevant level of
performance will, therefore, depend on proper construction of the contract involved

Agreement

Parties are free to terminate their contract by agreement. This might take the form of
a termination provision in the contract itself or through a new and separate contract.

Breach
Frustration

Indian contract act 1872 about termination is quite biased about the performance.
Wondering is there any termination law in an Indian contract or the court or the
parties’ base on the performance to judge.

The revocation of proposal is seemed to be quite positive about terminating a

contract.

1. By performance S.31 to 67.

2. By impossibility of performance S.56.-- Frustration
3. By Agreement S.62 to 67.
4. By breach.

S.31 Defines Contingent contract- A contract is a contract to do or not to do something,

if some event, collateral to such contract, does or does not happen.

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Agreement

References:

http://netk.net.au/Contract/06Termination.asp

http://www.corecentre.co.in/Database/Docs/DocFiles/indian_contract.pdf

http://www.australiancontractlaw.com/law/termination.html

http://www.xomba.com/discharge_contract_indian_contract_act
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