Singapore Institute of Management

Global Education

Diploma in Management Studies

DMSQF

July 2023 Semester

LAW0115 Business Law

CA2 Individual Assignment

8 August 2023

Submitted by:

Name: Wan Shiou Wei

Student ID: 10241702

a) Discharge of contracts is described as the termination of a contract. The contract is
discharged when each party releases themselves from their obligations under it.
There are four ways to end a contract: performance, frustration, agreement, and
breach.

Discharge by performance explains that both parties to a contract complete their

obligations. According to the general rule, the contract will be ended when both
parties' obligations are exact; no deviations are allowed as well.

Frustration is a supervening occurrence that is neither party's fault. This destroys the
very basis of the contract because the parties are committed to something radically
different from what they originally contemplated. In Singapore, the Frustrated
Contracts Act (Cap. 115) and common law apply to contracts that are discharged by
frustration.

When the parties mutually agree to release each other from performance if neither
has fulfilled its obligations, the contract is discharged by agreement. To terminate a
contract, each party must provide the other party with sufficient consideration.

Discharge by breach happens in two ways. First, when one party fails to meet its
contractual obligations when they arise, there is an actual breach. Then, an
anticipatory breach occurs when a party decides not to continue with the contract
before the date for performance.
b) Legal Principles:

When a contract ends and both parties release their obligations, it may be
discharged.

When a contract is discharged by performance, each party must fulfill its obligations
exactly and without deviation. In the case of Cutter v. Powell, the shipping company
agreed to pay C 30 guineas for serving as an officer during a voyage from Jamaica
to Liverpool. Since C didn't complete the journey, the defendant wasn't liable (Cutter
v. Powell, 1795).

Initially, substantial performance implies that even if one party is unable to perform,
he may still claim that he substantially completed the contract, but he cannot claim
the whole contractual payment. The innocent party cannot treat the contract as
terminated and refuse to pay the obligation. He may benefit from "unjust enrichment"
if he fails to cover the price, which is unfair to another party. The courts have two
guidelines for determining substantial performance. First, there is not a huge
difference between the contract amount and the rectification costs. Second, this is
unfair when the party providing substantial performance does not receive the
contract price minus rectification costs. It is associated with the Hoenig v. Isaacs
case: The defendant renovated the plaintiff's flat for a contract price of £750. The
plaintiff paid £400 due to poor workmanship. If the court rules the contract was
substantially performed, the defendant can recover £695 (Hoenig v. Isaacs, 1952).

Additionally, when a party partially fulfills his obligations but is prevented by the other
party from completely performing them, the innocent party may be entitled to
payment on a quantum meruit basis for finished work. Planche v. Colburn is the
applicable case law. Divisible contracts also exist that are divided into many parts.
The entire contract is unaffected since each part is treated separately and has
independent discharge rights. For instance, employment contracts.
Lastly, acceptance of partial performance refers to when one party willingly accepts
the partial performance of the other and must pay an appropriate price for the work
performed. It is legal only when the innocent party voluntarily accepts the incomplete
performance. Nevertheless, it is illegal if the innocent party agrees under duress and
the performed party cannot recover the entirety of his partial performance. Sumpter
v. Hedges is the relevant case: the plaintiff started building two houses for the
defendant but left due to financial issues. The defendant completed the work out of
necessity, not acceptance. The plaintiff's claim was rejected (Sumpter v. Hedges,
1898).

Moreover, a frustrating contract may be discharged when unforeseen occurrences

arise and without fault to any parties. This resulted in the obligations under the
contract being radically different from those originally contemplated by the parties.
Circumstances leading to frustration are the destruction of the subject matter (Taylor
v. Caldwell, 1863), the non-occurrence of an event (Krell v. Henry, 1903), personal
incapacity (Condor v. The Barron Knights Ltd, 1966) government interference or
acquisition (Metropolitan Board v. Dick. Kerr Ltd, 1918).

Application:

Under the contract's conditions, Uber was in charge of the project management of
renovations, interior design, and space planning services. The project cost $200,000
and had a four-month timeframe starting on February 1, 2023.

Initially, the contract was divided into many parts, including completing hacking work,
laying water pipes, and completing cabinetry work. The contract was treated
separately since Spring did not pay the entire amount owed in a single lump sum,
rather paying only 50% of it. Furthermore, not every part of the contract had any
effect on the whole. Thus, this contract served as an exception to the rule of a
divisible contract.

At first, the renovations went smoothly, and Uber was paid a $100,000 performance
fee. This demonstrates that Uber followed the contract's general rule that was
discharged by performance. The workers accurately and consistently performed
every stage of the project without deviation (Cutter v. Powell, 1795).

Due to persistent worker shortages, Uber returned the unpainted office to Spring on
May 31, 2023, and all other contract-required works were finished. Having trouble
obtaining workers is seen as an unforeseen occurrence that causes frustration. As a
result, Uber failed to complete the paintwork within the specified timeframe and
handed over to Spring an unfinished office. This significantly affects the contract's
nature and purpose, as Spring paid for a completely renovated office, involving the
paintwork.

Uber also delivered a substantial performance when they finished all other contract-
required works except painting. Hence, the exception to the rule in this situation is
substantial performance. Uber asked for payment of the remaining 50% of the
contractual sum and asked Spring to find a painter to complete the painting. Nihon
Paint was chosen by Spring to finish the $10,000 painting. The $10,000 fee was
recognized as a rectification cost.

Then, Spring willingly agreed to accept the partially renovated office because they
needed to move into it quickly. In this case, the exception to the rule is the
acceptance of partial performance. Therefore, Spring must make a fair payment for
all other works that have already been performed (Sumpter v. Hedges, 1898).

Conclusion:

(i) The contract was discharged by performance since it satisfied a substantial

performance exception. This could be shown when Spring completes all other
contractual obligations aside from painting. Then, Uber told Spring to pay 50% of
the contractual sum for the unit's handover and find Nihon Paint to complete the
paintwork with a $10,000 rectification cost. In law, Spring was not permitted to
refuse the payment to the performance party Uber because this would constitute
"unjust enrichment" for the benefit of Spring. According to the Court's guidelines,
it would be unfair for Uber not to obtain the contract price less the rectification
 cost since there was not a significant difference between both (Hoenig v. Isaacs,
1952).

(ii) In summary, Uber's substantial performance of the contract allowed them to

collect any money from Spring, despite the $10,000 painting rectification cost.
Spring should pay Uber the remaining 50% of the contract price minus the
$10,000 rectification cost. Thus, Uber could recover $90,000 from Spring.

(1,156 words)
References:

1. (2022Oct) LAW115-Topic07-Contract4(1)
2. Cutter v. Powell, 6 TR 320; 101 ER 573 (Court of King’s Bench June 9, 1795).
3. Hoenig v. Isaacs, EWCA Civ 6, 2 All ER 176 (Court of Appeal, 1952)
4. SIM MODULE BOOK Business Law Version 01 (new logo)
5. Sumpter v. Hedges, 1 QB 673, 67 LJQB 545, 46 WR 454, 42 Sol Jo 362, 78 LT 378
(Court of Appeal March 18, 1898)