Pn.

Liziana Kamarul Zaman

Pensyarah Kanan
Jabatan Undang-Undang, UiTM Kelantan
 Discharged = terminated
Once contract is discharged the contracting parties free from
further obligation under the contract
By Performance

By Agreement

By Impossibility

By Breach
 BY PEFORMANCE
 Section 38 (1)
When the parties have performed their contracts, by
carrying out their promises under the contracts, there is a
complete DISCHARGE of the contract.
If only one of the parties has performed his part under
the contract, he alone will be discharged the other
party is still bound to the contract until he perform his
promise under the contract.
 Time for performance

Any delay by one party, h/w slight, will

Time of entitled the other party to make the
performance contract voidable
S. 56(1)
is essential Case: Sim Chio Huat v Wong Ted Fuii

Time of The contract does not become voidable

performance But the promisee is entitled to compensation
is not for any loss he suffered
S. 56(2)
essential
 Place for performance

If there is a place
being specified
The parties must perform the
for the contract at the place specified
performance of
the contract

If there is NO
place being
Promisor is under a duty to ask the
specified for the promisee
performance of
S. 50
the contract
 Performance by whom? S. 41

If it is intention of
the parties tt the
contract shld be It must be done by him personally
performed by
promisor himself

No intention Promisor may employ a competent

person to perform the contract
 Performance by 3rd party S. 42
- If the promisee accepts performance from a 3rd party,
he cannot enforce it anymore against the promisor.
- Case: Hj Nik Ishak v Nik Zainab
 BY AGREEMENT
 Section 63 of the Contracts Act:
If the parties to a contract agree to substitute a new contract
for it, or to rescind it, the original contract need not be
performed.

Section 64 of the Contracts Act:

Every promisee may dispense with or remit, whooly or in part,
the performance of the promise made to him, or may extend
the time for such performance, or may accept instead of it any
satisfaction which he thinks fit.
 S. 63 S. 64
A contract may be
A contract may be discharged by
discharged by consent of
all parties in the form of: consent of all
parties in the form of:

Subtitution/ Waiver/
Alteration/
Rescission
Release/
of the original contract remission
 BY FRUSTRATION
 Discharge by Impossibility

S. 57(1)

An agreement to do an act impossible in

itself is VOID

Illust. (a)
A agrees with B to discover treasure by
magic. The agreement is void.
 Discharge by Impossibility
- Effects:
The contract become VOID if either ONE or BOTH parties
aware of the impossibility.
- If only one party knew of the impossibility, he must make
compensation to the other party.
- Sec. 57(3)
Compensation must be paid by the promisor to the promisee
for loss through non-performance of act known to be
impossible or unlawful.
- Illustration (c)
 Discharge by Frustration

S. 57(2)

A contract to do an act which, aft the contract is

made, becomes impossible, or by reason of
some event which the promisor could not prevent,
unlawful, becomes VOID when the act becomes
impossible or unlawful
 This may happen in several situations:

1. Destruction of the subj matter of the contract

Taylor v Caldwell (music hall)

2. There is supervening events wh. Defeat the whole

purpose of the contract
Krell v Henry (room kings coronation)

3. Death or personal incapacity

4. There is a change in the law which makes the contract

becomes unlawful/ due to outbreak of war
1. Destruction of the subject matter of the contract
A contract is discharged by frustration when a subject matter of
the contract destroyed due to unavoidable circumstances.
E.g. Fire, flood, land slide etc.

Taylor v Caldwell [1863]

Plaintiff rented a music hall from the Defendant for a series of
concert. Unfortunately, the hall was accidentally burnt down
before the concert was scheduled. Court held that the contract
was void due to the frustration.
2. There is supervening events which defeat the whole purpose of the
contract.
It is impossible to continue with the contract because the purpose of
the contract are no longer achievable due to the supervening event
that is beyond their expectation.

Krell v Henry [1903]

Defendant in this case contracted to hire a room from the plaintiff. The
defendants purpose in hiring the room was to watch the coronation
procession of King Edward VII. However, due to the Kings illness, the
procession was cancelled. Thus the plaintiff sued the defendant for the
payment of the outstanding balance owed for the hire of the room.
Held: The contract for hire was frustrated and defendant did not have
to pay the balance owed to the plaintiff.
3. Death or personal incapacity
If the contract is for personal services, such as a contract of
employment, the contract may be discharged by frustration due to
death or incapacity of that party.
Illustration (e) of Section 57.
A contracts to act at a theatre for six months in consideration of a
sum paid in advance by B. On several occasions A is too ill to act. The
contract to act on those occasions becomes void.

Robinson v. Davidson (1871)

In this case the contract was that the defendant must play the piano at a
concert on a specified date. On the specified date, the defendant was
unable to perform as she was ill. It was held that the contract was
discharged by frustration.
4. There is a change in the law which makes the contract becomes
unlawful/ due to outbreak of war.
There is a change in the law which makes the contract becomes
unlawful.

Lee Kin v. Chan Suan Eng [1933]

Where there was a lease which provided for renewal every five
years. A new law was passed prescribing annual renewals. The
court held that the lease was frustrated because of the new law.
 Effect
- Contract is discharged not due to any fault of the contracting
parties therefore either party cannot sue the other party for
breach.
- H/w if either party has received any advantage or benefit
under the contract, he has to return such benefit or advantage
to the person from whom he received it S. 66
 BY BREACH
 When a promisor fails to perform his
obligation there is a breach of the contract.
S. 40 The innocent party may continue or repudiate
the contract

Case Smith Construction Co. Ltd v Phit

Kirivata
 Section 40 of the Contracts Act:
When a party to a contract has refused to perform, or disabled
himself from performing, his promise in its entirety, the promise may
put an end to the contract, unless he has signified, by words or
conduct, his acquiescincein its continuance.

Illustration (a) of Section 40 of the Contracts Act

A, a singer, enters into a contract with B, the manager of a theatre, to
sing at his theatre two nights in every week during the next two
months, and B engages to pay her RM100 for each nights
performance. On the sixth night A wilfully absents herself from the
threatre. B is at liberty to put an end to the contract.

 Ban Hong Joo Mine Ltd v. Chen & Yap Ltd (1969)
The appellant had refused to make fortnightly payments for the
work that had already been done by the respondent. The
appellant also ordered the respondent to stop their work.
It was held that the respondent can treat the contract as being
repudiated and they are entitled to sue the appellant for the
work that has been done.