The normal and intended way to end a contract is by complete performance, when both parties have fulfilled their obligations exactly as agreed.

Key principles:

• Exact performance rule: obligations must be fully performed before the other party’s duty arises (Cutter v Powell [1795]).

• Substantial performance: if the party has substantially performed, they may still recover payment, less deductions for defects (Hoenig v Isaacs [1952]).

• Divisible contracts: if a contract can be divided into parts, payment may be due for each completed part (Taylor v Webb [1937]).

• Prevention of performance: if one party is prevented from performing, they may claim payment for work done (Planche v Colburn [1831]).

Time of performance:

If time is of the essence, failure to perform on time may allow termination (Union Eagle Ltd v Golden Achievement Ltd [1997]).

Parties can end their contract by mutual consent, as long as there is consideration or the agreement is made by deed.

Methods:

• Waiver: both parties agree to abandon the contract before performance.

• Substitution (novation): a new contract replaces the old one, often changing parties or terms.

• Accord and satisfaction: agreement to end or vary the contract, supported by new consideration (British Russian Gazette v Associated Newspapers [1933]).

• Release by deed: formal release without need for consideration.

A contract is frustrated when, after formation, an unforeseen event occurs that makes performance impossible, illegal, or radically different from what was agreed.

Key cases:

• Taylor v Caldwell [1863] – music hall destroyed by fire; contract frustrated as performance became impossible.

• Krell v Henry [1903] – contract to rent a flat for a coronation procession was frustrated when the procession was cancelled.

• Herne Bay Steamboat Co v Hutton [1903] – not frustrated; other purpose (pleasure cruise) still possible.

Limits:

Frustration will not apply if:

• The event was foreseeable or self-induced (Maritime National Fish Ltd v Ocean Trawlers [1935]).

• The contract provides for the event (Davis Contractors v Fareham UDC [1956]).

Effect:

Discharges the parties from future obligations, but rights already accrued remain. The Law Reform (Frustrated Contracts) Act 1943 allows recovery of money paid before frustration and compensation for expenses or benefits conferred.

A contract may be discharged by breach when one party fails or refuses to perform their obligations. The innocent party can usually terminate the contract and claim damages.

Types of breach:

• Actual breach – failure to perform when due.

• Anticipatory breach – clear indication, before performance is due, that a party will not perform (Hochster v De la Tour [1853]).

Seriousness of breach:

• Breach of a condition – allows termination and damages (Poussard v Spiers [1876]).

• Breach of a warranty – allows damages only (Bettini v Gye [1876]).

• Breach of an innominate term – effect depends on the seriousness of the consequences (Hong Kong Fir Shipping v Kawasaki [1962]).

Effect of termination:

The innocent party may treat the contract as ended and sue for damages, or choose to affirm it and continue performance.