Performance Discharge of Contract
Discuss About The Partial Performance Of Lump Sum Contracts.
The main issue of this case resolves around the possibility of a breach of contract being claimed by Andrew and management against the travel agent. There is also the issue of remedies which Andrew and Margaret would be able to claim successfully against this travel agent owing to the ensuing breach of contract. The issue is also to analyse the possibility of the contract being discharged through performance, in place of having been breached.
A contract, once it is formed, becomes binding on the parties to the contract. This means that the terms mentioned in the contract, have to be followed properly; where this is not done, the aggrieved party has the right of applying to the court for getting remedies awarded to them, owing to a breach of contract[1]. Before going into the discussion of breach of contract, there is a need to note that a contract can not only be discharged as a result of a breach of contract, but can also be discharged as a result of performance of stated terms of the contract[2].
Where the contracting parties fulfil the obligations covered under the contract, the contract is deemed to be discharged through performance. In Cutter v Powell[3], the court held that payment for work done by the husband of widow could be payable only if he had performed his part of the contract[4]. Even though this rule is harsh, it has been since mitigated by various exceptions being created[5]. One of such is partial performance of contract. If a party decides to accept the partial performance, then they have to pay the sum for the work which has been completed[6]. In Sumpter v Hedges[7], the court denied the acceptance of partial performance by the defendant as they were forced to accept this partial performance since the defendant had left the half completed house on the land of the defendant. Another important element regarding discharge of contract through performance is related to performance being prevented by the promise. In Planche v Colburn[8], the claimant was allowed to recover money for partial performance due to the fact that he had been prevented by the defendant from completing the performance of entire contract.
Misrepresentation is a vitiating factor under contract law, which has the capacity of rendering a contract as voidable/void. One of such factors is misrepresentation. Misrepresentation basically denotes a false statement of fact or law being made by one party, to another party, so that the other party gets into the contract[9]. Bisset v Wilkinson[10] is a leading matter in this context which provides that the false statement needs to be one covering law or fact. If it is one of opinion or advice, a claim of misrepresentation would not be successful. However, where the opinion giving party, was in a position to know the truth being the false statement being made, owing to the position or knowledge held by them, then the person making such false statement, even when it is related to an advice or opinion, would be liable, based on Smith v Land & House Property Corp[11]. The remedies of misrepresentation include rescission and/or damages. Through rescission, the parties are put back in their pre contractual position. Through damages, monetary compensation is awarded to the aggrieved party, for dealing with the loss which they had to bear as a result of misrepresentation being present.
Misrepresentation and Its Remedies
The key mode which results in the discharge of contract, apart from its performance is its breach. When the parties to the contract, fail in fulfilling their obligations, as have been covered under the contract, a breach of contract takes place[12]. So, where a promise made under the contract, even if it is a part of such contract, is not performed, a claim of breach of contract can be raised by the aggrieved party. Under the common law, there are different types of remedies which can be cited for the breach of contract. These remedies include damages, rescission, repudiation, injunctions and specific performance[13].
Damages under the common law of contract are the monetary compensation which is awarded to the aggrieved party, for compensating them for the loss. Addis v Gramophone[14] clarified the purpose of awarding damages. Damages are awarded as remedy for breach of contract in order to put the injured party in such place which they would have been at upon the contract being properly performed. The damages are awarded subject to rules of causation, remoteness and duty of mitigating loss being applied. In Monarch Steamship Co Ltd v Karlshamns Oljefabriker (A/B)[15], outbreak of war was not seen as chain of causation being broken as this was deemed as foreseeable by the court.
A key part of damages being awarded relates to rules of remoteness. A claimant is allowed to recover the losses only which are reasonably a result of breach of contract in a natural manner, or are such which are supposed to be in contemplation of parties at the time of formation of contract. In Hadley v Baxendale[16], the claimant was unable to use the mill due to delay in work of the defendant and claimed loss of profit. The court denied this claim on the basis that the defendant had never been told that a delay would result in claimant bearing losses. Further, this loss did not naturally occur or arise from the breach of contract. As these damages were not reasonably contemplated by the parties at the time of contract formation, the claim of claimant was denied.
In Victoria Laundry (Windsor) Ltd. v. Newman Industries Ltd[17], the defendant was aware of the fact that claimant would have to bear a loss in absence of boiler. As a result of the delay in delivery of boiler, a breach of contract was claimed, and a particularly lucrative sum was applied as damages by the claimant. The court denied the lucrative sum and stated that only such losses could be recovered which were reasonably contemplated by the parties in context of loss of profit resulting from absence of boiler.
Breach of Contract and Legal Remedies
There are different heads of damages under the contract law, on the basis of which monetary compensation can be claimed, and these cover the different types of loss. Where the plaintiff claims breach of contract based on disappointment and discomfort, it is crucial to show that enjoyment had been a part of contract[18]. This is mostly awarded in cases of holidays where they fail in meeting the standard which any holiday maker had been lead to believe that they would have enjoyed. In Baltic Shipping v Dillon[19], damages for distress were allowed to be recovered.
In Jarvis v Swan Tours[20], Jarvis had booked a holiday which made certain promises based on the brochure. Majority of these were not provided and the ones which were provided were not as they had been described initially. As a result of this, a claim for contract being breached based on disappointment was claimed. This resulted in the trial judge awarding £30 as damages. An appeal was made by Jarvis on this order. The appeal was upheld and the court held that as the specific purpose of getting in this contract was entertainment or enjoyment, the damages had to be awarded for frustration, distress, disappointment and upset resulting from contract breach.
In Jackson v Horizon Holidays[21], Jackson had booked a holiday for him and his family. As the hotel turned out to be unsatisfactory owing to cleanliness issues, a breach of contract was claimed. The trial judge awarded damages only for Jackson but not for the family, stating that disappointment of children and wife could not be considered as they were not a contract party. However, the higher court held otherwise on appeal being made by Jackson on order of the trial judge and Jackson was able to recover damages for the disappointment which his wife and children suffered.
In the present case study, a contract had been entered between the travel agent and Andrew and Margaret, where the travel agent promised that Andrew and Margaret would be provided with restful holiday, where they would access to a nice beach and facilities for golf and water skiing. For these services, Andrew and Margaret paid certain sum to the travel agent. Due to the certain things that happened, where the services given to Andrew and Margaret were not as they had been promised by travel agent, they are looking for raising a claim of breach of contract against the travel agent. On this claim, the travel agent can raise the contention that the contract had been discharged through performance. Based on Cutter v Powell, he can show that Andrew and Margaret had made payment for the holiday package which was same for the alternative resorts. Nothing was specially or overly paid for the claimed upon services by the two. Hence, the contract had been properly performed by him and as Andrew and Margaret held their end of bargain in terms of making payment for the contract, the contract was discharged through performance.
Damages and its Types
Another contention which can be made by the travel agent is the fact that Andrew and Margaret decided to use the services which were offered to them and also paid for the services they got. They paid nothing extra and hence got nothing extra. So, a partial performance of the contract can be claimed. Reliance can be placed on Planche v Colburn to show that by leaving early, the travel agent was stopped from proper completion of the contract. However, chances of this claiming being a success are very less. This is due to the fact that if travel agent relies on Planche v Colburn, Andrew and Margaret can prove him wrong based on Sumpter v Hedges and show that they were forced to accept the partial performance as they had no other place to stay.
Moving to the claims which can be raised by Andrew and Margaret, the first claim they can make is for the misrepresentation undertaken by the travel agent. The travel agent can claim based on Bisset v Wilkinson, that the services offered were based on advice. However, Smith v Land & House Property Corp would prove him wrong. This is because as a travel agent, he knew that the accommodation provided to Andrew and Margaret was a deserted cabin with no water, no toilet facilities, and no vehicle access, that it had been deserted for some time, that the only beach within walking distance is covered with rocks and coral, and is very unsuitable for swimming, and that there were no facilities for water skiing and the only golf course on the island is a mini golf course in the village, four kilometres away, which has been vandalised by youths. He had made false promises to Andrew and Margaret so that they can get in the contract with him. This would allow Andrew and Margaret to claim damages for the misrepresentation undertaken by the travel agent.
Andrew and Margaret also have the option of claiming breach of contract from the travel agent. The damages paid to Andrew and Margaret, based on Addis v Gramophone, would put the two in a pre contractual position, as they would have been properly compensated. On the basis of Jarvis v Swan Tours and Jackson v Horizon Holidays, Andrew and Margaret would be able to claim damages for breach of contract. This is because entertainment was a key part of the holiday which Andrew and Margaret had booked for themselves. Applying Victoria Laundry (Windsor) Ltd. v. Newman Industries Ltd, the travel agent knew that the purpose of the holiday booked by Andrew and Margaret was to get a restful holiday. So, a breach of contract, on the basis of not being able to enjoy the holiday, can be claimed upon by Andrew and Margaret.
The question is now on the remedies which can be claimed by Andrew and Margaret and for which basis. As monetary compensation is best suitable in this case, since rescission, repudiation, injunctions and specific performance would not put Andrew and Margaret in pre contractual position, damages have to be awarded to Andrew and Margaret. Andrew and Margaret have claimed the following damages: cost of the holiday, cost of medical treatment for Margaret, anticipated loss of wages, and cost of additional airfares incurred.
Based on Jarvis v Swan Tours and Jackson v Horizon Holidays, Andrew and Margaret would be able to claim damages incurred for cost of the holiday and for cost of additional airfares incurred. Based on Baltic Shipping v Dillon, Andrew and Margaret would be able to claim damages incurred for cost of medical treatment. However, this claim is likely to be contested based on Monarch Steamship Co Ltd v Karlshamns Oljefabriker (A/B) as nervous breakdown was a direct result of breach of contract cannot be established based on the given facts. Also, based on Hadley v Baxendale, Andrew and Margaret would not be able to claim damages incurred for anticipated loss of wages, owing to lack of causation and remoteness in breach of contract resulting in such losses.
Conclusion
Thus, based on the detailed analysis of this, Andrew and Margaret would be able to claim damages from the travel agent for cost of the holiday and for cost of additional airfares incurred; but this would not be successful for the other claims including cost of medical treatment and anticipated loss of wages.
References
Carter JW, Contract Law in Australia (LexisNexis Butterworths, 2013)
Dockray M, ‘Cutter v Powell: A Trip Outside the Text’ (2001) 117 Law Quarterly Review 664.
Kidd C, ‘Partial Performance of Lump Sum Contracts: Proposals for Reform’ (1985) 59 Australian Law Journal 96.
Latimer P, Australian Business Law 2012 (CCH Australia Limited, 31st ed, 2012)
Marson and Katy Ferris, Business Law Concentrate: Law Revision and Study Guide (Oxford University Press, 3rd ed, 2016)
Swanston J, ‘Discharge of Contracts for Breach’ (1981) 13(1) Melbourne University Law Review 69.
Williams GL, ‘Partial Performance of Entire Contracts’ (1941) 57 Law Quarterly Review 373.
Addis v Gramophone [1909] AC 488
Baltic Shipping v Dillon (1993) 176 CLR 344
Bisset v Wilkinson [1927] AC 177
Cutter v Powell [1795] EWHC KB J13
Hadley v Baxendale [1854] EWHC Exch J70
Jackson v Horizon Holidays [1975] 1 WLR 1468
Jarvis v Swan Tours [1972] 3 WLR 954
Monarch Steamship Co Ltd v Karlshamns Oljefabriker (A/B) [1949] AC 196
Planche v Colburn [1831] Economics KB J56
Smith v Land & House Property Corp (1884) 28 Ch D 7
Sumpter v Hedges (1898) 1 QB 673
Victoria Laundry (Windsor) Ltd. v. Newman Industries Ltd. [1949] 2 K.B 528
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