How does a contract come to an end, and what happens when performance becomes impossible?
Discharge of contract: discharge by performance (and the softening doctrines), by agreement, by breach (actual and anticipatory), and by frustration (impossibility, illegality and radical change, and the consequences under the Law Reform (Frustrated Contracts) Act 1943).
An Eduqas A-Level Law guide to the discharge of a contract. Explains discharge by performance, agreement, breach and frustration, and the consequences of frustration, with worked scenario answers and the AO2 application the paper rewards.
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What this dot point is asking
Eduqas contract requires you to know how a contract is discharged (brought to an end): by performance (and the doctrines that soften the strict rule), by agreement, by breach (actual and anticipatory), and by frustration (impossibility, illegality and radical change), including the consequences under the Law Reform (Frustrated Contracts) Act 1943. The skill is to apply the right mode of discharge to a scenario (AO2) and to evaluate a doctrine such as frustration (AO3).
The answer
Discharge by performance
Discharge by agreement and by breach
A contract may be discharged by agreement: a new agreement to end it, supported by consideration (accord and satisfaction), or under a term of the contract. Discharge by breach arises where a party fails to perform or performs defectively. A breach of condition or a repudiatory breach lets the innocent party elect to terminate and claim damages; a warranty breach gives damages only.
Discharge by frustration
Frustration discharges a contract where, after it is formed, an unforeseen event occurs without the fault of either party that makes performance impossible, illegal, or radically different. Examples: the destruction of the subject matter (Taylor v Caldwell, a music hall burnt down); personal incapacity in a personal-services contract; supervening illegality; and the non-occurrence of the contract's central event (Krell v Henry, a room hired to view the cancelled coronation, but contrast Herne Bay Steamboat). Frustration is not available where the event is self-induced (Maritime National Fish), was foreseen, or merely makes performance more onerous or expensive (Davis Contractors; Tsakiroglou). The consequences are governed by the Law Reform (Frustrated Contracts) Act 1943, which improved the harsh common-law position (Chandler v Webster): money paid is recoverable, money payable ceases to be due, the court may allow a party to recover expenses, and a party who obtained a valuable benefit may have to pay a just sum.
Examples in context
A strong answer identifies the correct mode of discharge and applies its rules, then the consequences.
Try this
Q1. Explain the doctrine of substantial performance. [10 marks]
- What the marker wants. Precise AO1: where a party has performed almost all of their obligations, they may recover the contract price less the cost of remedying the defects (Hoenig v Isaacs), provided performance is not too defective (Bolton v Mahadeva); it softens the strict rule in Cutter v Powell.
Q2. A singer contracts to perform on a specific date but falls seriously ill and cannot appear. Advise on whether the contract is discharged. [20 marks]
- Cue. An AO2 application: a contract for personal services may be frustrated by the performer's serious incapacity (Condor v Barron Knights), an unforeseen event not the fault of either party that makes performance impossible; the contract is discharged automatically, with consequences under the Law Reform (Frustrated Contracts) Act 1943.
Exam-style practice questions
Practice questions written in the style of WJEC Eduqas exam questions on this dot point, with worked answer explainers. The year tag is the paper they imitate, not the source.
Eduqas Component 2 2022 (scenario)20 marksA band is hired to play at a wedding in a specific hall on a fixed date. A week before, the hall burns down through no one's fault. Advise on whether the contract is discharged by frustration and the consequences. [a scenario in the style of Component 2; the real paper tariff is 25, AO1 and AO2]Show worked answer →
A mainly AO2 scenario on frustration.
Frustration. A contract is frustrated where, after formation, an unforeseen event, not the fault of either party, makes performance impossible, illegal or radically different (Taylor v Caldwell, the burnt music hall; Davis Contractors confines it). The destruction of the specific hall makes performance of this contract impossible, so it is frustrated and ends automatically.
Limits. Frustration does not apply if the event was self-induced (Maritime National Fish), foreseen, or merely makes the contract more expensive or difficult (Davis Contractors; Tsakiroglou). None of those applies here.
Consequences (Law Reform (Frustrated Contracts) Act 1943). Money paid before frustration is recoverable; money due ceases to be payable; a party who has incurred expenses may be allowed to retain or recover a just sum; and a party who has gained a valuable benefit may have to pay for it. So a deposit would generally be returned.
A top answer establishes frustration, addresses the limits, and applies the 1943 Act to the consequences.
Eduqas Component 3 2021 (essay)20 marksAnalyse and evaluate the doctrine of frustration. [an essay in the style of Component 3; the real paper tariff is 25, AO1 and AO3]Show worked answer →
A mainly AO3 essay. Explain frustration, then evaluate it.
The law. Frustration discharges a contract where a later, unforeseen, non-self-induced event makes performance impossible (Taylor v Caldwell), illegal, or radically different (Krell v Henry, the cancelled coronation; contrast Herne Bay Steamboat). It does not apply to mere hardship or increased cost (Davis Contractors; Tsakiroglou). The Law Reform (Frustrated Contracts) Act 1943 deals with the consequences.
Evaluation. Strengths: frustration fairly releases parties from contracts rendered pointless or impossible by events beyond their control; the 1943 Act improved the harsh common-law rule (Chandler v Webster). Weaknesses: the doctrine is narrow and the line between radical change and mere hardship is uncertain (Krell v Henry sits awkwardly with Herne Bay); 'radically different' is vague; and the 1943 Act's apportionment of expenses is discretionary and unpredictable.
A top answer explains the doctrine and the 1943 Act and evaluates its scope and fairness, then concludes.
Related dot points
- Formation of contract: offer and acceptance (including invitations to treat, the postal rule and revocation), consideration (sufficiency, adequacy and past consideration), and the intention to create legal relations.
An Eduqas A-Level Law guide to the formation of a contract. Explains offer and acceptance, the postal rule, consideration and the intention to create legal relations, with worked scenario answers and the AO2 application the paper rewards.
- The terms of a contract: express and implied terms (including statutory implied terms), the classification of terms (conditions, warranties and innominate terms), and exclusion clauses and their statutory controls.
An Eduqas A-Level Law guide to the terms of a contract. Explains express and implied terms, conditions, warranties and innominate terms, and exclusion clauses and their controls, with worked scenario answers and the AO2 application the paper rewards.
- Vitiating factors: misrepresentation (fraudulent, negligent and innocent), its requirements (a false statement of fact that induces the contract) and remedies (rescission and damages), and an outline of other vitiating factors such as duress and economic duress.
An Eduqas A-Level Law guide to the vitiating factors in contract. Explains misrepresentation (fraudulent, negligent and innocent), its requirements and remedies, and other vitiating factors, with worked scenario answers and the AO2 application the paper rewards.
- Remedies for breach of contract: the aim and measure of damages (expectation loss, causation, remoteness under Hadley v Baxendale and mitigation), liquidated damages and penalties, and the equitable remedies (specific performance and injunction).
An Eduqas A-Level Law guide to the remedies for breach of contract. Explains the aim and measure of damages, causation, remoteness and mitigation, liquidated damages and the equitable remedies, with worked scenario answers and the AO2 application the paper rewards.
- The scenario application question (AO2): the IRAC structure (issue, rule, application, conclusion), identifying the legal issues in a factual problem, applying authority to the facts, and reaching a reasoned conclusion.
An Eduqas A-Level Law guide to the scenario application question (AO2). Explains the IRAC structure, identifying the issues, applying the law to the facts and reaching a conclusion, with worked examples and the technique the Component 2 paper rewards.
Sources & how we know this
- Eduqas A Level Law (A150) specification — WJEC Eduqas (2017)