LAWS104 Lecture Notes - Lecture 10: Dmg Media, Rescission, Aust
12 Jun 2018
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LECTURE – Disharge y Breah,
Disharge y Frustration
DISCHARGE BY BREACH
-Parties can maybe be discharged if there is a breach.
-If termination does take place (usually will), both parties are discharged from any further
obligations.
-Termination -> not rescission (vitiated), it is cancellation and going back to the beginning -
termination has different consequences, it doesn't cancel it, just any further obligation to perform.
-Parties generally do not want to terminate, they want it to be performed.
-Some will want to terminate for valid reasons - two types of breach to give rise to the right to
terminate:
• Actual breach
• Repudiation (referred to as repudiatory breach).
Termination v Rescission
-Koompahtoo Local Aboriginal Land v Sanpine Pty Ltd (2007) 233 CLR 115.
Actual Breach
-Bettini v Gye [1876] 1 QBD 183.
• Opera singer case who failed to turn up to rehearsal. Promotor tried to sue?
• Only a breach of warranty. The promoter was not deprived of the essential benefit of the
contract.
-Tramways Advertising Pty Ltd v Luna Park Ltd (1938).
• Gave the test of whether the term is condition or warranty.
• Essentiality test - High Court confirmed.
o Intention of the parties.
o If the term is of such importance to the promisee unless it had been assured of strict
performance and should have been apparent to the promisor when making the promise
- makes the term essential. Will be treated as a condition.
-Ankar Pty Ltd v National Westminster Finance (Aust) (1987) 162 CLR 549.
• High Court - courts should not be too ready to construe a term as a condition.
• In the absence of clear indications to the contract, courts will construe a term so that a breach
of it will not give rise to automatic right to terminate. They want to encourage performance
rather than avoidance.
-Associated Newspapers Ltd v Bancks (1951) 83 CLR 322.
-Failing to do what is exactly agreed in the contract - parties usually try to fix it up.
-Any deviation from what is precisely agreed is a breach:
• Failure to perform on time;
• Failure to perform to the standard required;
• Failure to perform one other party performs;
• Default position is that it is a breach of warranty (a non-essential term, not to the root).
• Damages are possible.
-Whether a party has the right to terminate with actual breach:
• Will need a breach of condition.
Intermediate Terms
-Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26 (Diplock LJ).
find more resources at oneclass.com
find more resources at oneclass.com
• Involved a charter contract. A contract to hire a commercial cargo vessel (ship) for commercial
purposes.
• Kawasaki hired it for a period of two years.
• They said the ship was sea worthy.
• Ship went from England to United States. 5 weeks were lost because of repairs.
• It then went to Japan and had to be repaired again for a further 15 weeks. Corrosion,
breakdown.
• Kawasaki tried to terminate the contract, saying it was a condition that it worked well.
• Ship owners challenged the termination saying he had no right to terminate.
• Court of Appeal said it was unlawful to terminate.
• Two judges said the sea worthiness was merely a warranty.
• One judge (Diplock) held that the term cannot be treated as a warranty, it is too important,
but an intermediate term.
• Diplock - it is a term that is not immediately obvious as either a condition or warranty. It will
depend on the breach and the seriousness of it for the plaintiff. Termination would only be
possible if it was sufficiently serious to be treated as a condition. It should focus on the nature
of the breach.
o If you can't tell if it is a condition or warranty, it is an intermediate term.
o If the breach will always deprive the person it affects, then it is a condition.
• Question of termination will mean assessing the consequences of the breach.
• Two-year hire of ship - lost 20 weeks in total - Diplock said that Kawasaki could not say they
could terminate on breach of contract, yes they lost time, but there is no indication that it
could not have functioned properly for the rest of the two years.
• This approach was later endorsed by High Court of Australia.
Repudiation
-Less straightforward.
-When there is a failure to be willing and ready to perform.
• One party puts themselves in a position to say that they are not ready, or willing to perform.
• One party during, or before the contract they show intention to not be bound.
• One party shows they intend to perform the contract in a way that is different.
• Or, one party will give notice that they are unable (unwilling, not ready) to perform.
o Anticipatory Breach
▪ I can't pay by the due date.
▪ I can't finish the job by the due date.
▪ Indication they will breach or will be unable to perform as agreed.
▪ If this happens, the innocent party has the immediate right to terminate without
having to wait for the breach. They will usually wait or give time, but for purely
legal purposes, they can do so straight away.
-Penalty clause
• If you breach the contract in some way, you will pay in some way.
-Forfeiture clause
• Contracts for sale of land - simple contracts, but they have to satisfy the writing requirements.
• Both parties fighting for a deposit.
Anticipatory Breach
-Foran v Wight (1989) 168 CLR 385.
• High Court decision.
• Contract for sale of land, purchaser paid 10% deposit. 10% was required on the breach.
• Time for completion was expressed to be time of the essence in 6 months (unusual).
• Parties agreed settleet would take plae i 6 oth’s tie, ut it is essetial, it is a
condition.
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Parties can maybe be discharged if there is a breach. If termination does take place (usually will), both parties are discharged from any further obligations. Termination -> not rescission (vitiated), it is cancellation and going back to the beginning - termination has different consequences, it doesn"t cancel it, just any further obligation to perform. Parties generally do not want to terminate, they want it to be performed. Some will want to terminate for valid reasons - two types of breach to give rise to the right to terminate: actual breach, repudiation (referred to as repudiatory breach). Koompahtoo local aboriginal land v sanpine pty ltd (2007) 233 clr 115. Bettini v gye [1876] 1 qbd 183: opera singer case who failed to turn up to rehearsal. Promotor tried to sue: only a breach of warranty. The promoter was not deprived of the essential benefit of the contract.
