LAWS104 Study Guide - Final Guide: William Gummow, Westpac, Executory Contract
25 Jun 2018
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DISCHARGE BY AGREEMENT
Discharge by abandonment (implied agreement)
-Abandonment of a contract cannot be effect by one party alone
-If the parties by their ‘external manifestations’ evinced an intention to abandon or abrogate the
agreement, the agreement will be discharged’ (Summers v The Commonwealth)
-The question of whether there is abandonment of a contract is a matter of fact to be inferred from an
objective assessment of the conduct of the parties
-It is not necessary for the court to examine whether the parties themselves actually had the intention of
abandoning the agreement
-If a contract has been partly performed, ‘it is not lighting to be supposed that parties intend to abandon
accrued rights’ (Cedar Meats (Aust) v Five Star Lamb)
Fitzgerald v Masters (Dixon CJ and Fullagar J)
-‘There can be no doubt that, where what has been called and ‘inordinate’ length of time has been
allowed to elapse, during which neither party has attempted to perform, or called upon the other to
perform, a contract made between them, it may be inferred that the contract has been abandoned’
Discharge pursuant to a term of the original contract
-A term of a contract may enable the contract to be terminated if a certain breach occurs or if certain
circumstances arise
-Term is usually referred to as a condition precedent or a condition subsequent
Contractual right to terminate
-Sometimes a contract contains a provision whereby, if a certain type of breach occurs, a party has a
right to terminate the contract
Crawford Fitting Co v Sydney Valve & Fitting (McHugh JA)
-‘the answer depends upon whether the agreement contain an implied term to that effect. The existence
of the term is a matter of construction. But the question of the construction does not depend only upon
a textual examination of the words or writings of the parties. It also involves consideration of the
subject matter of the agreement, the circumstances in which it was made, and the provisions to which
the parties have or have not agreed’
If a term has to be implied, the normal rules relating to implication of terms set out in BP Refinery apply
Discharge by pursuant to a term of the original contract – conditions precedent
-A conditions precedent is a provision that sets out one of two consequences in the event of a certain
event not occurring
-First: a contract will not come into existence unless a certain event occurs
-Second: a party’s obligation to perform does not arise unless a certain event occurs
-Courts tend to favour a construction that the provision is a condition precedent to performance and will
only rule that it is a condition precedent to the existence of a contract where the contract, read as a
whole, compels such a conclusion (Perri v Coolangatta Investments)
Perri v Coolangatta Investments a term of the contract stated that the contract was ‘entered into subject to
[them] completing a sale of their property. The Perris made no arrangements to sell their property until 11
months later. 5 months after this, the vendor gave notice requiring completion of the contract and on expiry of
this notice formally issued a notice of termination. The Perris challenged this on the grounds of specific
performance but the court found that the condition was a condition precedent to the performance of the contract
and not one going to its formation. Further, the court implied an obligation that the Perris would make all
reasonable efforts to achieve the sale of their property and that failure to do this would lead to breach of contract
and a liability for damages.
Discharge by pursuant to a term of the original contract – conditions subsequent
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Document Summary
Abandonment of a contract cannot be effect by one party alone. If the parties by their external manifestations" evinced an intention to abandon or abrogate the agreement, the agreement will be discharged" (summers v the commonwealth) The question of whether there is abandonment of a contract is a matter of fact to be inferred from an objective assessment of the conduct of the parties. It is not necessary for the court to examine whether the parties themselves actually had the intention of abandoning the agreement. If a contract has been partly performed, it is not lighting to be supposed that parties intend to abandon accrued rights" (cedar meats (aust) v five star lamb) Fitzgerald v masters (dixon cj and fullagar j) Discharge pursuant to a term of the original contract. A term of a contract may enable the contract to be terminated if a certain breach occurs or if certain circumstances arise.
