Discharge — performance & breach

CON.10 — Discharge by Performance & Breach

Discharge by performance

The general rule: performance must be complete and exact to discharge an obligation (Cutter v Powell; Re Moore & Landauer). Substantial part-performance does not, by itself, earn payment under an entire obligation.

Exceptions softening the harsh rule:

• Substantial performance — if work is substantially done, the price is payable less a deduction for defects (Hoenig v Isaacs; contrast Bolton v Mahadeva, where defects were too serious).
• Severable (divisible) obligations — payment due for each completed part (e.g. instalment/stage contracts).
• Acceptance of partial performance — where the innocent party freely chooses to accept (genuine choice required: Sumpter v Hedges — no choice over a half-built house on his land = no quantum meruit).
• Prevention by the other party — innocent party may sue on the contract or claim quantum meruit (Planché v Colburn).
• Tender of performance — a valid tender refused discharges the tendering party's duty (and for payment, debtor must keep the money ready).

Discharge by breach

Not every breach discharges. The right to terminate (treat the contract as at an end) depends on the term breached:

• Condition — important term; breach gives the right to terminate AND claim damages (Poussard v Spiers).
• Warranty — minor term; breach gives damages only, no termination (Bettini v Gye).
• Innominate term — look to the consequences of the breach (Hong Kong Fir): only if it deprives the innocent party of substantially the whole benefit does termination arise.
• Repudiatory / renunciation — clear refusal to perform also justifies termination.

Anticipatory breach — repudiation before performance is due. Innocent party may either sue immediately or affirm and wait (Hochster v De La Tour; affirmation: White & Carter v McGregor — but no legitimate interest = stuck with damages).

Election — on a repudiatory breach the innocent party chooses to affirm or terminate; the choice, once communicated, is binding. Affirmation keeps the contract alive for both sides.

Common traps

• Don't auto-terminate for any breach — classify the term first.
• Quantum meruit needs a genuine choice to accept partial performance.
• Time is not automatically of the essence (unless stated, commercial context, or notice given).
• Statutory conditions/warranties under SGA 1979 ss.12–15 / Consumer Rights Act 2015 may override the common-law label.