KAMPALA INTERNATIONAL UNIVERSITY

SCHOOL OF LAW
COURSE : LLB
COURSE UNIT : LAW OF CONTRACTS 2
CODE : LLB1204
YEAR : ONE
SEMESTER : TWO
LECTURER : MR. MARTIAL ANDREW

GROUP THREE
NAME REG. NO SIGNATURE

NGIRANI SHADRACH 2024-01-24107

NATAMBA CARLOLINE 2024-01-24269
EYIA FRIDAH FAITH 2024-01-23630
ABUR RONAH SCOVIA 2024-01-24742
NAMYALO HODETAH 2024-01-23639
KIZZA WAMALA 2024-01-23331
MUTONYI HILDAH 2024-01-24216
NANKUMBA MARIA 2024-01-24210
VANESSA
NALUBOWA ROBINAH 2024-01-23884
 DISCHARGE OF A CONTRACT.
Discharge of contract refers to the process by which the contractual relations
be when parties are brought to an end and the parties thereto released from
further obligations to each other. Contractual relations may be abated as a
result of the discharge of the contract - such discharge may be as a result of the
act of the parties or an act of God, i.e., a supervening natural occurrence which
is independent of the parties and which makes the further performance of the
contract legally, physically or commercially impossible.
This generally means that the obligations of the parties have come to end.

Theses are;
1. By performance
2. By agreement
3. By breach
4. Under the doctrine of frustration
DISCHARGE OF A CONTRACT BY PERFORMANCE
Section 32(1) of the Contracts Act Cap 284 provides that parties to
the contract shall perform or offer to perform their respective
promises, unless the performance is dispensed with or excused
under this Act or any other law.
Where parties to a contract have performed their duties or
fulfilled their respective obligations under the contract, the
contract is discharged or brought to an end. As a general rule,
performance must be complete, i.e., in accordance with the terms
of the contract. Anything short of this would amount to a breach.
This is where both parties have performed the obligations, which
the contract placed upon t hem. Performance must be completed
i.e. it must be in accordance with the terms of the contract if the
Performance is incomplete. (contrary to the terms/the defaulting
party may be sued for damages).

GENERAL RULE
The performance must be carried out strictly in accordance
with the terms of the contract. Performance must be precise
and exact.
The effect of the general rule is that where a contract provides for payment by
one party after performance by the other, no. action for payment may be
maintained until performance is complete.
When the parties to a contract fulfil the obligations arising under the contract
within the time and manner prescribed, then the contract is discharged by
performance.
Example:
A agrees to sell his car to B for an amount of Ug. Shs. 10,000,000/= to be paid
by A on the delivery of the car. As soon as it is delivered, A pays the promised
amount. Since both the parties to the contract fulfil their obligation arising
under the contract, then it is discharged by performance.
In the case of Cutter V Powell, there was a contract by the seaman to serve on
a ship sailing from Jamaica to Liverpool. However, the seaman died at the sea
before reaching Liverpool. The defendant refused to pay for the work complete
before his death and was sued by the widow for a portion of the agreed sum.
Court held that even though the sailor was not to blame for failure to perform
the contract, the express terms of the contract renders payment conditional on
the full performance of the contract. Thus, on a construction of the express
terms of the contract, no payment was due for partial performance. (it was
held that her action would fail since the terms of the contract meant that he
would be paid only if he sailed the ship to Liverpool.)
Because of the harshness of the rule, over the years the courts and the
legislature developed some mitigating factors by way of exceptions.
1. SUBSTANTIAL PERFORMANCE
The doctrine of substantial performance arises where a person performs
his or her side of the bargain but there are minor defects in the
performance of the contract, under the substantial performance rule,
the company would be paid for the substantial work done on the project.

In Hoening V Isaacs (1952)2 ALL ER 176, there was a contract by the

plaintiff to decorate and furnish the defendant's flat for 750 pounds. The
defendant alleged that the workmanship was poor and defective but
paid 400 pounds. The plaintiff sued for the balance. The court found that
there were defects in the work but these could be cured for 55 pounds.
 The Court awarded the plaintiff the full amount of the contract less the
cost of putting right the defects plus the amount already paid.

2. PARTIAL PERFORMANCE
This arises where a person only partially performs his or her side of the
contract but the other party rather than reject the work, decides to
accept what has actually been done.
In such a case if the promise accepts the partial work done, he or she
will be obliged to pay for the work on a quantum meruit basis. The Latin
principle of quantum meruit means as much as deserved or what one
has earned. It basically means payment for the actual or reasonable
services rendered.

As noted earlier, performance of a contractual obligation must be

complete, and any partial performance would only amount to a breach.
Now, where there is a partial performance, the contractor cannot claim
for the value of what he has done as he is clearly in breach.

In the case of Sumpter v. Hedges, the plaintiff who had agreed to erect
upon the defendant’s land two houses and stable for 565 pounds, did
part of the work worth 333 pounds and then abandoned the contract.
The defendant himself completed the buildings. The court held that the
plaintiff could not recover for the value of the work done.

The rule as to complete performance as enunciated in Cutter v. Powell

has been qualified by the following exceptions:
1) Acceptance of partial performance
Where the defendant accepted the partial performance by the plaintiff, then
he would be liable to pay for that part of the contract that was performed, on
the basis of quantum meruit.
In Omoleye v Okeowo, the plaintiff agreed to supply 6,000 yards of textile
materials to the defendant at the rate of 41 shillings per yard. The defendant
deposited 2,500 pounds for this purpose. The plaintiff was unable to obtain the
stipulated material and unilaterally supplied 2,910 ½ yards of a different and
more expensive material at 50 shillings per yard. The defendant was entitled to
reject the goods, but he took delivery of the substituted material and went
ahead to resell it. The court held that the plaintiff was obligated to pay for the
material accepted from the defendant at the contractual rate of 41 shillings per
yard.
2) Prevention of performance or completion:
If in the execution of the contract, the plaintiff was prevented from
either performing or completing the performance of his obligations
under the contract, he shall be entitled to either claim for damages or
for what he had actually done on the basis of quantum meruit. This was
the ratio in Planche v. Colburn111 where the plaintiff was engaged by the
defendant to write a book. "The Juvenile Library” and after he had gone
far into the book, the defendant abandoned the project. The plaintiff
was held entitled to the value of what he had written on the basis of
quantum meruit.

3) Severable / Divisible Contract:

Where the contract between the parties is of a severable or divisible
nature, i.e., it is made us of severable parts that can be conveniently
dismembered from the whole, then the performance of some of the
parts would entitle the party to recover the value of what has been
performed on quantum meruit basis. For instance, a contract for the
supply of stationeries - if the plaintiff was able to supply notebooks,
biros, duplicating papers, and ink, but could net supply stapler, staple,
pins and diaries because these latter items could not be found anywhere
in the market as they were out of stock, then he should be able to
recover the sum due for the items duly supplied. Whether a contract is
divisible or not will depend on the intention of the parties and the
nature of the contract itself.

Accordingly, in Ekwunife Wayne (W/A) Ltd.,112 the appellant was

contracted to lay underground pumps for a petrol station and also to
electrify them on completion. It was subsequently discovered that there
was no electricity in that area and therefore he could not perform this
part of the contract. It was held that he could recover for what he had
done under the contract. This principle could also be applied where the
particular contract is illegal or void. Thus, the Court can severe the lawful
or valid aspect of the contract from the unlawful or illegal contract under
the principle of severance.
 4) Substantial Performance
By the doctrine of substantial performance, a contractor who has
performed substantially (though not entirely) his obligations under a
contract may recover the stipulated contract sum less the value of what
has not been done or not done, properly. The defendant also has a right
to counter claim to damages for incomplete performance or losses
suffered thereby114. This is necessary to avoid the untold hardships
occasioned from the strict application of the Common Law principle of
entire performance expounded in Cutler v. Powell. More so; that the
strict application of Culler v Powell would lead to "unjust enrichment of
the defendant."
Accordingly, in Melita & Co. Ltd. v. Baron Verhegen the appellant was
allowed to claim the price for the contract for the erection of a house
which had provided for installment payments. On completion, the
respondent withheld the last installment on grounds of structural
defects, but the appellant based his argument on substantial
performance of the contract which the Court of Appeal agreed with.
5) Tender of Performance
Tender of performance refers to an attempted performance of an
obligation. If a party to a contract attempts or offers to perform but the
performance is rejected by the other party, he would be deemed to have
performed and is discharged from obligations, and may also sue for
breach of contract. This is akin to prevention of performance earlier
discussed.
In Startup v. MacDonald the contract was for the supply of oil "within
the last 14 days of March". The plaintiff delivered the goods by 8:30p.m
on the 31st March which was rejected by the plaintiff as being too late.
The Court held the tender as being valid performance. In commercial
contracts “time clauses" are normally regarded as crucial to the
performance obligation and as such are classified as conditions, breach
of which entitle the non-breaching party to treat his obligations as
repudiated.
Bunge Corp v Tradax Export SA [1981] 2 All ER 513 In this case, a contract
for the purchase of 15,000 tons of Soya beans was to be shipped in 3
shipments of 5,000 tons. The buyers were to provide a cargo vessel at
the port. Buyer was also required to give 15 days notice to the readiness
of the ship.
On one occasion, they gave this notice four days to late. Breach of
contract or warranty? In these four days, the value decreases by $60.ton
The sellers sought to repudiate for breach. Buyers said no serious
consequences here, so no right to repudiate. Other commercial
background reasons exploitation of legal technicalities. House of Lords
said that time clauses were so fundamental to the contract that they
were in fact conditions as to commercial certainty. Therefore, the seller
was entitled to repudiate the contract for breach.

In some consumer contracts this requirement is relaxed and such

clauses may be treated as warranties, breach of which does not
discharge the non breaching party of their performance obligations but
instead merely gives a right to damages.

Where there has been only partial or defective performance, the non
breaching party may be prevented form repudiating the contract under
the doctrine of “substantial performance". This will only operate where
the breach is trivial in the context of the overall guidance. The non-
breaching party instead may claim damages, a set-off against the
contract price.

The doctrine is best illustrated by the following case:

Hoenig v Isaacs [1952] 2 All ER 176 Plaintiff agreed to decorate flats for
£750. Some of the work was defective. The defendant had already paid
£400, and refused to pay the balance on the grounds of partial defective
performance. To put this right, would cost £56. Court of Appeal said that
the plaintiff was entitled to the £350 (i.e. the defendant was not able to
be discharged because there was substantial performance) less the £56
cost of the repair.
4 DIVISIBLE CONTRACTS
The general rule that performance must be precise and exact does not
apply to divisible contracts. A divisible contract is a contract in which
partial performance attracts an obligation to provide payment of part of
the consideration. For example, X agrees to supply 100 tons of maize to Y
in ten installments of 10 tons each. X delivers only two installments but
becomes broke. Under the notion of divisible contract, Y will be obliged
to pay X the moneys owed under the contract, that is for the two
installments.
At common law, where performance is incomplete such party in default
is not entitled to any payment.
In the case of Sumter vs. Hedges (1898) 1 QB 673, CA, also cited in Max
and Young, “Cases and Material in Contract Law” at page 459, on the
subject “partial performance of an entire contract”, the Plaintiff builder
who had contracted with the Defendant to build two houses and stables
on the Defendant's land for the sum of 565 pounds, did part of the work,
amounting to about 333 pounds and had received payment of part of
the price. He then informed the Defendant that he had no money to
continue with the work. Collin LJ found that he had abandoned the
contract. In other words, parties must-fulfill their obligations in line with
the terms of the contract and once they have each done this, they are
discharged or relieved from further responsibilities to each another
render the contract.
However, problems may arise where only one party has fully performed
his obligations and the other party is yet to perform his or has only partly
performed.
In such a situation, only the party that has performed fully is discharged
the other is not and may be sued for breach of contract. The party in
breach may allege that he was prevented from performing by the other
party.

Further still, each party may blame his inability to perform on the other
party on the ground that by the terms of the contract the other was
required to perform first as a condition precedent lo his own
performance, etc.
TIME AND PERFORMANCE
In the case of Sharif Osman v Hajj Haruna Mulagwa the supreme court
held that the performance must be completed in accordance with the
date agreed upon in the contract.
In Adia Mines Vs John Mbiyo Nyonjoand other it was held that when
time has not been made the essence of the contract, its clear that in
contracts for sale of land and grant of leases, one parties cannot avoid
the contract on the ground of unreasonable delay by the other until has
been served making time of the essence.

But as to whether one party is required to perform before the other is a

matter of the intentions of the parties as manifested in the terms or the
nature of the contract; i.e., whether there is a condition precedent or the
obligations are concurrent or to be performed simultaneously.
Where the obligations are concurrent, the parties perform at same time
and no one may sue the other for not starting first, unless he has
performed his; but where there is a condition precedent, the party
obliged to perform that condition must so perform before the other
could perform his.

Furthermore, besides keeping to the terms of the contracts, the parties

are obliged to perform their respective duties within the agreed time.

If no time was agreed upon, they are required to perform within a

reasonable time - what is a reasonable time will depend "on the
circumstances of the case and the nature of the contract itself.

Whether time ‘is of the essence’ of the contract depends largely on the
terms of the contract. If by the terms of the contract time was stipulated
for the performance of the obligations, then the party performing must
act within the stipulated time. Otherwise, he would be in breach and the
other party may repudiate the contract or sue for damages.

In Panesar v. Popat time was made ‘of the essence’ in the contract for
the supply of furniture. The seller breached the time stipulation, and the
buyer extended the time by some days. The seller still could not supply
at the agreed date, whereupon the buyer repudiated the contract and
refused subsequent delivery. The Court held that the buyer was entitled
to refuse delivery since time was made of the essence of the contract