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CASE NAME Sumpter v Hedges (1898)

FOTC C agreed to build 2 houses and a stable for the D

SIGNIFICANCE / PRINCIPLE Partial performance of an entire obligation

Agreed to be paid £565 (lump sum) after the task has been completed

Held: C failed in his claim – the D was left with no choice but to accept partial performance

C failed to complete the task – ran out of money

Collins LJ:  ‘concluded by the finding of the learned judge to the effect that the C had abandoned the contract  ‘if C had merely broken his contract in some way so as not to give the D the right to treat him as having abandoned the contract and the D had then proceeded to finish the work himself, the C might perhaps have been entitled to sue on a quantum meruit on the ground that the D had taken the benefit of the work done.’

D completed the work himself – but C wanted to recover £333 for the work he has completed

Cutter v Powell (1795)

C’s husband agreed by contract to work on ship Term: “10 days after the ship ‘Governor Parry,’ myself master, arrives at Liverpool, I promise to pay to Mr T Cutter the sum of thirty guineas, provided he proceeds, continues and does his duty as second mate in the said ship from hence to the port of Liverpool’

Appleby v Myers (1867)

Husband died 6 weeks into the voyage – C sought to claim sum to represent the 6 weeks work undertaken C agreed to erect machinery on D’s premises – and to keep it in repair for 2 years C to be paid £459 at the end

Note: lump-sum building contract is normally construed as entire, so that no part of the contract price is due until completion. Partial performance of an entire obligation Held: wife’s action failed – payment on condition that he worked the ship to Liverpool Since did not fulfill the condition – widow was entitled to nothing

Held: Both parties were excused from the further performance of the contract

But there was an accidental fire – destroyed the premises and the machinery C sought to claim £419 on a quantum meruit basis

Hoenig v Isaacs (1952)

C employed to decorate and furnish the D’s flat for £750 Work is finished – bar some defects in a bookcase and a wardrobe – cost £55 to rectify D moved into the flat – refused to pay the outstanding balance of the contract price

But the C were not entitled to sue in respect of those portions of the work which has been completed – whether the materials used had become the propertyof the D or not There is no reason why accrued rights should not be enforced after frustration of a contract, BUT the right must have accrued unconditionally prior to the occurrence of the frustrating act  the mere conferring of some right prior to the frustration of the contract  will not give rise to a restitutionary right on a quantum meruit basis Note: the court is actually trying to mitigate the harsh rule of partial performance by trying to find a way to severe the contract, compared to sumpter v hedges Held: the C succeeded with his claim  contract regarded as an ordinary lump sum contract – substantially performed – C entitled to the contract price less a deduction for the defects  D could not treat entire performance as a condition precedent, but only as a term giving rise to damages – D taken the benefit of the work done under the contract Note: the promise to complete the work is construed as a term of the contract, but not as a condition  Not every breach of that term would absolve the employer from his promise to pay the price  Only a breach which goes to the root of the contract could absolve the employer from that responsibility – such leaving the work half completed Source: Joint Contracts Tribunal Form of Building Contract, 1963

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Bolton v Mahadeva [1972]

C agreed to install central heating in the D’s house – for a lump sum of £560 But the system gave off insufficient and uneven heat + gave off fumes C refused to correct defects – could be put right for about £174 D refused to pay anything

Not fair to allow the D to use some minor failure or imperfection as an excuse for not paying the price  But, crucial to remember that the substantial performance rule only allows the builder to recover the price if the shortcomings are slight. The substantial performance rule applies The C is unable to recover – he had not performed his part of the contract substantially

Source: Th eLa wCo mmi s s i o n, i ni t s

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Br i a nDa v e n p or tQCdi s s e n t e d: 

In almost all contracts of any substance today under which one party promises to carry out certain

Wallis, Son and Wells v Pratt and Haynes (1910)

work in return for a consideration to be given by the other, the contract will make provision for stage payments of one sort or another.  Facts of modern economic life have demonstrated that payments on account while the work proceeds are a necessity.  Where a contract does not provide for such payments, the reason may well be that the parties intended that payment would be due if, but only if, the contractor finished the work  If report’s recommendation are implemented, the builder can leave the site and, when the householder finally brings the contract to an end, send in a bill for the work done up to the time when he abandoned the site.  …householder to dispute the amount and calculate his counterclaim for damages… disadvantageous position where he negotiates from a position of weakness…not be forgotten that it is the builder who has broken the contract In the event that the obligation is left unperformed was not so obviously basic, it became customary to ask:  Is the term that had not been performed a condition or merely a warranty? Fletcher Moulton LJ:  But from a very early period of our law, it has been recognised that such obligations are not all of equal importance  …some which go so directly to the substance of the contract, or, in other words, are so essential to its very nature, that their nonperformance may fairly be considered…as substantial failure to perform the contract at all

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Bentsen v Taylor, Sons & Co (No2) (1893)

Charterparty described the ship as ‘now sailed or about to sail from a pitch pine port to the UK’. She did not in fact sail until over 3 weeks after the date of the charter

…some…though must be performed, are not so vital that a falure to perform them goes to the substance of the contract both clauses are equally obligations under the contract, and any breach of any of one of them entitles the other party to damages but in the case of the former… alternative of treating the contract as being completely broken by the non-performance…can refuse to perform any of the obligations resting upon himself and sue the other party for a total failure to perform the contract

Held: Description of the ship as “now sailed or about to sail” was of the substance of the contract – was a condition precedent and not a mere warranty  a breach of the condition would have entitled the D to repudiate the contract

BUT the 2nd letter sent by the D – amounted to a waiver of such right to repudiate the contract + liable for the freight under the charterparty  but still entitled as against the C to such damages as they could prove Finally, D wrote to C’s brokers – that they had sustained by reason rejected loading the ship of the breach of the condition Held: Buyers terminated on the The buyers were entitled to demand goods ground that the barrel staves answering the description in the contract, delivered did not accord with and were not bound to accept the goods the description under s13 tendered merely because they were Staves were still perfectly good merchantable under that description for the buyers’ purpose NOTE: But it may seem that the buyers want to escape the contract because of the fall in the market D – wrote to C’s brokers asking if they had any proposal respecting the charter – no proposal was made by C

Arcos Ltd v Ronaasen & Son

But be aware there is a de minimis rule and the exceptions introduced into the Sale of Goods Act, by ss15A and 30A  prevent parties from using a

technical breach of the terms implied under the Act as an excuse for getting out of a contract, even if the breach did little or no harm Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd

24-month time charter – provided the vessel to be delivered to the charterers a Liverpool

Held: The charterers had no right to do so – D liable for wrongful repudiation  their appeal failed as well

‘off-hire’ clause – provided: Note: courts introduced the ‘innominate  that the charterers need term’ approach.  Rather than seeking to classify the not pay hire in respect of periods over 24 hours term itself as a condition or lost in carrying out warranty  Court look to the effect of the repairs breach – ask if the breach has  and such off-hirer periods might be added substantially deprived the innocent party of the whole benefit of the to the hire period, at the contract charterer’s option  Only if this is answered affirmatively – would it be but at the date of her delivery, considered a breach of condition the ship was unseaworthy + OTFOTC  20 weeks out of a 2-year undermanned and inefficient contract period did not substantially engine-room staff deprive the D of the whole benefit – hence, repairs carried out on the way not entitled to repudiate the contract to Osaka – took total of 18 weeks to make her sea-worthy Q: can a charterer be expected to load his goods aboard a ship that is known to be unseaworthy at the time – even if the left a 17-month period during which she could be available to matter is a relatively trivial one?  The seaworthiness of the ship itself the charterers.  is NOT a condition  meaning: sometimes the charterer WILL Steep fall in freight rates since have to load on to an unseaworthy the date of the charter – the ship charterers purported to terminate  Better analysis: ‘seaworthiness’ is a condition in terms of substance  the owner does not have to make it seaworthy IMMEDIATELY  because time is not of the essence  Only if the owner fails to make the ship seaworthy within the frustrating time, then the charterer can refuse to load / terminate the charter Cehave NV v Bremer

A shipment was delivered where 1/3 of the contents were

More flexible approach was also used – “intermediate” or “innominate” term

Handelsgesellschaf t mbH, The Hansa Nord [1976]

damaged Contract provided for “shipment to be made in good condition” Implied terms from the Sale of Goods Act has been replaced in the contract Q: could the shipment be rejected

The Mihalis Angelos [1971]

Owners of ‘the Mihalis Angelos’ chartered the ship to the D to use for the carriage of some cargo The charter provided – the ship would be ready to be loaded by 1st july

Held: The shipment could not be rejected  it was not a repudiatory breach  term as to shipment in good condition was neither a condition not a warranty  but was an intermediate term  buyers seem to be trying to reject, not because the utility of the goods was impaired, but because they saw an opportunity of acquiring them at well below the originally agreed price  damages for 1/3 of shipment cost was sufficient  citrus pulp was still of merchantable quality but see The Mihalis Angelos [1971] Held: the expected ready to load clause  condition  even if it caused no loss to the D  classification as a condition was said to be because of the need for commercial certainty in shipping contract

The owner had no grounds to believe that the ship would be ready by 1st July – earliest possible date 14th July – ship was only ready on the 23rd charter provided that option to cancel available at july 20 The D cancelled the contract on 17th July – when unable to obtain cargo due to bombing of a railway  frustration Owners – claim for anticipatory breach

Borrowman,

D – argued the C was in breach of a condition of the contract Seller – tendered goods that

Held:

Phillips & Co v Free and Hollis (1878)

Hartley v Hymans (1920)

Universal Cargo Carriers Corporation v Citati [1957]

did not conform to the contract the seller would be in repudiatory breach of the contract Buyer – entitled to reject the UNLESS the seller is able to tender goods goods that conform to the contract within the stipulated period in the contract Contract for the sale of cotton Held: yarn although prima facie: time is of the essence with respect to delivery which Delivery to begin in September should have been completed  D waived his rights to insist that 1918 – payment per week the period for delivery terminated Delivery should have been on that date – through his letters  D also thereby estopped from completed by Nov 15, 1918 alleging that the period terminated Seller failed to deliver within on that date the stipulated period Also the letters between the C and D – But uring this period, the D implied a new agreement that delivery complained of the delay and might be made within an extended and asked for better deliveries – led reasonable period the C to entertain the belief that the contract still subsisted Charterer failed to provide Held: cargo within the lay days Owners cannot terminate the contract  Because time was NOT of the Owners refused to keep the essence vessel at the charterer’s  Owners only able to terminate if disposal any longer the delay went to the root of the contract Q: what delay would constitute as one that went to the root of the contract  Devlin J rejected the arbitrator’s suggestion that the delay must have been for a reasonable time  Instead, Devlin J said the delay must frustrate the charterparty – in the sense that the delay would defeat the object of the venture NOTE: since 1957, Law may have changed – innocent party need not wait so long  Once the date for performance has passed, he may serve notice on the other party to complete performance within a reasonable time  If still fails, the innocent party may

Raineri v Miles [1981]

then terminate There are 2 contracts Principle: Failure to comply with a clause, which requires completion on a fixed date – Contract 1  Between D and third means completion on that date is a breach of contract party  Entitles the innocent party to sue  The contract requires for damages the third party to  Not discharged by compliance with vacate the premises by a a notice to complete certain date Contract 2  Between D and C

Held: D was allowed to claim indemnity from 3rd parties  ‘a clause requiring completion on a specified day could only be construed as meaning completion on that day  not of the essence  such a breach entitled the innocent party to sue for damages

on the day BEFORE completion – 3rd parties informed D that they were unable to vacate the house  C has already vacated his house – forced to find temporary accommodation Note: equitable rule now prevails  ONLY termination of contract  D served 3rd parties a restrained – court of equity will notice to comply with grant specific performance to the their end of the contract  with which they party guilty of the delay  Accompanying forfeiture or complied  Completion occurred on recovery of a deposit would not be both contracts restrained simultaneously

Behdazi v Shaftesbury Hotels Ltd [1992]

However, C sought to claim damages against D for breach of contract – ie: cost of temporary accommodation  D claimed indemnity from 3rd parties Contract for a sale of land

Held: The purchaser was not entitled to terminate the contract: By a written agreement,  If a party failed to fulfill an purchaser agreed to buy 2 obligation by the due date, the adjoining hotels in London – agreed that other party could serve a notice  Purchaser should pay a making time of the essence  But the time limit must be deposit reasonable  Titles should be deduced – completion on Aug 31  Eg: 7 days was not considered to be reasonable If by Oct 31 – vendor unable to

obtain – contract would become null and void June 20 – contracts exchanged – but vendor unable to deduce title despite repeated requests Aug 30 – purchaser gave notice – making time of the essence – 7 days to deduce the title  When vendor failed – purchaser purported to rescind the contract + claimed the return of the deposit

Bunge Corporation v Tradax SA [1981]

Contract for sale of soya bean meal – shipment for the USA Contract required buyers to ‘give at least 15 consecutive days notice’ of the probable readiness of the vessel But buyers gave notice 4 days later the required date Sellers claimed the late notice was a breach of contract – amounting to a repudiation and claimed damages from the buyers  Basis: the market price then had fallen over USD 60 a ton

But equity would not grant specific performance – ie: restrain termination by the innocent party, if the innocent party had ‘made time of the essence’ by serving a notice to complete within a reasonable time NB: Halsbury’s Laws of England, 4th edn, Vol 9 para 481  States that there is a general rule for making time of the essence  Applicable for all contract Time will not be considered to be of the essence unless: 1. Expressly stipulated that conditions as to time must be strictly complied with, OR 2. Nature of the subject matter / surrounding circumstances show time is of the essence, OR 3. A party subjected to unreasonable delay gives notice to the a party in default making time of the essence Held: Decision to award sellers damages was reversed  That the term as to time when notice was required to be given  wan NOT a condition, but an intermediate term  Lateness of the notice did not amount to breach of contract BUT THE SELLERS APPEALED: MEGAW LJ:  Sellers made clear that the term was intermediate  The contract was governed by English law – effect of c 125 of GAFTA 119  Accepted principle of English law – mercantile contract for the sale of goods ‘prima facie a stipulated time of delivery is of the essence.’  Thus, there can be no doubt that the obligation of the sellers to deliver was a CONDITION of the contract  ‘just as the contractual time for

delivery of the goods is a condition binding on the sellers, so that the contractual time by which the notice has to be given for the purpose of enabling the sellers to perform that condition should be regarded as a condition binding on the buyers’. Stanton v Richardson (1872)

Ship chartered to carry a cargo Held: of wet sugar Charterer was entitled to reject the ship AT ONCE  jury found that the defect could not Unseaworthy because her pumps could not cope with the be put right within a frustrating liquid flowing from the sugar time seems to indicate that the charterers would NOT have been able to reject the ship should the defect could...