15. Discharge and remedies

A contract is discharged when the obligations under it come to an end. There are four ways, and a set of exceptions.

Performance

The general rule is that each side must perform exactly what was promised. Substantial performance of an entire obligation may still earn the price, subject to a deduction for what is left undone. A party who has only done part of an entire contract generally cannot claim the contract price.

Agreement

What the parties made, they can unmake. They may release each other, or replace the old contract with a new one. A release needs consideration, or a deed, unless promissory estoppel or a composition stands in the way. That links back to part payment of a debt.

Frustration

Frustration ends a contract where, after it was made and without the fault of either side, something happens that makes performance impossible, illegal, or radically different from what was promised. A rise in cost, or a turn in the market, is not enough. The loss lies where it falls, subject to the statutes that allow money paid to be recovered and expenses to be retained.

Breach

A breach of a condition, or a repudiation, lets the innocent party end the contract and claim damages. They may instead affirm and claim damages only. Breach of a warranty gives damages, not discharge. Some breaches are excepted by the contract itself, by an exclusion clause, or by the rule that a party cannot rely on their own wrong.

Remedies

Unliquidated damages are assessed by the court. The usual contract measure, as the opening chapter says, is expectation: the position the claimant would have been in if the contract had been performed, including lost profit. The claimant may instead claim wasted expenditure, or, where it fits, restitution. The loss must have been caused by the breach, and it must not be too remote. The claimant must mitigate.

Liquidated damages are a sum the parties fixed in the contract as a genuine estimate of the loss. The court will award it. A sum that is a threat, out of all proportion to any legitimate interest in performance, is a penalty and will not be enforced as agreed. The court then awards the actual loss.

A quantum meruit is a claim for a reasonable sum for work done, where there is no price, where the contract is unenforceable but the work was requested, or where the other side prevented performance. It is the restitutionary claim the opening chapter describes: payment for the benefit conferred, not for the profit that was expected.

Equitable remedies are discretionary. Specific performance orders a party to do what was promised. It is refused where damages are adequate, where the court would have to supervise personal service, or where the claimant has not come with clean hands. An injunction can stop a breach of a negative promise. Rescission sets a voidable contract aside. Delay and third-party rights can bar all of these.