Discharge of contract and remedies - Specific performance

Learning Outcomes

After reading this article, you will be able to identify and explain the main ways a contract can be discharged, distinguish between performance, breach, and frustration, and understand the remedy of specific performance. You will be able to apply these principles to practical scenarios and advise on when specific performance may be available as a remedy for breach of contract.

SQE1 Syllabus

For SQE1, you are required to understand the law and practice relating to discharge of contract and the remedy of specific performance. In your revision, focus on:

  • the main ways in which contracts can be discharged (performance, agreement, breach, frustration)
  • the distinction between strict and substantial performance
  • the consequences of breach, including the right to terminate and claim damages
  • the doctrine of frustration and its effect on contractual obligations
  • the nature, scope, and limitations of specific performance as an equitable remedy

Test Your Knowledge

Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.

  1. What are the four main ways a contract can be discharged?
  2. When is specific performance available as a remedy for breach of contract?
  3. What is the effect of frustration on the parties’ contractual obligations?
  4. True or false? A party who has substantially performed a contract is always entitled to the full contract price.

Introduction

A contract is discharged when the parties’ obligations come to an end. For SQE1, you must know the main ways a contract can be discharged and the consequences for the parties. You also need to understand the remedy of specific performance, when it is available, and its limitations. This article covers the key principles and practical implications for exam scenarios.

Discharge of Contract

A contract may be discharged in several ways. The main methods are:

  • performance
  • agreement
  • breach
  • frustration

Each method has different legal consequences for the parties.

Performance

The most common way a contract is discharged is by performance. If both parties perform their obligations exactly as agreed, the contract ends.

Key Term: performance
Fulfilling all contractual obligations as required by the contract.

Strict and Substantial Performance

Some contracts require strict performance—every obligation must be completed precisely. However, if a party has substantially performed (i.e., completed the main obligations with only minor defects), they may still be entitled to payment, subject to a deduction for defects.

Key Term: substantial performance
Completion of the main obligations under a contract, with only minor defects remaining.

Worked Example 1.1

A builder agrees to renovate a kitchen for £10,000. The work is completed, but the cupboard doors are the wrong colour, costing £200 to replace. Is the builder entitled to payment?

Answer: Yes, the builder has substantially performed the contract. The client must pay £10,000 minus £200 for the defect.

Breach

A contract may be discharged by breach. If one party fails to perform a condition or commits a serious breach, the other party may treat the contract as ended (repudiatory breach) and claim damages.

Key Term: repudiatory breach
A breach so serious that it allows the innocent party to terminate the contract and claim damages.

Anticipatory Breach

If a party indicates before performance is due that they will not perform, the other party may treat the contract as discharged immediately.

Worked Example 1.2

A supplier agrees to deliver goods on 1 June. On 15 May, they inform the buyer they will not deliver. What can the buyer do?

Answer: The buyer may treat the contract as discharged immediately and claim damages for breach.

Frustration

A contract is frustrated if, after formation, an unforeseen event occurs (not due to either party’s fault) that makes performance impossible, illegal, or radically different from what was agreed. Frustration automatically ends the contract.

Key Term: frustration
The automatic discharge of a contract due to an unforeseen event making performance impossible, illegal, or fundamentally different.

Effect of Frustration

When a contract is frustrated, both parties are released from future obligations. Money paid before the frustrating event may be recoverable, and expenses incurred may be deducted, under the Law Reform (Frustrated Contracts) Act 1943.

Worked Example 1.3

A hall is hired for a concert, but it burns down before the event. What is the legal effect?

Answer: The contract is frustrated. Both parties are discharged from further obligations. Prepaid sums may be recoverable, subject to deductions for expenses.

Agreement

Parties may discharge a contract by mutual agreement. If neither party has fully performed, each gives up their rights and obligations, and the contract ends. If one party has fully performed, a deed or fresh consideration is needed to discharge the other’s obligations.

Specific Performance

Specific performance is an equitable remedy. It is a court order requiring a party to perform their contractual obligations, rather than paying damages. It is discretionary and only granted when damages would not be adequate.

Key Term: specific performance
A court order compelling a party to perform their contractual obligations.

When is Specific Performance Available?

Specific performance is usually available for contracts involving unique goods or land, where damages would not compensate the innocent party. It is not available for contracts of personal service, or where supervision by the court would be difficult.

Exam Warning

Specific performance is discretionary. The court will not grant it if damages are adequate, if the contract is for personal services, or if it would cause undue hardship.

Worked Example 1.4

A buyer contracts to purchase a rare painting. The seller refuses to deliver. Is specific performance available?

Answer: Yes, because the painting is unique and damages would not be adequate. The court may order specific performance.

Limitations

Specific performance will not be ordered if:

  • Damages are an adequate remedy
  • The contract involves personal service or employment
  • The order would require constant supervision by the court
  • The claimant has acted unfairly (clean hands doctrine)
  • Performance would cause undue hardship

Revision Tip

For SQE1, always consider whether damages would be adequate before advising on specific performance.

Key Point Checklist

This article has covered the following key knowledge points:

  • The main ways a contract can be discharged: performance, agreement, breach, frustration
  • The difference between strict and substantial performance
  • The consequences of repudiatory and anticipatory breach
  • The doctrine of frustration and its effect on contractual obligations
  • The nature and limitations of specific performance as an equitable remedy

Key Terms and Concepts

  • performance
  • substantial performance
  • repudiatory breach
  • frustration
  • specific performance
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Pleased to share that I have successfully passed the SQE1 exam on 1st attempt. With SQE2 exempted, I’m now one step closer to getting enrolled as a Solicitor of England and Wales! Would like to thank my seniors, colleagues, mentors and friends for all the support during this grueling journey. This is one of the most difficult bar exams in the world to undertake, especially alongside a full time job! So happy to help out any aspirant who may be reading this message! I had prepared from the University of Law SQE Manuals and the AI powered MCQ bank from PastPaperHero.

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Senior Associate at Trilegal