A contract is an agreement made with the free consent of parties with capacity to contract with a

lawful consideration and lawful object, with the intention to be legal bond1.

Discharge of contract is defined as the termination of a contract or an agreement made by two

parties with the fails in performing the obligations mentioned at the time of creating an
agreement with the acceptance of both parties like free consent. Meaning that the obligations of
the parties have come to an end2.

Law teacher defines discharge of contract when the parties have fully performed their contractual
obligations or when events, conducts of the parties or operation of law releases the parties from
performance3

Chris Turner defines discharge of contract as the ending of obligations under a contract4.

There are mainly four ways in which a contract can be discharged namely;

1 Discharge by agreement
2 Discharge by performance
3 Discharge by frustration and
4 Discharge by breach.
Agreement.

A contract is deemed to be discharged by performance where all the contractual obligations and
terms have been performed by both of the parties and the contract is completed. The strict rule on
performance “perfect tender rule” is that there should be complete performance of all obligations
under the contract, the contract is then in effect completed and discharged. This rule means that
if one party fails to meet all their obligations then the contract is not dischargeable by
performance but by breach and may require the other party to be remedied. This rule can be seen
in the case of Cutter v Powell 5, where Cutter contracted with Powell to be the second mate on
the ship bound from Jamaica to England. Cutter was to be paid 10 days after the arrival of the
ship provided “he proceeds, continues and does his duty as second mate in the said ship, from
hence to the port of Liverpool”. Cutter died shortly before the ship reached Liverpool and his
1
Contracts Acts, 2010.
2
Blacks law dictionary 2nd edition.
3
Law teacher.
4
Contract Law 2nd edition, Chris Turner.
5
(1795) 6 term rep 320
widow sued to recover the payment for the period he had worked. The payment was denied
because the contract was not fully performed by one of the parties. The case illustrates the effect
of failing to perform by one party the contract. The strict rule on performance is that in an ‘entire
contract’ all obligations must be performed so there can be no payment for part-performance.

The general rule under classic law is that performance must be precise and exact. This means
that for a contracted to be discharged by performance the all the contractual obligations must be
observed. This rule was further explained in the case of Re Moore & co V landauer & CO6
where the defendant agreed to buy from the plaintiff 3000 tins of canned fruits. The fruits were
to be packed in cases of 30 tins, on delivery it was packed in cases of 24 tins. The court therefore
held that this did not constitute to satisfactory performance and the defendant where entitled to
reject the whole consignment.

The strict rule as to performance is mitigated in a number of instances and has some exceptions.
A contract maybe entire or divisible, an entire contract is one where the agreement provides that
complete performance by one party is a conditions precedent to contracted liability on the part of
the other party. The rule of “entire” can however be mitigated, by divisible of the contract to
sections (the completion of each section giving a right to some payment). This standard position
in relation to employment contracts like in salary may be stated on annual basis, a person is still
paid monthly. This principle was seen Bolton v Mahadeva7, there was a contract (a) install a
central heating system (b)supply a bathroom suite, the court held the central heating system
turned out to be defective and was not obligation to pay the supply of the bathroom suite was
severable. In such cases the question is whether a particular obligation is entire or severable is
one of construction, and where a party agrees to do work under a contract, the court are reluctant
to construe the contract so as to require complete performance before any payment becomes
due8.

Non-performance due to the other party, if one party prevents the other from completing the
obligations under on entire contract, the party who has party performed is entitled to part
payment. This principle is evident in the case of Planche v Colburn9, the plaintiff recover 50

6
[1921] 2 KB 519
7
[1972] 2 All ER 1322
8
G.H Treitel, The Law of Contract pg. 702
9
(1831) 8 Bing 14
pounds towards the work which he had done in writing a book for series which had then been
canceled by the defendants. The contract price had been 100 pounds but the plaintiff had not
complete the book at the time the defendants brought the contract to the end.

Acceptance of partial performance,

Acceptance of partial performance, where the party whom the promise of performance was made
receives the benefit of partial performance of the promise under such circumstances that he is of
the promise under such circumstances that he is able to accept or reject the work and he accept or
reject the work and he accepts the work, then the promise is obliged to pay a reasonable price for
the benefit received. This arises where a person only partially performs his or her side of the
contract but the other party, rather than rejects the work, decides to accept what has actually been
done. In such a case, if tpromisee accepts the partial work done, he or she will be obliged to pay
for the work on a quantum meruit basis. This prevents unjust enrichment. In the case of Sumpter
v Hedges, the plaintiff, who had agreed to erect upon the defendant’s land two houses and
stables 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 but it must be possible to infer from the circumstances a
fresh agreement by the parties that payment shall be made for the goods or services in fact
supplied.

Substantial performance is a contract law doctrine that allows parties to be paid under a
contract and to retain the benefits of a contract even if they technically failed to comply with the
precise terms of the agreement. When a person fully performs the contract, but subject to such
minor defects that he can be said to have substantially performed his promise, it is regarded as
far in more just to allow him to recover the contract price reduced by the extent to which the
breach of contract lessened the value of what was done, than to leave him with no right of
recovery at all. In the case of Dakin v Lee, the contract was for the repair of a house, the work
had not been done according to the contract. The was meant to use 5in diameter hollow and
instead used 4in diameter solid iron. The court of Appeal noted that there was a distinction
between failing to complete and completing badly. There the contract had been performed
thought badly performed and the plaintiff could not recover for the work done, less deductions
for the facts that it didn’t conform to the contract requirements.

Furthermore, in the case Kampala Capital City Authority v Zimbe Enterprise Hardware &
Construction10, the court held that where the plaintiff has substantially performed the contract
and further performance was deliberately made difficult by the defendant himself then the
plaintiff was entitled to an order for the full contract price under the doctrine of substantial
performance.

In the case of Fire masters Limited v Huawei Technologies Co(U) Limited11, Hon. Justice
Geoffrey Kiryabwire 12 in his judgement while considering as issue similar to the present issue
held replying on the author “R.W Hodgin” in his book “ Law on contract of East Africa Kenya
Literature”

“…if one party has substantially completed his side of the bargain leaving a minor
omission or fault, the court may accept such performance as discharging his
obligations…”13

In constructing a contract to see whether a particular term must be fully performed or whether
substantial performance is enough, the distinction between conditions and warranties is relevant.
A condition must be wholly performed, whereas substantial performance of a warranty is
enough. In Poussard v Spiers & Pond14 madam Poussard had entered an agreement to play a
part in an opera the first performance but fall ill before it. The defendant had to hire a substitute
to take her part and refused the service of the plaintiff when she came back. She later sued them
for the breach of a contract. It was held that the failure of the plaintiff to perform the contract as
from the first night was a breach of condition and the defendant were within their rights in
regarding the contract as discharged.

If a condition is breached, the innocent party has a choice to affirm the breach of the contract and
continue to be party to the contract or terminate the contract, which then releases both parties

10
(HCT-00-CC-MA-2012)
11
2009
12
Pg. 4-5 of his judgement
13
R.W Hodgin Law of Contract of East Africa Kenya Literature Bureau (pg. 17)
14
(1876) Q.B C 4
from all of the obligations under the contract15. Section 61(1) of the contract act “Where there
is a breach of contract, the party who suffers the breach is entitled to receive from the party who
breaches the contract, compensation for any loss or damage caused to him or her” The failure to
discharge obligations under a contract will amount to a breach of a contract this was defined in
the case of Ronald Kasibante v Shell Uganda Ltd16 as;

“…the breaking of the obligations which a contract imposes which confers a right of
action for damages on the injured party…”

Breach of a contract is “violation of contractual obligation by failing to perform one’s own

promise by repudiating it or by interfering with another party’s performance”17. There can be
variety of reasons for breaching a contract and the consequences of such a breach can be very
serious even if it is unavoidable. The current view on a breach only ever has effect of allowing
the innocent party the choice of whether to terminate the agreement or allowing the innocent
party the choice of whether to terminate the agreement or allow it to continue. This was
confirmed in the case of Photo Productions v Securicor18 the innocent party will have the
possibility of electing to either treat the contract as repudiated and therefore to terminate tort
affirm it.

There are three main remedies to a breach of a contract (a) specific performance, (b)
liquidated damages and (c) injunction.

Damages19

The basic principle of contractual damages is that of restitution in intergrum of full restitution
which involves putting the innocent party into the position it would have been in had the
contract been performed. This principle can be traced back to Robinson v Harman are
monetary compensation allowed to the injured party of the loss or injury suffered by him or
her as a result of the breach of contract. The fundamental principle underlying damages is not
15
www.lawteacher.net
16
HCC No 542 of 2006
17
Black’s Law Dictionary 8th edition pg. 200
18
[1980] AC 827 [1980] 1 ALL ER 556. In the employment area it was confirmed by the court of appeal in Gunton v
London Boroung that the general rule applied
19
6 Section 61 of the Contract act 2010
 punishment but compensation. By awarding damages, the court aims to put the injured party
into the position in which they he/she would have been, had there been performance and not
breach, and not punish the defaulter. In the case law Pilkington v wood20 the plaintiff bought
a house in Hampshire and his solicitor , in breach of contract ,negligently failed to notice that
the house had a defective title .the solicitor was held liable for the amount by which the
houses value had been lessened by the title not being good .the plaintiff shortly afterwards
took up work in lancashire and suffered added loss as the house was hard to resell
however ,the solicitor was not liable for the latter loss as he could not anticipate that the
plaintiff would shortly move.

As a general rule compensation must be commensurate wages will be awarded the injury or
loss damages sustained, arising naturally from the breach, If actual loss is not proved, no
damages will be awarded to the other party. The plaintiff cannot claim damages for loss
which is attributable to his failure to mitigate hence its considered as liquidated damages.
Liquidated damages, refers to the sum that is known by both parties, according to the
contracts act section 61 sub-section (1) were there is breach of contract act, the party who
suffers the breach is entitled to receive from the party who breaches the

Quantum meruit.

The remedy for a breach of contract available of an injured party against the guilty party is to
file a suit upon quantum meruit. The phrase quantum merit literally means, “as much as is
earned” or “in proportion to the work done”. this remedy is available when the party has
substantially performed his or her obligations under a contract. Such party would then be
entitled to the part of the consideration which he or she has earned through such performance.
The aggrieved party may file a suit upon quantum meruit and may claim payment in
proportion to work done or goods supplied. This was seen in the case of Sumper v Hedges21
the claimant agreed to build two houses and stables for the defendant. It was agreed that 565
pounds would be payable on completion. He performed just over half of the contract and the
defendant completed the work himself. The claimant sought to recover pounds 333

20
1953
21
1898 1 QB 673
representing the value of the work he had completed. he argued that completing the work
himself ,the defendant had thereby accepted partial performance and prevented the claimant
from completing the contract .the court held the claimants action failed .the court held that the
defendant had no choice but to accept partial performance as he was left with a half completed
house on his land

Rescission.

When there is a breach of contract by one party, the other may rescind the contract and need
not perform his part of obligation. Such innocent party may sit quietly at home if he decides
not to take any legal action against the guilty party. But in case the aggrieved party intends to
sue the guilty party for damages for breach of contract he has to file a suit for rescission of the
contract. When the court grants rescission, the aggrieved party is freed from all his obligations
under the contract and becomes entitled to compensation for any damages, which he has
sustained through the non-fulfilled of the contract.

Tender of performance

This is treated as equivalent to performance in the sense that, if it is rejected it will lead to the
discharge of the tenderer’s liabilities. This will largely depend on the terms of the contract as
seen in the case of Startup v Macdonald, the plaintiff agreed to sell 10 tons of oil to the
defendant. Delivery was to be within the last 14 days, the defendant refused to accept or pay
for the goods. It was held that provided that the seller had actually found the other party and
that there and that there was time to examine the goods to check compliance with the contract
this was a satisfactory tender.

From this it seen that the requirements are that the tender should meet the strict tender should
meet the strict terms of the contract and that it should be brought to the attention of the other
party in time for any rights which might arise on tender to be exercised.

Specific performance

This is an equitable remedy; this is an order of the court requiring the performance of a
 contractual obligation. Specific performance is defined in section 64(1) of the contract act
“Where a party to a contract, is in breach, the other party may obtain an order of court
requiring the party in breach to specifically perform his or her promise under the contract.”
Specific performance means the actual carrying out of the contract as agreed. Under certain
circumstances an aggrieved party may file a suit for specific performance. This was explained
in the case of Hoeing v Isacks22, the claimant agreed to furnish to decorate and furnish the
defendant’s flat for 750 pounds payable by two instalments and the balance on completion.
The claimant completed the work but the defendant was unsatisfied some of the furnishing
and refused to pay all the final instalment. The court held that the claimant had substantially
performed and therefore was entitled to the contractually agreed price minus the cost of the
defects.

Injunction

this is an order of court restraining a person from a particular act. It is a mode of securing the
specific performance of the negative terms of the contract. These are orders of court which
restrain the carrying out of specified acts. This is provided for under Article 126(2)(c)23 which
provides for the compensation as a reward for the victims of wrongs by the court. this is
further provide for in Section 14, 33 and 38 of the judicature act 24 that provides for the
power to the court to grant injunction. This was further explained in the case of American
Cyanide v Ethicon25 where court held that court will should consider whether damages were
an adequate remedy for a claimant if an injunction was not be available.

In conclusion, if one party performs their obligations to a greater percentage under a

contract, leaving a minor omission or fault under the contract, the courts will accept this
performance as discharging the contract. Considering all the principles of discharge of
tender performance, prevention of completion by one party, time and places of contracts
and divisible contract ,the substantial performance principle illustrates a minor defect
of the general rule.

22
1952 2 ALLER 176
23
The 1995 constitution of Uganda as amended
24
The judicature act cap 13
25
1957 1 ALL ER 504