Slide thuyết trình TACN2 Topic: Provisions concerning the status of the contract

Mai Thái Ninh Hoàng Duy Thái
Phạm Đức Nam Phạm Thế Vinh


Nguyễn Mạnh Đức Trung


PROVISIONS CONCERNING THE
STATUS OF THE CONTRACT


Problems
The first one is:
If a contract was signed a year ago, does it still exist now?
Or has its life ended?
The second one is:
If a contract exists in several languages, which one is the real contract,
which language is considered as authentic?


• Normally, a contract comes to an end when the last duty under this
contract is performed or in the simpler terms a contract’s life ends
when the work is complete..


But not every contract ends as planned. There are a number of ways in which a contract can end

• By performance: When the parties have performed all that is required of them
under the contract. This is the most common way for a contract to end
• By Termination: When either party pursuant to a power created by agreement
or law puts an end to the contract otherwise than for its breach.

• By Cancellation: It occurs when either party puts an end to the
contract for breach.
• By Rescission: When both parties agree to end the contract
• By Impossibility and Frustration: When the contract cannot
continue for some reasons ( for example: it is impossible or totally
pointless to continue with it) or when neither party is at fault


• The authentic contract language will be decided by the parties.
• In international practice, a contract often exists in 2 or more language,
each side believes it understands the contract – but what happens if
there are contradictions between the 2 versions?
Whose language prevails?


The lifetime of the Contract
• Discharge by Performance
• Termination
• Cancellation
• Rescission
• Impossibility and Frustration


Discharge by Performance
A contract is discharged by performance:
• Where a promise has been given upon an excuted
consideration, and is performed by the promisor.
• Where one promise has been given inconsideration of

another, and both are performed.


• If one party does not fully perform the contract this will amount to a breach of
contract and the other party may have a claim for damages unless the contract
has been frustrated.
• If the non-performance amounts to a repudiatory breach (breach of condition)
the other party will be released from their obligations.
• Where a contract is one where the price is payable on completion, then
completion is generally required in order to discharge the contract. This is
often expressed in the terms of being a condition precedent. Completion
triggers the requirement of payment: no completion, no payment.


Divisible/Severable contracts
• The rule relating to discharge through full performance applies where
there exists an entire contract. Where it is possible to divide a contract
into separate parts, eg. if a sum is agreed to be payable per week or
hour, then the courts can award a sum for the separate parts of the
contract which have been completed


Substantial performance
• A further exception exists where a court is satisfied that substantial
performance is present. The court may then award the contractually agreed
price and deduct sums to reflect the amount not performed. If however, the
performance is not held to amount to substantial performance the claimant is
entitled to nothing. Difficulty arises as to what amounts to substantial
performance. There is no precise limit set down but is to be determined on the
facts of individual cases

Acceptance of partial performance
Where one party freely agrees to accept partial performance, then a sum
is payable for the work completed. The main focus is on free acceptance


Tender of performance
• Where a party is willing to perform and tries to tender performance
but the other party does not accept the performance then the party
seeking to tender performance is discharged from the contract and the
non accepting party is liable in damages for non acceptance


Performance prevented by the promisee

• Where the promisee prevents completion of the performance then the
promisor is entitled to payment for the work which has been
completed


Termination of Contract

• Two major types of terminations


Termination for default
• Under termination for default, a contractor may not recover its costs on
undelivered work and must repay any progress or advance payments applicable
• the contractor is liable to the government for any excess costs for supplies and

services procured similar to those terminated and for any other damages. The
government may elect to take all or any part of the completed supplies and
manufacturing materials involved for which the contractor is paid
• Other terminations for default : Termination for Default Upheld, Termination for
Default Overruled


Termination for convenience
• Termination for convenience of the government is of far greater frequency
than termination for default. Contractors dealing with the government should
be prepared at all times for such an occurrence files should be well
documented, accounting systems should be compatible with termination to
insure maximum recovery and a termination co-ordinator should be available
to monitor the claim in the various company divisions affected, including the
proper handling of termination inventory and preparation of the necessary
forms. Before accepting a government contract or subcontract, the termination
clause should be scrutinized closely and rejected if not appropriate.


Cancellation
• The discharge of the Contract by any other right arising from the
applicable law or any other source is deemed to be “cancellation” of
the Contract


• Rescission

• Impossibility and Frustration

• Termination and cancellation are both one-sided procedures
• The word ”rescission” comes form the word “recind” which means to
cancel or annul


Contract rescission is available under the
following circumstances
• Consent
• Issues with contract formation
i.

Fraud

ii. Lack of capacity
iii. Mistake
•.Against public interest


• Occionally a contract is discharged because it is impossible or totally
pointless to continue with it
• But the courts are reluciant to allow this contracts are signed to be
kept, not to be broken


To summarize, the contract becomes impossible of performance or is
frustrated in any of the following cases
• Where the subject matter of the contract ceases to exist
• Where circumstances arise which make the performance of the contract impossible
• Where object contemplated by the parties or the event contemplated
• Where enactment of legislation or Government interference prevents the performance

of the contract
• Where act becomes unlawful