WEEK FOUR LAW OF CONTRACTS II GUIDANCE NOTES BY JASPER LUBETO

These notes are not a substitute for class readings. They merely highlight the salient points
and students must consult recommended reading materials. Students are expected to have
read these notes prior to the class and undertaken further research.

Complete and substantial performance

Anticipatory breach of contract
Remedies for anticipatory breach
Notice to make time of the essence.
Discharge of a contract by performance
Exceptions to the common law doctrine of precise and exact

1. COMPLETE AND SUBSTANTIAL PERFORMANCE.

Complete performance
Complete performance by a party means that the contracting party has fulfilled all their
contractual duties. A completely performing party is entitled to a complete performance by
the other party.
Substantial Performance
Substantial performance of a contract means less than complete performance; but the level of
performance is sufficient to avoid a claim of breach of contract. More specifically, it means
that a party has performed all material elements of the contract, but there are non-material
aspects left uncompleted.

2. ANTICIPATORY BREACH OF CONTRACT

Is a situation where a party to a contract expressly, or by implication intimates to the other in
advance its intention not to perform on the date of performance. In this case, there must be
evidence that clearly suggests breach of contract.

Frost v Knight
“…The law with reference to a contract to be performed at a future time, where the party
bound to performance announces prior to the time his intention not to perform it, as
 established by the cases of Hochster v De La Tour and The Danube and Black Sea Co v
Xenos on the one hand, and Avery v Bowden, Reid v Hoskins and Barwick v Buba on
the other, may be thus stated. The promisee, if he pleases, may treat the notice of
intention as inoperative, and await the time when the contract is to be executed, and then
hold the other party responsible for all the consequences of non-performance.”

Mwangi v Kiiru [1987]

“...But perhaps the common-sense application of the word repudiation is to what is called the
anticipatory breach of contract where the party by words or conduct evinces an intention no
longer to be bound, and the other party accepts the repudiation and rescinds the contract. In
such a case, if the repudiation is wrongful and the rescission is rightful, the contract is ended
by rescission but only as far as concerns future performance. It remains alive for the awarding
of damages …. for the breach which constitutes the repudiation.”
In this case, the innocent party may take any of the following steps:-
a) Sue for damages
The party must prove the anticipatory breach of the contracts by the other party, as well as its
willingness to perform its part of the contract.
b) Wait for the party to perform by the due date.
The innocent party may opt to afford the other party a chance to perform its part of the
contract, however, if the contract is in the meantime frustrated, the innocent party loses all
remedies.
George Avery v Samuel Wilson Bowden(1855)
Where the court held that  no cause of action for breach of contract had arisen before the
performance of the contract would have become unlawful. A frustrating event (the Crimean
War) could excuse further performance of a contract even if the relevant party was already in
breach.
c) Sue for the decree of Specific Performance.
The innocent party may apply for the equitable remedy of specific performance to compel
the other party to for the equitable remedy of specific performance to compel the other party
to perform its part of the contract and the same may be granted if circumstances justify.

Fred Imbatu v Rashid K Too [2018]

“…Specific performance like any other equitable remedy is discretionary and the Court will
only grant it on well laid principles.”

Amina Abdul Kadir Hawa v Rabinder Nath Anand & another [2012]
 “…There is agreement that in order for the relief of specific performance to be availed to the
claimant the following guiding principles or parameters should be met or demonstrated to
exist:-
(a)   The remedy is an equitable remedy meaning that the court has to satisfy itself that on the
facts presented to it (the court) it is equitable in the interests of both parties to grant the
reliefs.
(b)   It is available where damages will not be an adequate compensation meaning that if
damages are adequate, even if all the other prerequisites have been met and favour the
granting of the relief  of specific performance the court can withhold it and award damage
instead.
(c)    It is a discretionary relief which discretion should not be exercised arbitrarily but on the
basis of applicable principles. The guiding principles applicable to the courts exercise of its
discretion which is trite and which this court has judicial notice of is that the discretion has to
be exercised judiciously with a reason.
(d)   Even if the facts of the case demonstrate that a specific performance is a proper remedy
to grant in the circumstances, it may none the less be withheld in circumstances where it is
likely to course hardship to the defendant even if circumstance giving rise to the hardship to
be suffered by the defendant were not contributed to by the contracting parties and may have
arisen even after the conclusion of the contract.
(e)   The party entitled to earn the relief has to demonstrate that he/she has fulfilled all his/her
obligations under the terms of the contract. Or alternatively that there is demonstrated proof
that he/she is ready and willing to fulfill the same.”

3. NOTICE TO MAKE TIME OF THE ESSENCE

Is a notice served by a party that is not in default to the defaulting party when the defaulting
party fails to meet their contractual obligations within the stipulated time.
The notice must set out a reasonable, and definite time for performance of the obligation. In
the event where the time lapses and the obligation has not been performed, the non-defaulting
party may terminate the contract and sue for damages.
There are three requirements for a valid notice;
1. The notice must specify a time for performance.
2. The time allowed in the notice must be reasonable.
3. The notice must clearly state that the time fixed for performance is of the essence.

Njamuya v Nyaga [1983]

 “… in a case where it is not stipulated in the contract that time is of the essence, the notice
must be given to the defaulting party and that notice is what will make time to be of essence.
It is also clearly stated there that the notice must also give a defaulting party a reasonable
time within which to rectify the default.”

George Njenga Kagai v Samuel Kabi Njoroge & another [2019] 

“…With regard to time being of the essence, the principles as set out by this Court in the case
of Sagoo v Dourado (1983) KLR 366 are as follows:
“In contracts of all types, time will not be considered to be of essence unless: -
(i) The parties expressly stipulate that conditions as to time must be strictly complied.
(ii) The nature of the subject matter of the contract or the surrounding circumstances show
that time should be considered of the essence, and/or
(iii) A party who has been subjected to unreasonable delay  gives notice to the party in default
making time of the essence.”

4. DISCHARGE OF A CONTRACT BY PERFORMANCE

A contract is discharged by performance if both parties perform their mutual obligations as
agreed.
Medieval common law insisted that discharge by performance was only possible if parties
had performed their obligations precisely and exactly. This is the common law Doctrine of
Precise and Exact which provides that parties must perform their contractual obligations to
the letter.
There are, however, exceptions to the doctrine of precise and exact. These are circumstances
in which parties will be compensated for work done ( quantum meruit) or discharged even
though they have not performed precisely and exactly.
1. Divisible contracts.
This applies to contracts which are, by nature, divisible and performance of a part thereof
entitles the party to payment for work done.
2. Substantial performance.
If a party has substantially performed its part of the contract, they are entitled to payment for
the work done. Whether a contract is substantially performed is a question is a question of
fact.

3. Partial Performance If Accepted

 If a party to a contract has expressly or by implication agreed to pay for partial performance,
the party performing is entitled to payment for work done.
4. Prevented Performance.
This applies where a party is ready and willing to perform its part of the contract, but is
prevented from doing so or by the other party. In this case, the performing party is entitled to
payment on quantum meruit.
5. Frustration of Contracts
A contract is said to be frustrated when performance of the obligations becomes impossible,
illegal, or commercially useless by reason of extraneous circumstances for which neither
party is to blame.
Frustration of contract terminates it and discharges the parties from performance.