INTRODUCTION

DISCHARGE OF CONTRACT

The expression discharge of contract may be defined as a release of a person from a

After the parties conclude their contract that is, after a contract is formed between the parties
the next step is the fulfillment of their respective obligations under that contract. A contract is
therefore said to be discharged or terminated when the parties to that particular contract are
freed from their respective obligations. In other words, when the rights and obligations
arising out of the contract are extinguished the contract is said to be discharged.1

Discharge of Contract by Frustration: This is the principle that allow party to a contract to
be discharged from the contractual obligation when unforeseen event occurs make it
impossible to fullfill the contractual obligation.This principle is applied when the
circumstances which led to frustration were not anticipated by the parties at the time of
contracting. In order for the contract to be Frustrated it must consist the following
circumstances;

1.DESTRUCTION OF SUBJECT MATTER.

Where to contract agreed or depend on the continued existence of a particular subject matter,
the contract is discharged if the subject matter of the contract is destroyed without the fault of
either party.

Example where a contract requires that performance should be done at a particular structure,
then destruction of the said structure before performance discharges the contract.

In TAYLOR vs. CALDWELL (1863) 3B,826, in that case the defendants let a certain music
hall to plaintiffs before the date of the proposed concerts, the hall was accidentally destroyed
by fire.

NOTE: This destruction was without the fault of either party. The plaintiff’s sued the
defendants arguing that, the defendants should perform the contract for they have carried out
an undertaking absolutely. And since there was no music hall (the subject matter of the
contract) then there was a breach of contract by the defendants.
1
Filikunjombe, P. H, Law of Contract Teaching Material, (2007-2010), Tumaini University

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The issue before the court was whether the loss sustained by the plaintiffs was to be born by
the defendants.

HELD: The defendants were not liable.

WHY? Because both parties that is, plaintiff and defendant impliedly presumed that, the
contract will be carried out as long as the music hall was there. BUT, because the subject
matter is no longer there, then the contract is discharged by frustration.

NOTE: What we should note she is the fact; the court imported the theory of implied term to
hold that there was no breach of contract because there was a supervening event which had
frustrated and discharged the contract.2

2.NON OCCURANCE OF A PARTICULAR EVENT.

Where there is a contract between two parties and their contract is based on a certain event, if
that event fails to occur owing to no fault of either party, then such contract is said to be
frustrated.

See KRELL vs. HENRY (1903) 2KB 740,3 in this case the plaintiff agreed to let some rooms
to the defendant for the purpose of viewing a royal procession commonly referred to as
“coronation procession”. In this procession, the King Edward VII was to be coronated and his
procession was to pass through a certain road, which the King felt very sick.

By this time the defendant had already advanced pound 25 and promised to pay the
remaining due later on. But due to the fact that procession was cancelled he refused to pay the
remaining due. The plaintiff sued him to recover his remaining due.

HELD; The court had to address the following issues before it reached to the decision,

(i).What having regard to all circumstances was the foundation of contract.

(ii).Whether performance of contract was prevented. (If the answer is in affirmatively).

(iii).Was the event which prevented the performance of the contract of such a nature, that it
could not be reasonably said to have been in the contemplation of the parties at the time of
the contract?

2
TAYLOR vs. CALDWELL (1863) 3B,826

3
KRELL vs. HENRY (1903) 2KB 740
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(If this part is also answers in affirmatively then both parties would be

discharged from further performance of the contract).4

DEATH OR ILLNESS OR INCAPACITY OF A PARTY TO CONTRACT.

The death, illness or incapacity of one of the parties to the contract may also bring the
contract to an end.

Where the nature of the contract requires personal performance by a party, then his death or
incapacity or serious illness puts on end to the contract. Therefore, where the nature of the
contract requires the existence of the party then his inability or non existence discharges the
contract.

For instance, in ROBINSON vs. DAVISON (1871) LR 269, the defendant promised to
perform in a concert, but she failed due to illness. An action was brought to court against her.

HELD: It was decided in favour of her because she was not able to perform her obligations
due to illness.

Also, in CANDON vs. THE BARON KNIGHTS (1966) 5, the plaintiff was employed by the
defendant’s band as a drummer for a term of 5years to play on 7 nights a week.

The plaintiff felt sick and the doctor ordered that he was only fit to play only 4 nights a week,
the defendant band terminated the contract.

HELD: The business was made impossible for the plaintiff to confine his contract, hence
frustrated.

OUTBREAK OF WAR.

Upon declaration of the war, the performance of the pending contracts becomes impossible.
Normally such contracts are declared void or suspended.

For instance, in DAVIS AND KEATING ETC vs. JESSA BHALOO (1868-1918)

Z.L.R 517, X had contracted to sell goods to Y that, there were to be delivered at Zanzibar on
a German ship. The outbreak of the 1914-1918 war caused the ship to divert from Zanzibar
and the goods were never delivered.

4
ROBINSON vs. DAVISON (1871) LR 269,
5
CANDON vs. THE BARON KNIGHTS (1966)
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Y sued X for breach and X successfully defended himself under section 56(2) of the T.L.C.O.
It states that “A contract to do an act which after contract is made, becomes impossible or by
reason of some event which the promisor could not prevent, unlawful, becomes void when
the act becomes impossible or unlawful.”6

CHANGE OF LAW OR STATUTORY INTERFERENCE / GOVERNMENT OR

As a general rule any contract contrary to law at the time of its formation is void. See section
56 (1) of Law of Contract Act (LCA)

When a government makes a law /rule/regulations/directive whose effects is to prevent a part

Also, if after conclusion of contract, owing to an alteration of the law or act of some persons
armed with statutory authorities for instance the Government contract becomes impossible
then the contract is discharged.

Thus, a contract is discharged when its performance is made illegal by a subsequent change
in the law of the state or country in which the said contract is to be performed. Therefore, a
contract between A and B to construct a big concert hall at a particular place is discharged by
the adoption of by a law or subsidiary legislation prohibiting such building within that area.

See BAILEY vs. CRESPINGY (1809) LR, QB180, 7and the defendant in this case leased
land to B on condition that he would not erect anything other than, ornamental things. But
under statutory power the Government took the land

and builds a railway station on it.

HELD: The defendant was excused from performance of his obligations because the railway
built on it under statutory powers rendered such contract impossible of performance.

Furthermore, if the contract to be performed in a foreign country becomes illegal due to the
change in law of that country, the contract becomes discharged byfrustration.

(A). John’s Contractual Rights

6
DAVIS AND KEATING ETC vs. JESSA BHALOO (1868-1918)
7
BAILEY vs. CRESPINGY (1809) LR, QB180,
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Issue

Whether John is entitled to a refund for the ticket he purchased from TRC after the event he
intended to attend (the basketball finals) was cancelled.

Rule

Under Section 10 of the Law of Contract Act [Cap 345 R.E. 2019], 8 a valid contract exists
when there is: An offer, Acceptance, Consideration (payment), and Intention to create legal
relations so All John's rights are under the valid contract formed.

In this case, when John purchased the ticket, a valid contract of carriage from Mwanza to
Dar-es-salaam was formed between him and TRC.

Further, Section 56(2) of the same Act provides for frustration, stating:

> “A contract to do an act which after the contract is made becomes impossible or, by reason
of some event which the promisor could not prevent, unlawful, becomes void when the act
becomes impossible or unlawful.”9,

This principle is also illustrated in the case of Krell v Henry [1903] 2 KB 740, where the
court held that if the main purpose of the contract is destroyed by an unforeseen event, the
contract is frustrated and becomes void.

Application

John’s contractual right is to be transported by TRC from Mwanza to Dar es Salaam. TRC,
on its part, is still capable of performing its obligation — the transportation. The purpose for
which John intended to travel (to attend the basketball finals) is personal and unknown to
TRC under normal ticketing circumstances. Therefore, the failure of his personal purpose
does not frustrate the contract.

In contract law, frustration is only applicable if:

 Performance becomes impossible,

8
Section 10 of the Law of Contract Act [Cap 345 R.E. 2019],
9
Krell v Henry [1903] 2 KB 740
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Since the event cancellation did not affect the transport service, frustration does not apply,
and the contract remains valid. Thus, John is not entitled to a refund.

Conclusion

John has no contractual right to claim a refund from TRC under ordinary ticket
circumstances. The contract between John and TRC was to provide transportation, which
TRC is still ready and able to fulfill. The cancellation of the basketball finals was not part of
the contract, hence does not frustrate the agreement. but here under section 32 (3)and (4) of
Transport And Lisencing Act of 2020 provided some rights for passenger to a refund where
section 32(3) provided that "Where a passanger cancels a booking or more prior to the
departure time,the licensee shall immediately refund the full fare paid to the passenger" so
according to the valid contract John has made with TRC if he cancell a booking him self by
considering the rules provide under this section John is entitled to a refund or under section
32(4) John may change the date of travel.10

(B). If TRC Advertised Special Coaches for Basketball Fans

Issue

Does the cancellation of the basketball finals frustrate the contract if TRC had advertised
special coaches (Class 1 & 2) specifically for people attending the games?

Rule

If TRC publicly advertises specific services (e.g., special coaches) for a particular purpose
(such as attending a sports event), and customers (like John) purchase tickets based on that
purpose, then that purpose becomes an essential term of the contract.

Under such circumstances, the cancellation of the event may frustrate the contract, making it
void under Section 56(2 of the Law of Contract Act .11

According to Section 65 of the Law of Contract Act:

> “When an agreement is discovered to be void... any person who has received any advantage
under such agreement is bound to restore it...”

10
section 32 (3)and (4) of Transport And Lisencing Act of 2020
11
Section 56(2) of the Law of Contract Act [Cap.345.R.E.2019]
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Also, in Krell v Henry,12 the hiring of a room to view a coronation procession was frustrated
when the procession was cancelled — even though the performance (room availability) was
still possible — because the foundation of the agreement was destroyed.

Application

In this new scenario, TRC had advertised special coaches specifically for fans going to attend
the finals. This means:

 The purpose of the journey was known and mutually agreed upon,
 The cancellation of the finals by the Minister was beyond control and unexpected,
 The purpose of the contract (attending the game) was therefore frustrated.

As a result, the contract becomes void under Section 56(2) 13. Under Section 65, John is
entitled to a refund because the consideration (money paid) was for a purpose that is no
longer achievable.

This situation aligns with Krell v Henry, where frustration was recognized due to the central
purpose of the agreement failing.

Conclusion

If TRC had advertised the coaches specifically for the basketball finals and John purchased a
ticket on that basis, the cancellation of the event frustrates the contract. The contract becomes
void under Section 56(2), and TRC is legally required to refund John under Section 65 of the
Law of Contract Act.

CONCLUSIVELY: John’s contractual right to a refund depends on whether the purpose of

REFERENCE

STATUTES

The Law of Contract Act [CAP.345R.E. 2022].

12
Krell v Henry [1903] 2 KB 740
13
Section 56(2) of the Law of Contract Act [Cap 345 R.E.2019]
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BOOKS

Filikunjombe, P. H, Law of Contract Teaching Material, (2007-2010), Tumaini University

CASES

the case of PARADINE v. JANE (1647) EC 47

TAYLOR vs. CALDWELL (1863) 3B,826

KNELL vs. HENRY (1903) 2KB 740

CANDON vs. THE BARON KNIGHTS (1966)

BAILEY vs. CRESPINGY (1809) LR, QB180