3.3 Discharge of a Contract

2026 Syllabus Objectives

By the end of this topic, you should be able to:

  • Explain what it means for a contract to be discharged (brought to an end)
  • Understand discharge by performance, including the strict performance rule and all its exceptions
  • Understand discharge by breach, including actual breach and anticipatory breach
  • Understand discharge by frustration, including the types of frustrating events, the limitations on frustration, and its effects at common law and under the Law Reform (Frustrated Contracts) Act 1943

Main Content

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What Does "Discharge" Mean?

When a contract is discharged, it means the contract has come to an end. The legal duties that each party owed to the other are released — nobody is legally required to do anything more under that contract.

There are several ways this can happen:

  1. Performance — both parties do what they promised
  2. Breach — one party breaks the contract
  3. Frustration — something unexpected makes the contract impossible or pointless

3.3.1 — Discharge by Performance

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The Basic Idea

The most straightforward way a contract ends is when both parties fully perform (carry out) everything they promised. Once both sides have done their part, the contract is complete and discharged.

Example: Ahmed agrees to paint Sara's house for £500. When Ahmed finishes the painting and Sara pays him £500, the contract is discharged by performance.

The Entire Performance Rule (Also Called the Strict Performance Rule)

Under this rule, a party must completely and exactly finish everything they promised before they can demand payment. If they only do part of the job, they are not entitled to any money at all.

This seems harsh, but the law's reasoning is that if you promise to do something fully, you should do it fully before being rewarded.

The leading case is Cutter v Powell (1795). A sailor agreed to work on a ship the whole voyage from Jamaica to Liverpool in exchange for a large lump-sum payment. He died before the ship reached Liverpool. His widow sued for the proportion of wages earned up to his death. The court said she could recover nothing — because the contract required the entire voyage to be completed, and it was not.

Another key case is Bolton v Mahadeva (1972). A plumber was hired to install a central heating system for £560. The system was badly done — it gave off fumes and didn't heat the house properly. The court held the plumber could recover nothing because he had not substantially performed the contract.

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