There are four ways to terminate a contract. They are for performance, agreement, repudiation and frustration. When a contract is considered to be resolved by performance, what it means is that the parties to the contract have fulfilled their legal obligation and there is no further need to continue the contract. For example, Ben offered his expensive watch to Sam for $ 5000. Sam accepted the offer and Ben gave the watch to Sam and in return Sam paid him the agreed amount of money. In this case, the contract has been concluded since both parties have fulfilled their contractual obligation. Unfortunately, life is not that simple as there are circumstances in which the parties to the contract may find it difficult to fulfill their contractual obligations. In such a situation, there may be only partial performance and the question is whether this is acceptable.
Let’s say Simon is a math tutor and agrees with Mary to teach him math tuition for 10 lessons at $ 100 per lesson. Simon completes 6 lessons and cannot continue teaching Mary because he has some personal problems that he needs to solve. The question is whether Mary has to pay for the 6 lessons Simon has already taught. At one point, the court held that if one of the parties to a contract has not fully fulfilled its obligation, there is no need to compensate it. However, over a period of time the court has reconsidered this and now there is a possibility that Simon could claim all 6 lessons on what is called a “quantum merit” basis. This is a Latin phrase that means ‘payment for work done’. But Simon’s ability to claim partial payment is based on whether Mary has benefited in any way from the contract. In this case, Mary may have benefited from the contract and may have to pay. However, if Simon only taught one lesson and stopped teaching her, perhaps Mary could refuse to pay as she can claim that she has not benefited from the contract. This is relatively subjective and is something the court might have to decide based on the merits of the case, if that case ever goes to court.
However, there are circumstances where it is not necessary to compensate for part performance. What if you ordered a chicken cutlet at a restaurant and it turned out to be undercooked? Can you pay half the price for this? Obviously not!
Another way that a contract is fulfilled is through an agreement. This is when both parties agree before the contract is concluded that when a certain event occurs, the contract will be terminated or that if either party wishes to terminate the contract, they must give the other party a period of notice. Dismissal by agreement is a common feature in the employment contract where the parties can agree in advance that if the employee wants to resign, he must give a period of notice and vice versa also for the employer. Another example is the prenuptial agreement that couples enter into before marriage.
The third way a contract is fulfilled is through repudiation. This is where one of the parties deliberately breaches the agreement. For example, Michael agreed to sell his piano to Susie for $ 3,000. Susie agrees to buy the piano and tells Michael that she will pay him the money the next day. Then Brad shows up and agrees to buy the piano from Michael for $ 5000. Michael sells the piano to Brad. By doing this, you are breaching your agreement with Susie, as the contract has already been decided between Michael and Susie. Susie has the right to sue Michael for breach of contract. There is a possibility that the court will order Michael to buy the piano from Brad and sell it to Susie at the agreed price or give Susie some form of compensation.
The last method of a contract that is downloaded out of frustration. This means that one or both parties cannot fulfill their contractual obligation due to some unforeseen event that prevents them from continuing with the contractual relationship. You bought a ticket to see a concert by a famous pop group. Before the concert, the lead singer of the pop group members died of a drug overdose. Therefore, the concert is canceled as it would be impossible to continue the concert. Therefore, the contract is considered frustrated. So you can get a refund for the ticket you bought. It is also possible for a contract to be terminated when the contract becomes illegal to perform. For example, if a product is for sale and the government subsequently passes legislation that bans the product, further sales of the product are considered illegal.
Once the contract is fulfilled, the contract is terminated.