Previous: Contractual terms

Introduction

The discharge of a contract means that it is bought to an end. For most contacts, this is done by both parties fulfilling their obligations. However, a contract may also be discharged in other ways. Where there is a common mistake, a contract is never made, and where a contract is frustrated or breached in a repudiatory manner, it may be discharged prematurely.

Common mistake

Where parties to a contract are both mistaken in some way before the contract is concluded, the contract may be void, that is it is treated as if it never existed. This is different to frustration, which can only occur after conclusion.

The case of Bell & Lever Bros [1932] is a good illustration of how the doctrine of common mistake operates. As a brief background, Bell and another person named Snelling were employed by Lever Bros to run and make profitable a company. They successfully did this, and once Lever Bros was satisfied that their objectives had been completed, both Bell and Snelling were made redundant with huge payoffs to say thank you. However, shortly after paying this money, Lever Bros discovered that prior to the redundancy contracts being finalised, Bell and Snelling had both engaged in some personal trading, which had been expressly prohibited by their employment contracts. If Lever Bros had known this before, Bell and Snelling could have dismissed without any payoff. They therefore sought to recover the payoff sums...

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