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Paper 1 · Lesson 6 — Law of Contract

Terms breach and discharge

Contract terms, breach, and discharge (performance, frustration, anticipatory breach).

2 questionsAnswers & explanations includedFree — no sign-up

Question 1

A contract for the sale of a house is due to complete on 30 September, the option having been exercised in July. On 12 September the buyer writes to the seller saying plainly that he will not be completing, having spent a weekend in the area and changed his mind about it. He makes no reference to financing and offers no qualification. The seller, who has committed to a purchase of his own and has a second interested party who viewed in August, wishes to know whether he must wait until the end of the month and see whether the buyer turns up before he may do anything at all about it.

Which statement is correct?

  1. A. The seller may treat the contract as breached at once, the buyer having renounced it.
  2. B. There is no breach until 30 September passes without completion having taken place.
  3. C. There is no breach, an intention announced in advance being merely a present intention.
  4. D. There is a breach, but the seller must hold himself ready to complete before he acts.
Show the answer and full explanation

Answer: A

The rule. A clear refusal to perform, given before performance falls due, is an anticipatory breach. The innocent party may treat the contract as breached immediately.

Why A is correct. He may act on 12 September.

The other options.

  • B requires the date to pass.
  • C treats the announcement as a mere statement of present intention.
  • D requires the seller to stand ready to the end, which is the most plausible of the three because it sounds prudent.

Exam note. He need not wait to be let down twice.

A clear refusal to perform, given before performance falls due, is an anticipatory breach →

Question 2

A seller dies after the buyer has exercised the option but before completion. The buyer is willing to wait for the estate to be administered. In an unrelated transaction the same month, a buyer dies after exercising, and his family wish to know where they stand.

Which statement is correct?

  1. A. Both contracts are discharged, the death of a party to a land contract ending it.
  2. B. Neither is discharged; in each case the deceased's estate must complete on the terms.
  3. C. The seller's death does not discharge the contract; nor does the buyer's death either.
  4. D. The seller's death discharges it; the buyer's does not, his estate being liable to complete.
Show the answer and full explanation

Answer: C

The rule. The seller's death does not discharge the contract — the executor may complete. The buyer's death does discharge it, performance having become impossible, and the estate recovers what was paid.

Why C is correct. It states both halves in the right direction.

The other options.

  • A discharges both.
  • B discharges neither.
  • D inverts the pair, which is where a candidate who knows the rule is asymmetric but not which way round will land.

Exam note. Ask who died. Seller-side, the contract survives; buyer-side, it does not.

The seller's death does not discharge the contract — the executor may complete →

Practise it under exam conditions

Single questions test whether you know a rule. The paper tests whether you can find it in a scenario, at speed, with three plausible alternatives in the way. Start with the free 20-question half-paper.

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