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9084 · 3.3.1

Performance — practice questions

Practice and worked examples for 9084 Performance. Short previews only — attempt the full question in MarkScheme against the official scheme.

Worked example 1

A builder contracts to install a central heating system for £5,600. The work is completed, but the system emits fumes and does not heat the house properly. A heating engineer quotes £1,700 to fix the issues. The homeowner refuses to pay the builder anything. Advise the builder.

Show solution outline
  1. Identify the Contract Type: This is an entire contract for a single lump sum (£5,600) for a complete installation.
  2. Assess Performance: The issue is whether performance is substantial. The defects are serious: the system doesn't heat the house (its main purpose) and is unsafe (emits fumes). This is analogous to Bolton v Mahadeva.
  3. Apply the 'Substantial Performance' Test: The court considers two factors: the nature of the defect and the cost of cure relative to the contract price.
    • Nature of Defect: The defects go to the root of the contract; the system fails its primary purpose.
    • Cost of Cure: The cost to fix is £1,700. We calculate this as a percentage of the contract price:
    • Calculation: (£1,700 / £5,600) * 100% = 30.4%
  4. Compare to Case Law: In Bolton v Mahadeva, the cost of cure was approx. 30% of the contract price (£174 / £560), and performance was held NOT to be substantial. The facts here are very similar.
  5. Conclusion: Performance is not substantial. The builder has breached the contract by failing to provide what was promised. Under the strict rule for entire contracts, the builder is not entitled to any payment. The homeowner is correct to refuse payment.

Worked example 2

A freelance journalist, Ben, agrees to write a series of 5 articles for 'Tech Today' magazine for a total fee of £2,500. The contract states that payment is '£500 on delivery of each article'. Ben delivers the first two articles on time, and they are accepted. He delivers the third article a week late. The magazine editor is unhappy and refuses to pay for any of the articles, terminating the contract. Advise Ben.

Show solution outline
  1. Identify the Contract Type: The contract is a divisible or severable contract, not an entire contract. The clause '£500 on delivery of each article' clearly separates the overall obligation into five distinct parts, each with its own corresponding payment.
  2. Apply the Law for Divisible Contracts: The strict rule from Cutter v Powell does not apply. Instead, payment is due for each part of the contract that is completed. Ben has completed and delivered three articles.
  3. Calculate Payment for Completed Parts: Ben is entitled to payment for the two articles that were accepted without issue.
    • Calculation: 2 articles × £500/article = £1,000.
  4. Analyse the Breach (Late Delivery): The third article was delivered late. The issue is whether this delay is a repudiatory breach (breach of condition) allowing the magazine to terminate and refuse the article.
    • 'Time is of the essence' is not expressly stated and is unlikely to be implied for this type of work. Therefore, the time of delivery is likely a warranty.
    • A breach of warranty only entitles the innocent party (the magazine) to claim damages for any loss caused by the delay. They cannot terminate the contract or refuse payment for the article itself.
  5. Calculate Final Amount Owed: The magazine must pay for all three articles delivered. They can potentially deduct damages if they can prove a loss from the one-week delay, but they cannot withhold the full £500.
    • Total owed to Ben: 3 articles × £500/article = £1,500 (minus any proven damages for the delay).
  6. Conclusion: The magazine's refusal to pay anything is a breach of contract. Ben can successfully sue for £1,500 for the three articles he has delivered. The magazine's termination of the contract is wrongful.
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