A An agreement that the law will enforce. may be concluded in the following ways:
- agreement between the parties;
- The end of something. Contracts terminate when the parties have done what they agreed. A contract can also be terminated without being completed, for example if one party breaks the contract, or it is impossible to carry out. by frustration;
- breach of contract Failing to do what was agreed in a contract..
When the parties to the contract completely fulfil their obligations to one another, whether by payment of money or by doing something as agreed in the contract, the contract comes to an end.
Agreement between the parties
A contract, being the result of agreement, may be terminated by further agreement between the parties to end their contractual relationship.
Further, the parties may agree that the contract is automatically terminated if a ‘contingent condition’ is not fulfilled. For example, two parties agree to purchase property, subject only to A obtaining finance from the bank. If A is unable to obtain finance, then the contract is at an end. As the clause was a contingent condition, as opposed to a promise, A has not breached the contract.
Termination by frustration
If something happens after a contract has been made that makes the performance of the contract futile or impossible, without fault of either A person or organisation directly involved in a court case. Parties include the plaintiff or applicant, the defendant, and any third party added to the action, but not independent witnesses., the contract A document that sets out what a person wants to happen to their money and other property after they die. be automatically terminated.
Simple lack of ability of one of the parties to perform the contract is not sufficient. The impossibility must be something that renders performance totally impossible or something unexpected that changes the circumstances so radically that the contract would have to become fundamentally different from the original contract.
A very apt example of this is where a couple enters into a contract to (1) An agreement to pay for the temporary use of something, for example a car. Also called renting or leasing. (2) To employ someone to do work. a wedding venue. However, due to the COVID-19 pandemic, a lockdown is announced, and weddings are no longer allowed to take place on that date. In this situation, the contract (subject to any terms to the contrary) may arguably be terminated by frustration.
It has also been held that An independent body that hears legal claims brought by parties and decides between them. Serious cases are heard by a judge and jury, or just a judge. Less-serious cases are heard by a magistrate. injunctions – that made it impossible for a party to do the amount of construction work they had agreed to do – automatically terminated a contract by frustration (see Codelfa Construction Pty Ltd v State Rail Authority of New South Wales  HCA 24).
Sometimes, parties agree to ‘force majeure’ clauses that set out the precise consequences if certain events occur that are beyond the parties’ control. For example, a force majeure clause may provide that in the event of strikes, floods or war, the time for delivery of a shipment is merely delayed, rather than the contract being automatically terminated.
Breach of contract
As set out above, breach of contract by one party may entitle the other party to terminate the contract, where the breach constitutes ‘repudiation’ or breach of a condition or an intermediate term that causes substantial loss of benefit.
If a party breaches a term that is considered to be a A promise in a contract. For example, a promise by a manufacturer that goods will be repaired or replaced if they turn out to be faulty., the wronged party does not have the right to terminate the contract but can still claim A court order for money to be paid to someone to compensate them for a loss suffered as a result of a civil wrong or breach of contract. For example, a person who caused a serious permanent injury to another person can be ordered by the court to pay damages that compensate the injured person for their loss of income from being unable to work. See also aggravated damages; compensatory damages; general damages; liquidated damages; nominal damages; special damages. (see ‘Terms may be conditions or warranties’ and ‘Remedies for breach of contract’, above).
It should be noted that termination of a contract means that unlike where a contract is Revoked or cancelled. (i.e. made Having no legal effect. A void agreement has something wrong with it, so it cannot be a legally binding contract. For example, a verbal agreement to buy land would be void, because the law says those contracts have to be in writing. from the beginning), the contract is Legally binding or effective. up to the point of termination such that accrued rights and obligations remain intact and parties are only discharged from any outstanding obligations.