Reading time: 3 minutes

Do you want to end a contract with another party? Does the other side say that you have breached the contract? Has the other party breached an essential term of the agreement and you wish to terminate the contract? Perhaps both parties have reached a mutual agreement to end the contract, and you’re not sure how to end it.  You are likely to want to ensure that your rights and obligations under the contract do not continue after ending the contract.

Contract law can affect a number of areas in our day-to-day life. Contract law governs the commercial relationships we enter into, even if the agreement has been formalised in writing. In fact, the law of contracts plays a vital role in our daily interactions, and the majority of these agreements are performed without any problem. However contractual disputes often arise by misunderstanding, or because one party wishes to renege on their contractual responsibilities.

How can a contract be ended?

A contract can be ended in any number of ways, including by:

  • Frustration;
  • Mutual Agreement;
  • Performance of the Contract;
  • Operation of law; or
  • Election after breach.

It is worth noting that the most common way for a contract to conclude is the fulfilment of all contractual obligations. This is known as performance of the contract, and the contract ends with both parties having performed their obligations.

Are there exceptions to performance?

It is a common misunderstanding that in order for a contract to be fully performed, every single aspect of the agreement needs to be satisfied. This used to be the legal position in the past.  The key case was Sumpter v Hedges [1898] 1 QB 673, whereby a contractor was only able to complete part of the work he had been contracted to complete. The contract stipulated the payment of a lump sum of 565 pounds, but the plaintiff was only able to carry out a portion of the work to the value of 333 pounds. The defendant did not pay anything. The plaintiff was upset about not receiving any payment for the work done, so sued the defendant on quantum meruit. This is a Latin term that means as much as he or she has earned. The plaintiff was appealing a trial judge’s decision that the plaintiff be paid the cost of materials he used, but nothing extra for the work done.

Unfortunately for the plaintiff, the Court of Appeal upheld this decision, as the contract was for a lump sum and the plaintiff had not shown any evidence to show that part performance formed part of the contract.

However more recent case law is likely to uphold the idea that businesses can be paid for part work completed.  This depends on a number of factors including the terms of the contract. For example, did they specify an hourly rate, or payments with milestones, or only one lump sum at the end.

There are many exceptions where a business can be paid for part performance. These exceptions include:

  • Divisible contracts;
  • Time for performance;
  • Substantial performance;
  • Trivialities;
  • When performance becomes impossible; and
  • Acceptance of partial performance.


Now that you know there are a number of exceptions to the old ‘lump sum’ rule that used to apply in Sumpter, you might wonder where you stand in your contractual matters. Stay tuned for Parts 2 and 3 where we elaborate on how the different methods for ending a contract operate in practice.

LegalVision has a team of great contracts lawyers. Please call our office on 1300 544 755. We will happily provide you with a fixed-fee quote and an obligation-free consultation.


How to Protect and Enforce Your Trade Mark

Wednesday 11 May | 11:00 - 11:45am

Protect your business’ brand from copycats and competitors. Register for this free webinar to learn how.
Register Now

Corporate Governance 101: Responsibilities for New Directors

Friday 13 May | 11:00 - 11:45am

If you are a new company director, join our free webinar to understand your legal compliance obligations. Register today.
Register Now

How Franchisors Can Avoid Misleading and Deceptive Conduct

Wednesday 18 May | 11:00 - 11:45am

Ensure your franchise is not accused of misleading and deceptive conduct. Register for our free webinar today.
Register Now

New Kid on the Blockchain: Understanding the Proposed Laws for Crypto, NFT and Blockchain Projects

Wednesday 25 May | 10:00 - 10:45am

If you operate in the crypto space, ensure you understand the Federal Government’s proposed licensing and regulation changes. Register today for our free webinar.
Register Now

How to Expand Your Business Into a Franchise

Thursday 26 May | 11:00 - 11:45am

Drive rapid growth in your business by turning it into a franchise. To learn how, join our free webinar. Register today.
Register Now

Day in Court: What Happens When Your Business Goes to Court

Thursday 2 June | 11:00 - 11:45am

If your business is going to court, then you need to understand the process. Our free webinar will explain.
Register Now

How to Manage a Construction Dispute

Thursday 9 June | 11:00 - 11:45am

Protect your construction firm from disputes. To understand how, join our free webinar.
Register Now

Startup Financing: Venture Debt 101

Thursday 23 June | 11:00 - 11:45am

Learn how venture debt can help take your startup to the next level. Register for our free webinar today.
Register Now

About LegalVision: LegalVision is a commercial law firm that provides businesses with affordable and ongoing legal assistance through our industry-first membership.

By becoming a member, you'll have an experienced legal team ready to answer your questions, draft and review your contracts, and resolve your disputes. All the legal assistance your business needs, for a low monthly fee.

Learn more about our membership

Need Legal Help? Submit an Enquiry

If you would like to get in touch with our team and learn more about how our membership can help your business, fill out the form below.

Our Awards

  • 2020 Excellence in Technology & Innovation Finalist – Australasian Law Awards
  • 2020 Employer of Choice Winner – Australasian Lawyer
  • 2021 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review
  • 2021 Law Firm of the Year - Australasian Law Awards
  • 2019 Most Innovative Firm - Australasian Lawyer