Discharge by Breach

1. What is a breach?

A breach is the failure by a party to comply with his contractual obligations, by giving defective performance, different performance or no performance at all.

2. What are the types of breach?

A breach can be an actual breach or an anticipatory breach.

3. When does an actual breach occur?

An actual breach occurs when one party fails to perform his obligation correctly. An example occurs in Pilbrow v Pearless de Rougement.

4. What is an anticipatory breach?

An anticipatory breach occurs when one party indicates, before the date on which performance is due, that performance will not take place. The other party can then sue immediately. An example occurs in Hochster v de la Tour.

5. When does an anticipatory breach occur?

This can be by renunciation or self-induced impossibility. Unlikelihood or uncertainty in future performance do not suffice.

6. How is the principle of an anticipatory breach summarised?「」

In Geden Operations Ltd v Drybulk Handy Holdings Inc. (Bulk Uruguay) 2014, the principle was summarised as conduct ‘which is sufficient to entitle the other contracting party to treat himself as discharged from further performance.’

7. What is a condition?

A condition is a term that is fundamental to the contract, i.e. without that term the contract would be pointless. 

8. What happens when a condition is breached?

When a condition is breached, such as in Poussard v Spiers the victim may repudiate the contract (end the contract) if desired and/or sue for damages (compensation). 

9. What is a warranty?

A warranty is a minor term of the contract.

10. What happens when a warranty is broken?

When a warranty is broken the victim may sue only for compensation and the contract will continue, shown in the case of Bettini v Gye.