breach and termination

Condition principle

Party A has to perform contractual obligation before Party B’s liability occurs

Concurrent condition

Parties must perform contractual obligations at the same time

Independent promises

Each party can enforce each other’s promise though one has not performed their own

Entire obligations

Party A must completely perform their part before Party B performs theirs

Cutler v Powell [1975] 6 TR 320

Severable Obligations

Payment is due time to time as performance of a specified part of the contract is rendered

Supply of Goods and Services Act 1982 s13

Liability is fault based for supply of service rather than strict liability

Actual breach

Failure to perform an obligation that has actually arisen under the contract

Anticipatory breach

Before time of performance arrives one party informs the other that he will/can not perform their obligation under the contract

Repudiatory breach

Breach which gives claimant the right to terminate contract

classification for repudiatory breach

• breach of a condition

• serious breach of an innominate term ‘intermediate term’

Party cannot terminate contract for a breach of warranty - entitled claimant to damages but not release of obligations

Arcos Ltd v Ronaasen [1993] AC 470

Reinforces the strict compliance in commercial contracts - goods must correspond with their description

Non-repudiatory breach

Breach which does not give claiming party the right to terminate contract

Monetary compensation

Right to claim damages for breach of contract

Right of election

Innocent party can choose to affirm contract or terminate it and claim damages

Specific performance

Innocent party demands actual performance

The Dominique [1989] AC 1056

Termination usually doesn’t have retrospective effects - party is not released from their obligation before termination of contract

Hochester v De La Tour [1853]

Breach takes place before the date of performance

The elective theory

Injured party can either

• accept anticipatory breach and terminate contract immediately, they do not have the remedy anymore

• Affirm the contract and wait until the end of performance by then the anticipatory breach becomes an actual breach

White & Carter v McGregor [1962] AC 413

Where party A has decided they do not want performance to be carried out, Party B can still choose to perform so and recover the contract price

Injured party can choose to affirm contract

Johnson v Agnew [1980] AC 367

Breach of contract are generally assessed at the date of the breach not the date of trial

Party can terminate contract for repudiatory or fundamental breach and this is effective immediately

Photo production Ltd v Securior Transport Ltd [1980] ac 827

Exclusion clause can still be effective even in cases of fundamental breach, provided the clause is clearly worded and incorporated.