Breach Flashcards
What is a repudiatory breach?
This is the kind of breach that entitles the innocent party to treat the contract as either discharged or affirm it. There are two types of repudiatory breach:
Where the guilty party refuses to perform their obligations.
Where the guilty party performs their obligations in a manner that is seriously defective.
What can the innocent party if there is a repudiatory breach?
In such circumstances the innocent party has the choice to either terminate the contract by treating it as discharged or alternatively, affirm the contract. If the innocent party chooses to end the contract then the parties are released from the obligations due to be performed. The guilty party will be liable in damages. If the innocent party affirms the contract it remains in force so that both parties are under a contractual obligation to continue the performance. Either party could then be liable for damages if for their breaches that may take place during performance of the affirmed contract.
White & Carter v McGregor
White & Carter v McGregor
The claimant supplied bins to the Local Authority and were allowed to display adverts on these bins. The defendant owned a garage. The defendant’s sales manager entered a contract with the claimant for them to place adverts on the bins for a period of 3 years. The agreed price was payable by three annual instalments and if one of the payments was late the whole price became immediately due. The defendant had not authorised the sales manager to enter the contract and phoned the claimant on the same day as the contract had been made telling them that he did not want the advertising. The claimant ignored the defendant’s communication and arranged for the advertising plates to be made up and placed on the bins. The defendant refused to pay the first instalment and the claimant submitted a bill for the full three years of advertising.
The House of Lords held that the claimant was not obliged to accept the breach of contract and could continue with the contract. They were thus entitled to full payment for the three years advertising.
What happens if the guilty party refuses to perform?
Where a party refuses to perform, the innocent party is entitled to treat the contract as discharged. Where the refusal is before the date for performance, the innocent party is entitled to treat the contract as discharged and does not have to wait until the date of performance.
Hochester v De La Tour
If the innocent party opts to ignore the refusal and continue with the contract, then that party runs the risk of being in breach later
Avery v Bowden
Hochester v De La Tour
The claimant agreed to be a courier for the defendant for 3 months starting on 1st June 1852. On the 11th May the defendant wrote to the claimant stating he no longer wanted his services and refused to pay compensation. The claimant obtained a service contract elsewhere but this was not to start until 4th July. The claimant brought an action on 22nd May for breach of contract. The defendant argued that there was no breach of contract on 22nd May as the contract was not due to start until 1st of June.
It was held that where one party communicates their intention not to perform the contract, the innocent party need not wait until the breach has occurred before bringing their claim. They may sue immediately or they can choose to continue with the contract and wait for the breach to occur.
Avery v Bowden
By contract the claimant was to carry cargo for the defendant. The claimant arrived early to collect the cargo and the defendant told them to sale on as they did not have any cargo for them to carry and would not have by the agreed date. The claimant decided to wait around in the hope that the defendant would be able to supply some cargo. However, before the date the cargo was supposed to be shipped the Crimean war broke out which meant the contract became frustrated. The claimant therefore lost their right to sue for breach. Had they brought their action immediately they would have had a valid claim.