13. Breach of contract

Poole’s Casebook on Contract Law provides a comprehensive selection of case law that addresses all aspects of the subject encountered on undergraduate courses. The performance obligations of the parties to a contract are determined by contractual terms. A breach of contract arises when a party fails to fully comply with a performance obligation, without lawful excuse. If a contractual obligation is strict, failure to comply constitutes a breach of contract regardless of fault. Subject to an enforceable exemption clause, the injured party is entitled to damages to compensate for the loss suffered as a result of the breach. This chapter focuses on breach of contract and its legal consequences. It discusses the election on repudiatory breach; termination or affirmation of a contract; the classification of terms: conditions, warranties, and innominate or intermediate terms; the ‘entire obligation rule’; and anticipatory breach.

13. Breach of contract

Course-focused and comprehensive, Poole’s Textbook on Contract Law provides an accessible overview of the key areas on the law curriculum. There are four ways to discharge a contract: by performance, agreement, frustration, or breach. The standard of performance required in relation to each contractual obligation needs to be identified because a failure to perform to the required standard constitutes a breach. In the absence of lawful excuse, a breach of contract arises if a party either fails or refuses to perform a contractual obligation imposed on that party by the terms of the contract or performs a contractual obligation in a defective manner. While every breach of contract will give rise to a right to claim damages, the contract will remain in force unless the breach constitutes a repudiatory breach. The chapter examines the types of repudiatory breaches and the election to terminate or affirm, together with an assessment of the law governing the identification of a repudiatory breach and the consequences of terminating when the breach is not in fact repudiatory. It also examines the options available to the non-breaching party when an anticipatory breach occurs.

12. Specific remedies

Without assuming prior legal knowledge, books in the Directions series introduce and guide readers through key points of law and legal debate. Questions, diagrams and exercises help readers to engage fully with each subject and check their understanding as they progress. This chapter considers remedies that directly address the issue of providing the innocent party with the performance that was expected. Their use depends on a number of factors, which means that they are not universally available, and that the claimant will therefore often be left to his remedy in damages. The discussions cover actions for the price or other agreed sum, the rule in White and Carter v McGregor, affirmation and anticipatory breach. The chapter goes on to discuss specific performance and injunctions and the tests of damages being inadequate, mutuality plus other factors such as personal service contracts and the relevance of the need for supervision.

26. Anticipatory breach of contract

This chapter examines the doctrine of anticipatory breach, which occurs where, before the time comes for A to perform their part of the contract, A declares that A is not going to do so. This repudiation of the contractual obligation is itself a breach of contract. The innocent party may choose to either accept or reject an anticipatory breach. If they accept, the contract is terminated and the innocent party can sue for damages immediately. If the anticipatory breach is rejected, then the contract remains on foot. If the innocent party elects not to accept the breach and to keep the contract alive, then they may proceed to perform their side of the bargain and sue for the contract price. However, it appears that this action for the agreed sum, or action in debt, may not succeed if the innocent party had no ‘legitimate interest’ in taking such steps.

Part III The right To Terminate, 7 Repudiation and Anticipatory Breach

This chapter studies repudiation and anticipatory breach. The essence of repudiation is the absence of readiness and willingness by the defaulting party to perform their obligations under the contract. Though the word ‘repudiation’ suggests an unwillingness or refusal to perform, it can also include the situation in which the defaulting party, though perfectly willing to perform when the time comes, is incapable of doing so. The chapter then looks at modes of repudiation. The two key questions in deciding whether repudiation has taken place are: (1) the ratio quantitatively which the breach bears to the contract as a whole, and (2) the degree of probability or improbability that such a breach will be repeated. The chapter also considers the law regarding the issue of notices making time of the essence.

BREACH OF CONTRACT AS ONE OF THE GROUNDS FOR TERMINATION OF THE CONTRACT OF CARRIAGE OF GOODS BY SEA

Key words: a contract of carriage of goods by sea, termination of contract, terms of contract, repudiatory breach, anticipatory breach

22. Breach of Contract and Termination

This chapter begins with a definition of ‘breach of contract’ and then outlines the circumstances in which a breach of contract gives to the innocent party a right to terminate further performance of the contract. These include breach of a condition and breach of an intermediate term where the consequences of the breach are sufficiently serious. The chapter also considers the problems that can arise in deciding the status of a term which has not been classified by the parties as a condition, a warranty, or an intermediate term. It examines termination clauses and the significance attached to the good faith of the party who is alleged to have repudiated the contract. The chapter includes a brief comparison of English law with the Vienna Convention on Contracts for the International Sale of Goods and with the Principles of European Contract Law, and also addresses the question of whether an innocent party is obligated to exercise its right to terminate further performance of the contract, and considers the loss of the right to terminate. It concludes with a discussion of the law of anticipatory breach of contract.