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‘A breach of contract is committed when a party without lawful excuse fails or refuses to perform what is due from him under the contract, or performs defectively or incapacitates himself from performing’, Treitel
Whether a breach has occurred and what remedies are available will depend upon the type of term that has been infringed. Contractual terms are categorised as conditions, warranties or innominate terms (see the page on Conditions or Warranties for more information).
Only the breach of a condition, or innominate term with serious consequences, will give rise to a repudiatory breach and the right of election. This is the right of the innocent party to decide whether to terminate or affirm the contract. In both cases the party still has the right to sue for damages.
TERMINATEIf the innocent party chooses to terminate the contract all future contractual obligations are discharged. However, they must communicate their decision to terminate to the other party. It doesn’t matter how this is done so long as the message is objectively clear and unequivocal (Vitol SA v Norelf Ltd (The Santa Clara) (1996) (HoL)). |
AFFIRMIf the innocent party chooses to affirm then the contract continues and both parties must fulfil their future contractual obligations. The party does not have to terminate immediately but waiting too long to communicate their decision can be taken as an implied affirmation (Stocznia Gdanska SA v Latvian Shipping Co (2001) (HC)). If the party affirms the contract they cannot decide later on to terminate it, unless the breach is ongoing or happens again. |
Breach can happen after the contract has been agreed but before actual performance of the contract has begun. This is known as anticipatory breach and usually occurs when one party informs the other that they will not be able to fulfil their part of the obligation.
Where this occurs, the innocent party can start proceedings for breach of contract at any time from the declaration of anticipatory breach, they are not obliged to wait for the actual breach to occur (Hochster v De la Tour (1853) (HC)).
De la Tour engaged Hochster in April to act as his courier on a European trip which was due to start on 1st June. However, on May 11th De la Tour wrote to Hochster to terminate the contract. Hochster started proceedings for breach of contract on 22nd May but De la Tour argued that no action could be taken until 1st June when performance was due to take place. The court held that Hochster was entitled to bring an action against De la Tour as soon as the anticipatory breach occurred i.e. on 11th May when he wrote terminating the agreement.
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