Types of Breach
•Actual breach: where: A party fails to perform,
there is defective performance & an underlying
term is unfounded or untrue
•Anticipatory Breach: Party explicitly informs
other party they will not be performing contract
responsibilities or they will be performing them
differently from way contract envisages Hochster v
De La Tour. Innocent party becomes aware through
other parties actions that other party won’t be able
to perform its obligations, Lovelock v Franklyn
General Effects of Breach
•Any breach allows innocent party to sue for
damages
•If breach is serious, if it goes to heart of contract,
innocent party can treat contract as discharged
•Discharge for serious breach ( breach of a condition
or breach of an intermediate term that goes to heart
of contract) is not automatic, innocent party can
choose to discharge (& sue for damages) or treat
contract as if it was still on foot (and sue for
damages), Election to discharge must be made in
clear words or unequivocal conduct
•Vitol v Norelf: a party who repudiates for
anticipatory breach may be in the wrong, and may
through their conduct be the ‘guilty’ party who has
to pay damages.
Specific Effect of Actual Breach
•Perform test of essentiality
Assessing Whether Term Has Quality of Essentiality
•Language adopted in the term.
•Structure of the term and the contract
•Whether contract is in standard form and there have
been earlier discussions on term.
•Likely consequences of breach.
•Whether damages would be adequate remedy
•Importance of such term in context of contract and
its commercial background
•Bunge Corporation New York v Tradax Export SA
Panama [1981] 1WLR 711): Precise compliance by
the buyer was necessary as a precondition to the
seller performing his obligations
Intermediate Term
•Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen
Kaisha Ltd (1962): Does event deprive party who
has further undertakings still to perform of
substantially the whole benefit which it was
intention of parties as expressed in contract that
they should obtain as consideration for performing
those undertakings
Specific Effect of Anticipatory Breach
•If they accept the breach and end the contract: Both
parties are discharged from future obligations,
Rights that have vested remain (so if for instance a
progress payment was due it can still be collected).
Any cause of action from breach remains (so they
can still sue in damages)
•They may elect to keep contract on foot they can
seek specific performance immediately Hasham v
Zenab court can make orders that leave some parts
of the contract to be specifically performed
immediately with others be performed in future
•Innocent party can elect to continue with
performance & sue on contract price rather than in
damages White and Carter v McGregor
•If contract remains on foot both sides can enforce
their rights
Repudiation
•Repudiation may be proved in two ways -By an
examination of promisors words & conduct & by an
examination of promisor's actual position
•Would a reasonable person be led to the conclusion
that promisor doesn’t intend to fulfil their part of
the contract
•Charles Rickards Ltd v Oppenhaim
•Renard Constructions PL v Minister for Public
Works (1992) 26 NSWLR 234
