Learning Cycle 7 - Remedies for Breach of Contract Termination For Breach of Contract Is it possible to show you have been released from a contract? Yes, by some type of impossibility, a misrepresentation made etc. however if you cannot show this, a subsequent failure to perform will bring some form of remedy e.g. Arcos v Ronaasen [1933] In how many situations can an innocent party terminate contract because of breach? Two distinct situations : - Straightforward breach, meaning defective performance/non-performance on behalf of the other party. Question of termination, as well as damages, then depends on the classification of the term which has been breached - 'Repudiation', meaning one party has wrongfully pulled out (renounced) the contract, either by words or conduct, because they are unwilling/unable to perform their obligations, the court sees repudiation as serious matter so they require 'clear indication; that a party is unready or unwilling to perform the contract, it is possible to repudiate a contract in advance of the time fixed for performance ( anticipatory breach ) Core Remedies for Breach Does breach always give way to termination? No, it depends on what sort of term has been breached, this can be split into three categories - Condition, breach always gives innocent party option to terminate contract and claim damages - Innominate term, innocent party can always claim damages and might also be able to terminate contract if the effect of breach is serious enough - Warranty, breach never gives innocent party option to terminate contract, they can only claim damages Type of Clause 1. Condition 2. Innominate ( intermediate ) clause 3. Warranty Conditions Termination? Yes Yes Where 'serious' Yes No Damages? Yes What are conditions? Most fundamental terms of the contract, must be sufficiently important and be deemed a major term, it's the basis for a contract How do we determine what is a condition? It must be so vital to the contract that it goes to the root of the transaction Identifying the Nature of a Condition : Poussard v Spiers (1875-76), defendant's fired opera singer after she failed to perform in some shows they hired her for, it was stipulated in her contract she must show up, they fired her on this basis and believed they were entitled to
do so, question before court was whether this breach was sufficiently important to be considered a condition, court found it was important enough, therefore deeming it a condition and finding the defendant's well within their rights to seek termination - in this case meaning they were entitled to fire her as a result of her breach What are the four categories identifying a term as a condition? Identified by COA in BS & N Ltd v Micado Shipping (The 'Seaflower') (2001) 1) A term will be a condition 'if it is expressly so provided by statute' e.g. various terms implied into contracts for the sale of goods such as Arcos Ltd v EA Ronaasen & Son (1933) 2) A term will