LECTURE 13 - DISCHARGE OF CONTRACTS (BREACH) - CONTRACT Issues: - Breach - Nature of Repudiatory Breach - The Sale of Goods Act 1979 - Categorisation of Terms by the Court - Special Types of Breach - Anticipatory Breach - Effect of Breach: Right of Election Breach: - May lead to o Damages; or Repudiation; or o Both - No automatic termination of contract - Photo Production v Securicor (1980) Nature of Repudiatory Breach - What types of breach of contract will give rise to the right to repudiate? - Should this be determined by parties? - Should it be dependent on the actual consequences of the breach? - Should the law specify categories in relation to contractual obligations the breach of which will result in the right to repudiate? The Sale of Goods Act - Implied terms under the SGA 1979 are labelled as either 'conditions' or 'warranties'. - Sec 11(3)- a condition is a stipulation the breach of which may give rise to a right to treat the contract as repudiated, whereas a breach of warranty may give rise to a claim for damages but not to a right to treat the contract as repudiated. Conditions in the Sale of Goods Act - Arcos Ltd v EA Ronaasen & Sons [1933] - Reardon Smith Line Ltd v Hansen-Tangen[1976] Categorisation of Terms - The Courts' Approach - 'major' terms - any breach gives the right to repudiate (terminate) contract + damages. - 'minor' terms - damages, but no right to repudiate, whatever the actual consequences of the breach.
Conditions and Warranties - Condition = major term - Warranty = minor term o Importance of term to contract - " Poussard v Spiers (1876) · Bettini v Gye (1876) o Labelling by parties - · Schuler AG v Wickman (1974) Innominate Terms - Hong Kong Fir Shipping v Kawasaki Kisen Kaisha (1962) o Seaworthiness o Right to repudiate depends on seriousness of consequences of breach, not the breach itself - Advantage - flexibility - Disadvantage - uncertainty Express Termination Clauses - Rice v Great Yarmouth Borough Council (2001) - Financing Ltd v Baldock [1963] - Lombard North central Plc v Butterworth [1987] Anticipatory Breach - Executory contract o One party indicates that it does not intend to perform on the due date o Other party can " 'accept' the breach and sue for damages immediately " wait for the due date to arrive before taking action - Hochster v De La Tour (1853) Effect of Breach and Right of Election - Geys v Societe Generale London [2012] - Force India Formula One Team v Etihad Airways [2010 - Avery v Bowden (1855) - Vitol SA v Norelf Ltd [1996] - White & Carter (Councils) Ltd v McGregor [1962] Mistaken Repudiation - Federal Commerce and Navigation Co Ltd v Molena Alpha Inc, The Nanfri (1979) - Woodar Investment Development Ltd v Wimpey Construction UK Ltd (1980)