EARLY TERMINATION OF RESOURCE, ENERGY AND
OTHER LONG-TERM CONTRACTS
___________________________________
John Randall QC
St Philips Chambers
1
Termination at Common Law1 : some ‘revision’
1.1
Conventional (post Hong Kong Fir) tri-partite categorisation of contractual
terms
1.1.1
‘Conditions’ in the strict sense
•
As Treitel2 puts it (at §18-041):
“If a contractual term relates to ‘a substantial ingredient in the identity of the
thing sold’, it will be classified as a condition, and its breach will entitle the
victim to terminate, on the basis that it would be unjust to require him to
accept and pay for something which differed in an important way from that
for which he contracted.”
•
theoretically possible re minor matters:
o
Bettini v Gye (1876) 1 QBD 183 per Blackburn J at 187:
“Parties may think some matter, apparently of very little importance, essential;
and if they sufficiently express an intention to make the literal fulfillment of
such a thing a condition precedent, it will be one”
o
Gumland Property Holdings v Duffy Brothers [2008] HCA
10 at [53] & [58]:
“very clear words” are required, but “under [general] contractual principles it
is possible by express provision in the contract to make a term a condition,
even if it would not be so in the absence of such a provision – not only in
order to support a power to terminate the contract … but also to support a
power to recover loss of bargain damages”
o
Lombard North Central v Butterworth [1987] QB 527
per Mustill LJ at 535-6 (by making time essential) –
discussed by Furmston3 at §7.43, and Opeskin (1990)
106 LQR 293 at 300-2
•
Judicial reluctance so to construe a contractual provision:
1
This talk is based on English and Australian law save where otherwise stated
th
Treitel, The Law of Contract, 13 edn (2011)
3
th
The Law of Contract, ed Furmston, 4 edn (2010)
2
1
o
Wickman v Schuler [1974] AC 235
1.1.2
‘Mere warranties’
1.1.3
‘Innominate’ or ‘intermediate’ terms (Hong Kong Fir v Kawasaki [1962]
2 QB 264)
General judicial preference (but not always: cf Bunge v Tradax
•
[1981] 1 WLR 711 at 715E Lord Wilberforce)
Wide variety of verbal formulations of test for whether a breach is
•
sufficiently serious to justify termination, often by reference to
doctrine of repudiation (Furmston op cit, §7.15 at fn 7) because
repudiation often implied from actual breach(es)
o
Substantially the whole benefit (older cases)
o
Going to the root of the contract
o
“To constitute repudiation, the threatened breach must be such
as to deprive the injured party of a substantial part of the
benefit to which he is entitled under the contract” Decro-Wall
International v Practitioners in Marketing [1971] 1 WLR 361
at 380A per Buckley LJ5
o
A substantial part of the totality (Rice v Great Yarmouth BC
[2001] 3 LGLR 4 (p41) CA at [38])
•
Treitel (op cit at §18-026) well summarises the position with regard
to the law’s judgment as to when a failure to perform / a breach is
‘substantial’:
“The question when a failure in performance is sufficiently serious to entitle
the injured party to terminate gives rise to very great difficulty. The frequent
references in the cases to breaches which ‘substantially’ deprive a party of
what he bargained for, or ‘go to the root’ of a contract, or which ‘frustrate’ his
purpose in making the contract are not particularly helpful in analysing the
law or in predicting the course of future decisions. …the courts … generally
classify a failure in performance with an eye on the consequences … If, on
balancing [the need to protect the injured party and the prejudice caused to
the other by termination]... they conclude that the injured party should be
allowed to terminate, they will classify the failure in performance as
‘substantial’ in order to produce the desired result …”
4
Confirmed as also reflecting Australian law by the High Court of Australia in Koomphatoo Local Aboriginal Land
Council v Sanpine Pty Ltd [2007] HCA 61, 233 CLR 115
5
Notwithstanding the opinion expressed by Lord Wilberforce in Federal Commerce and Navigation Co. Ltd. v
Molena Alpha Inc. (The Nanfri) [1979] AC 757 at 779C-D that there is no “divergence of principle” between this
formulation and that of Buckley L.J. in Decro-Wall International cited above, it is suggested that the older formulation
clearly presented a higher threshold for the innocent party to overcome, a view apparently supported by Lewison L.J.
in Ampurius Nu Homes Holdings Ltd. v Telford Homes (Creekside) Ltd. [2013] EWCA Civ 577, [2013] 4 All E.R.
377 at [48]
2
o
The learned author goes on (at §§18-026 to 18-036) to identify
the various factors which will influence the Court’s crucial
judgment on this question in any given case. These include
adequacy of damages as a remedy for the innocent party, the
ratio of failure to the performance undertaken, uncertainty as to
future performance, and ulterior motives on the part of the
terminating party (generally, seeking to get a better bargain
following movements in the market).
1.2
In addition to actual breaches, ‘anticipatory breach’
It will be recalled that either an unequivocal and communicated refusal (or
assertion of inability) of performance when due in the future (a.k.a. a
renunciation), or a clearly established inability to perform (a.k.a.
impossibility), entitle (but do not oblige6) the innocent party to terminate,
without waiting for the date on which actual performance is due to arrive.
However, as was famously observed by Asquith LJ in Howard v Pickford
Tool Co Ltd [1951] 1 KB 417 at 421:
“an unaccepted repudiation is a thing writ in water and of no value to
anybody: it confers no legal rights of any sort or kind” (emphasis added). It
follows that unless and until the anticipatory breach is ‘accepted’ by the
innocent party, it is the other party’s ‘right’ (as it may be expressed) to
change his attitude and become willing to perform or (as the case may be)
remedy his inability to perform when the due time arrive”
(though may result in an estoppel: viz Peter Turnbull v Mundus
Trading [1954] HCA 25, 90 CLR 235).
1.3
For a different 3 part analysis (to similar ultimate effect): see Rice v Great
Yarmouth BC supra at [35]-[36] per Hale LJ:
1.3.1
(1) Term breached is equivalent to a strict Condition
1.3.2
(2) Renunciation – However (though not mentioned in Rice supra):
1.3.2.1
Clearly goes beyond “simply walking away” (Rice [35]);
1.3.2.2
Furmston op cit at §7.20 refers to “an intimation that [the
promisor] will perform the contract in a manner which is
substantially different from that required” as amounting to a
renunciation;
1.3.2.3
6
Lord Wright in Ross T Smyth v Bailey [1940] 3 All ER 60 at 72B:
A principle recently reaffirmed by the UK Supreme Court in Société Generale v Geys [2012] UKSC 63, [2013] 1 AC
523
3
“the party alleged to have repudiated … may intend in fact to fulfil [the
contract], but may be determined to do so only in a manner substantially
inconsistent with his obligations, and not in any other way”
1.3.2.4
Fullagar J in Carr v JA Berriman Pty Ltd [1953] HCA 31, 89
CLR 327 said, with reference to the facts of that case (at 351):
"A reasonable man could hardly draw any other inference than that the
[other party] does not intend to take the contract seriously, that he is
prepared to carry out his part of the contract only if and when it suits him”
1.3.2.5
In Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd
[1989] HCA 23, 166 CLR 623 Mason CJ said :
“[22] There is a difference between evincing an intention to carry out a
contract only if and when it suits the party to do so and evincing an intention
to carry out a contract as and when it suits the party to do so. In the first
case the party intends not to carry out the contract at all in the event that it
does not suit him. In the second case the party intends to carry out the
contract, but only to carry it out as and when it suits him. It is much easier to
say of the first than of the second case that the party has evinced an
intention no longer to be bound by the contract or to fulfill it only in a manner
substantially inconsistent with his obligations and not in any other way. But
the outcome in the second case will depend upon its particular
circumstances, including the terms of the contract. In some situations the
intention to carry out the contract as and when it suits the party maybe taken
to such lengths that it amounts to an intention to fulfil the contract only in a
manner substantially inconsistent with the party's obligations and not in any
other way.”
1.3.2.6
In assessing whether a party’s words and conduct are such as to
found an inference of repudiation, the (objectively inferred7) risk
of repetition of breaches in the future is an important
consideration (Chitty on Contracts8 at §24-046 citing Maple
Flock v Universal Furniture [1934] 1 KB 148; and see also Rice
v Great Yarmouth BC supra at [38]);
1.3.3
(3) Cumulative breaches: “the test … is severe…” (Rice v Great Yarmouth
BC supra at [36]).
1.4
Provided the termination is communicated clearly and unequivocally, no
particular form of communication is required:
7
8
See Furmston op cit at §7-20
st
31 edn. (2012)
4
1.4.1
Normally will be express, or by clear implication;
1.4.2
Exceptionally, silence (really conduct/absence thereof9): Vitol SA
v
Norelf Ltd (The Samta Clara) [1996] AC 800 at 810-11 per Lord Steyn
(cited in Shell Egypt v Dana Gas [2010] EWHC 465 (Comm) at [31(i)];
summarised in Furmston op cit at §7.29).
2
Express Termination Clauses (ETCs)
2.1
Purpose for inclusion ETCs are of particular practical importance where the
contract is intended to operate over a long period of time, which is true of many
resource and energy contracts. It is no coincidence that several of the leading
cases in this area concern long-term contracts. The purposes for which ETCs
may be included in a contract are many and various.
2.1.1
The principal one, to which Treitel op cit draws attention (at §18-061) is
“to prevent disputes from arising as to the often difficult question whether
the failure in performance is sufficiently serious to justify termination; and
they take effect even though there is no substantial failure”. The event
entitling a party to terminate may not even constitute a breach at all,
although generally it will. ‘Certainty’ is served by making consideration of
Treitel’s question “of very great difficulty” unnecessary, at least for the
initial purpose of deciding whether or not there is a right lawfully to
terminate the contract. However, as is discussed below
• this certainty may come at a price to the terminating party, and
• the difficult question may still have to be addressed subsequently.
2.1.2
Another, less high-minded, purpose for which an ETC is often included in
a contract is to entitle the party with its benefit to terminate in
circumstances where it is unlikely that it would be so entitled at common
law. However, the counterpoint to this is a judicial tendency to construe
such clauses narrowly, and (where they are nevertheless held operable)
so as to limit the extent of the benefit which they confer (see e.g. §§2.2
above and 7 below).
2.2
Wording of the termination clause:
2.2.1
Judicial reluctance to construe an ETC as entitling termination for a minor
breach (similar to reluctance to construe an express term as rendering a
minor obligation a strict Condition – see §1.1.1 above, citing Wickman v
Schuler):
9
More specifically, the failure of Norelf to take any further step to perform the contract which was apparent to Vitol,
and from which Vitol knew that Norelf was treating the contract as at an end
5
•
Antaios Cia Naviera SA v Salen Rederierna AB [1985] AC 191 In “failing punctual and regular payment of the hire … or on any
breach …” – the words underlined (by me) were construed as
meaning ‘or on any repudiatory breach’
•
Rice v Great Yarmouth BC supra, where “If the Contractor ..
commits a breach of any of its obligations under the Contract” (giving
rise to a contractual right to terminate) was held to mean “... commits
a repudiatory breach of …”
•
Similarly Dominion Corporate Trustees Ltd v Debenhams
Properties [2010] EWHC 1193 (Ch), Kitchin J – a literal construction
of a clause in an agreement for lease whereby any breach of the
agreement entitled the innocent party to terminate was rejected as
‘flouting business common sense’
•
2.2.2
See discussion in Furmston op cit at §7.7
The exact wording of the clause must be satisfied before an ETC will be
held to have become operable.
In MMP v Antal [2011] EWHC 1120
(Comm), the contract provided that MMP should not “at any time, do
anything to affect adversely [Antal’s] name, Trade Marks or other
Intellectual property”. An ETC gave Antal a right of immediate termination
for breach of this clause. Flaux J held (at [77]) that conduct giving rise to a
(reasonable) fear that Antal’s name or intellectual property would be
damaged was not sufficient, and that only proof of actual damage would
suffice.
2.3
Effect of termination under an ETC:
2.3.1
Chitty10 rightly doubts the decision in Laing Management v Aegon
Insurance (1998) 86 BLR 70 insofar as HHJ Lloyd QC held that after a
termination pursuant to an ETC which did not also amount to acceptance
of a repudiatory breach the contract remained alive for the benefit of both
parties.11 Surely the true position is that :
•
“in both cases [the party terminating] is electing to terminate the
contract for the future (i.e. to bring to an end the primary obligations of
the parties remaining unperformed) … ‘Termination’ is capable of
meaning both a termination pursuant to [an ETC] and the acceptance
10
Op cit at §22-049
See at 110H-I. In Stocznia v Gearbulk supra, dicta apparently to like effect in the earlier case of UDT v Ennis
[1968] 1 QB 54 (CA) was dismissed by Moore-Bick LJ at [28]-[35] as “not altogether easy to understand … particularly
in the light of more recent expositions of the principles governing the law on repudiation and the doctrine of election
…It should be borne in mind that these were ex tempore judgments delivered at a time when the principles of
discharge by breach had not received the detailed analysis and exposition provided in the more recent authorities”
6
11
of a repudiation” (Dalkia Utitlites v Celtech [2006] EWHC 63 (Comm),
[2006] 1 Lloyd’s Rep 599 at [143] per Christopher Clarke J), but
•
Some non-primary clauses (e.g. classically arbitration clauses12) are
(or are conventionally construed as) intended to survive the
termination (in the sense described in the previous bullet point) of the
contract which contains them
2.3.2
A sounder approach is that of Moore-Bick LJ in Stocznia v Gearbulk
[2009] EWCA Civ 75, [2010] QB 27, at [34]:
“it is impossible for a party to terminate a contract, in the sense of
discharging both parties from further performance, whether by invoking a
term which entitles him to do so or by exercising his rights under the general
law, and at the same time treat it as continuing, since the two are
inconsistent. Either the primary obligations remain for performance, or they
do not.”
2.3.3
However an earlier dictum in the same judgment (at [20]) is less clear:
“In my view it is wrong to treat the right to terminate in accordance with the
terms of the contract as different in substance from the right to treat the
contract as discharged by reason of repudiation at common law. In those
cases where the contract gives a right of termination they are in effect one
and the same.”
The intended scope of this dictum is open to debate, and Edwin Peel writing in the
Law Quarterly Review13 questions whether this can be said of cases where (unlike
Stocznia v Gearbulk itself) the breach giving rise to a right to terminate under an
ETC is not sufficiently serious to give rise to a right to terminate at common law.
Issues which arise are considered further below, under ‘Changing Horses/Second
Thoughts’ and ‘Consequences’.
2.4
Strict compliance necessary?
2.4.1
Chitty op cit suggests that (contrary to some well-known older cases14,
and the position adopted by Treitel15) “Strict or precise compliance with
the termination clause may no longer be a necessary pre-requisite to a
valid termination”16
12
Heyman v Darwins [1942] AC 356
Affirmation by Termination, (2009) 125 LQR 378 at 380-81
14
Including The Mihalis Angelos infra; Madorf Peach & Co v Attica Sea Carriers [1977] AC 850
15
Op cit at §18-062
16
§22-049; also §22-051 at fn 227. See to similar effect Carter, ‘Termination Clauses’ (1990) 3 Journal of Contract
Law 90, at 101, and the (Australian) authorities there cited
7
13
•
Consistent with modern approach to notices in context of leases:
Mannai Investment v Eagle Star [1997] AC 749
•
Ellis Tylin v Co-operative Retail Services [1999] BLR 205 per HHJ
Bowsher QC at 217-20
•
Pan Foods v ANZ Banking Group [2000] HCA 20, 170 ALR 579
per Kirby J at [24]
•
See also Furmston op cit at §7.29: substance of the notice is what
matters
•
But in practice, this more liberal approach to the need for strict
compliance is seldom in evidence
2.4.2
However, so far as time provisions are concerned, the right to give notice
of termination under an ETC must not be anticipated, and such a notice
given even slightly prematurely is of no effect: The Mihalis Angelos
[1971] 1 QB 164 (CA); Afovos Shipping v Pagnan [1983] 1 WLR 195
(HL); Chitty op cit at §24-031; Furmston op cit at §7.7
2.4.3
In contrast to the common law position, in the recent UK Supreme Court
case of Société Generale v Geys17 Lady Hale SCJ, giving the leading
judgment on this issue, stressed the importance of the other party being
“notified in clear and unambiguous terms that the right to bring the contract
to an end is being exercised, and how and when it is intended to operate.”18
This observation was not limited to employment contracts, for she added
“These are general requirements applicable to notices of all kinds …”19 The
communication particularly relied on by the bank, which had previously told
Mr. Geys that it had “decided to terminate [his] employment with immediate
effect”,20 was its conduct in making a payment into Mr. Geys’ bank account
amounting to his full entitlement to salary and other allowances under the
ETC relied on. This was rejected as insufficient, Lady Hale stating that “It is
necessary … that the employee not only receive his pay in lieu of notice, but
that he receive notification … in clear and unambiguous terms, that such a
payment has been made and … in the exercise of the contractual right to
terminate … with immediate effect.”21 Lord Carnwath SCJ, agreeing “after
some hesitation”, acknowledged that this “may seem somewhat formalistic”
and that Mr. Geys “could no doubt readily infer the purpose of the payment
17
Concerning the attempted operation of an ETC in an employment contract
[2012] UKSC 63, [2013] 1 AC 523 at [57]
19
Ibid, loc. cit.
20
See ibid at [9] per Lord Hope DPSC
21
Ibid at [58]
18
8
once he became aware of it” (which the trial judge found was probably
before the crucial date22)
2.4.4
Moreover, under many ETCs a notice giving the contract breaker the
opportunity to remedy the default23 within a specified period is required
prior to a notice of termination, in which case the prescribed procedure
must be strictly followed.24 In particular:
•
The principle at §2.4.2 above is of particular significance
•
The opportunity to remedy must be clearly stated: Western Bulk
Carriers v Li Hai Maritime [2005] EWHC 735 (Comm), [2005] 2
Lloyd’s Rep 389 per Jonathan Hirst QC as a DHCJ at 406-7, and
•
By parity of reasoning with that in Afovos Shipping v Pagnan
supra, the full contractual period for remedy must be allowed before
any termination in reliance on it will be valid
CASE STUDIES:
compare - VITOL SA v NORELF LTD (common law), with
SOCIÉTÉ GENERALE v GEYS (E.T.C.)
2.5
Acting reasonably or in good faith necessary? Under English law it is not
necessary for a party exercising an ETC to do so reasonably or in good faith:
Anson’s Law of Contract25; Carter op cit at 103. The position in Australian law
may not now be the same: see Renard Constructions v. Minister for Public
Works per Priestley JA26; Burger King v. Hungry Jack’s27; Paterson,
Robertson & Duke, Principles of Contract Law.28
3
Changing Horses/Second Thoughts
3.1
The general rule “is that a promisee may rely on any available ground for
termination whether or not known at [the] time of the election to terminate. Thus,
the promisee is not usually required to justify an election to terminate on any
ground given at the time of the election” (Furmston, op cit, at §7.28)29. See
22
Ibid at [10] per Lord Hope
For a valuable discussion as to what amounts to remedying a default in the context of a commercial contract, see
Wickman v Schuler [1974] AC 235
24
Furmston op cit §7.29 at fn 12. See further the discussion of Lockland Builders v Rickwood at §4.2 below
25
th
29 edn (2010), 470
26
(1992) 26 NSWLR 234 (NSWCA) at 254-271
27
[2001] NSWCA 187, 69 NSWLR 558
28
4th edn (2012), 487-492
29
Contrast cases where the recipient of a termination notice has sought to argue that the notice must be treated as an
election to operate a provision of the contract markedly disadvantageous to the notice giver, although the notice giver
neither said nor intended as much: Bridge v Campbell Discount [1962] AC 600; Walkinshaw v Diniz [2001] 1
Lloyd’s Rep 632
9
23
British & Beningtons Ltd v North Western Cachar Tea [1923] AC 48 at 71-72
per Lord Sumner,30 cited by Lord Denning MR in The Mihalis Angelos supra at
193B, and in the High Court of Australia by Dixon J in Shepherd v Felt and
Textiles of Australia [1931] HCA 21, 45 CLR 359. The relevant part of the latter
case was approved and succinctly summarised by Latham CJ near the end of his
judgment in the leading Australian case of Tramways Advertising v Luna Park
[1938] HCA 66, 61 CLR 286 thus: “the defendant can justify the repudiation of the
contract upon any ground which in fact existed whether or not such a ground was
previously relied upon by him”.
3.2
Facts known or unknown As has recently been pointed out by Lloyd LJ, although
this principle is often used in relation to facts of which the terminating party was
unaware until later, there is “no reason why it should not be used in relation to facts
which were known to that party at the time”.31
3.3
Exception (1) – where an ‘election’ is involved
3.3.1
A recent example of the exceptional position where a party which has
served notice of termination under an ETC is thereby treated as bound by
an election not to terminate at common law for repudiatory breach is
afforded by Shell Egypt v Dana Gas [2010] EWHC 465 (Comm),
Tomlinson J.
He applied passages from a similar 2006 case, Dalkia
Utilities v Celtech supra, where Christopher Clarke J, having recognised
that prima facie an innocent party can rely on both a contractual right to
terminate and a common law entitlement to accept a repudiatory breach,
went on to state that if a notice
“makes explicit reference to a particular contractual clause, and nothing
else, that may, in context, show that the giver of the notice was not intending
to accept the repudiation and was only relying on the contractual clause; for
instance if the claim made under the notice of termination is inconsistent
with, and not simply less than, that which arises on acceptance of a
repudiation … In the present case markedly different consequences would
arise according to whether or not there was a termination under [the ETC] or
an acceptance of a repudiation… The same notice cannot operate to
produce
30
two
…
diametrically
opposing
consequences.
In
those
Also Boston Deep Sea Fishing and Ice Co v Ansell (1888) 39 Ch D 339 at 352, 364; Glencore BV v Lebanese
[1997] 1 All ER 514 (CA) at 526f; Stocznia v Latco (No 2) [2002] EWCA Civ 889, [2002] 2 Lloyd’s Rep 436 at [32],
cited with approval in Stocznia v Gearbulk supra at [44]
31
Reinwood v L Brown & Sons [2008] EWCA Civ 1090, [2009] BLR 37, at [51]
10
circumstances it should take effect in, and only in accordance with its
express terms, namely as a determination under [the ETC]” (at [143]-[144]);
3.3.2
Again, the judgment of Moore-Bick LJ in Stocznia v Gearbulk supra (in
which no such inconsistency was found, leaving the general rule
applicable – see at [39]-[42]) succinctly summarises the position:
“If the contract and the general law provide the injured party with alternative
rights which have different consequences … he will necessarily have to
elect between them and the precise terms in which he informs the other
party of his decision will be significant, but where the contract provides a
right to terminate which corresponds to a right under the general law
(because the breach goes to the root of the contract or the parties have
agreed that it should be treated as doing so) no election is necessary. In
such cases it is sufficient for the injured party simply to make it clear that he
is treating the contract as discharged… If he gives a bad reason for doing
so, his action is nonetheless effective if the circumstances support it” (at
[44], my underlining).
CASE STUDY: Shell Egypt v Dana Gas
3.4
Exception (2) - estoppel/waiver
3.4.1
In principle, the ordinary doctrines of estoppel/waiver are available, if on
the facts it can be shown (unusually) that the terminating party has made
an unequivocal representation (whether by words or conduct) on which the
other party has acted to its detriment: Glencore BV v Lebanese [1997] 1
All ER 514 (CA) at 527h-j, 530j. In this context at least, the doctrines
come to much the same thing, given that waiver can only apply to qualify
the general principle “in cases of, in effect, estoppel”32;
3.4.2
Despite earlier authority apparently to the contrary,33 in English law there is
no wider doctrine whereby termination notices may be held invalid on the
ground that reliance on them would be unfair or unjust: Glencore BV v
Lebanese supra at 529a-531c.34
Consequences of ETCs (1) – Loss of common law rights?
4
“In general, contractual rights of termination are treated as additional rights, not given in
substitution for common law rights” (Furmston35). Examples of cases applying or recognising
this principle abound, and include Union Transport Finance v British Car Auctions [1978] 2
32
per Lloyd LJ in Reinwood v L Brown & Sons [2008] EWCA Civ 1090, [2009] BLR 37, at [51]
Panchaud Frères v Etablissements General [1970] 1 Lloyd’s Rep 53 (CA)
Though as to the less certain position under Australian law see §2.5 above
35
Op cit, at §7.7 (and repeated at §7.29)
33
34
11
All ER 385 (CA),36 Afovos Shipping v Pagnan [1983] 1 WLR 195 (HL),37 and Lombard v
Butterworth [1987] QB 527 (CA).38
4.1
Exceptionally, however, express provision in a contract can expressly or impliedly
exclude a common law right to terminate in respect of a breach falling within the
scope of that provision:
“Whether the procedure laid down for termination in the contract excludes,
expressly or impliedly, the common law right to terminate further
performance of the contract in respect of a breach which falls within the
scope of the clause is a question of construction of the contract. When
interpreting [such a termination clause] the court will have regard to the
commercial purpose which is served by the termination clause and interpret
it in the light of that purpose.”39
4.2
3 examples where implied exclusion of the common law right in respect of actual
breaches was, exceptionally, found:
•
Lockland Builders v Rickwood (1996) 77 BLR 38 (CA), the example cited
in Chitty op cit §22-049 at fn 210, from which the following points may be
noted:
o
The building owner’s reliance on the common law right was, in effect,
an attempt to avoid the opportunity given to the builder by the ETC to
rectify its breaches within a specified period of a notice before a
termination notice could be served40
o
The ETC was not expressed to be without prejudice to the owner’s
rights at common law41
o
The ETC was not construed as excluding all rights to terminate at
common law, but only rights to terminate in respect of a breach falling
within the scope of the ETC
o
Both Russell and Hirst LJJ noted that the clause would not have been
construed as having impliedly excluded the right to terminate if the
contract breaker had evinced a clear intention not to be bound by the
terms of the contract,42 in other words a repudation by renunciation
36
See at 392a-b per Bridge LJ
See at 201 per Lord Hailsham LC
38
See at 543C-545F per Nicholls LJ
39
Chitty op cit at §22-049
40
As to which note BSkyB v HP Enterprise [2010] EWHC 86 (TCC), Ramsey J at [1366], final sentence. Schuler v
Wickman supra can be viewed as another such case, given the presence of the ETC in clause 11(a) of the contract
there under consideration (see at 249C-G, 252A-C (& 264A-B), 260A-B and 271C-H.
41
And compare Schuler v Wickman supra per Lord Morris at 259G-H
42
See at 46 and 50 respectively
12
37
rather than simply actual breaches (as to which see the discussion at
§1.3.2 above)
•
Crane and Co v Wittenborg (CA, unreported, 21 December 1999), where it
was held that a provision in a charterparty which expressly dealt with what
the parties were entitled to do in the event of any “substantial breach” –
terminate immediately by notice in the case of a non-remediable
“substantial” breach and give notice triggering a period for remedy where the
breach was remediable – did provide a complete code for the parties rights
in the event of a repudiatory breach. This was because (per Mance LJ at
[21]) the Court found doubted “whether there is any distinction to be drawn
between a “substantial” breach required by the clause and a breach of
condition or repudiatory breach.”
•
The majority decision on this point in the Federal Court of Australia in
Amman Aviation v Commonwealth [1990] FCA 5543 per Davies J at [11][15] & Sheppard J at [2]-[15].
4.3
An ETC may also operate so as, in effect, to set a minimum level of seriousness
required before a breach of an innominate or intermediate term may be relied on
as justifying termination at common law:
•
“… circumstances otherwise within the scope of the [ETC] but falling short of
the precise terms would in my judgment not give rise to the right to terminate
at common law … to justify termination at common law something ‘worse’ or
not addressed by those provisions would be required” per Langley J in
Amoco (UK) Exploration v British American Offshore [2001] All ER (D)
244 (Nov) at [104]
•
“…if a breach of a term had to reach a degree of seriousness before [an
ETC] could be applied, it is unlikely that a breach which was less serious
would, by itself, amount to a repudiatory breach” per Ramsey J in BSkyB v
HP Enterprise [2010] EWHC 86 (TCC), at [1366].
CASE STUDY: Amoco (UK) Exploration v British American Offshore
4.4
The general presumption, however, is, reflecting the opening paragraph 4 above,
that an ETC does not exclude the parties’ common law right to accept a
repudiatory breach of contract unless there are clear words to that effect: Dalkia
Utilities v Celtech supra at [21], and compare e.g. South Oxon DC v SITA
43
A case better known for the subsequent appeal to the High Court of Australia on issues relating to damages and
remedies [1991] HCA 54, 174 CLR 64
13
[2007] Env LR 13 at [174]-[178] per David Steel J (insufficient indication that the
ETCs in that case contained a complete code for termination in the relevant area).
CASE STUDY: Dalkia Utilities Services v Celtech International
Consequences of ETCs (2) – Need the termination be immediate?
5
Hitherto,44 the conventional view of the position at common law has been that termination
by acceptance of a repudiation has to be with immediate effect upon communication of that
acceptance, even though in some circumstances this may seriously detract from the
commercial value of the right for the innocent party. In some contracts (e.g. for the longterm provision of a service, which the promisee itself owes a legal obligation to others to
provide that same service) it is not practically possible to give notice of acceptance of a
repudiatory breach so that the contract terminates immediately. The taking of preparatory
steps for the service to be provided by another in advance of an acceptance (with
immediate effect) of the repudiatory breach would involve the innocent party itself running
the risk of being accused of repudiating the contract, and losing its potentially important
right to loss of bargain damages. In contrast, an ETC may well provide for the right to
terminate being exercisable or taking effect upon the expiration of a specified period of
notice or at a specified future date: Anson op cit at 471-72; compare e.g. the ETC in
Walkinshaw v Diniz [2001] 1 Lloyd’s Rep 635, which the driver Mr Diniz sought to
exercise.45
5.1
Unlike an ‘anticipatory breach’ (as to which see §1.2 above), an actual breach
does have immediate legal effects, if only to give rise to a cause of action for
damages. If the breach is serious enough, or of a Condition, it may also give rise
to a right to terminate at common law. In this situation, although it has been said
that there is no ‘via media’ for the innocent party, who must elect between
affirmation and termination, the law does give the innocent party a reasonable
time before he has to make up his mind between these inconsistent courses. As
Rix LJ put it in Stocznia v Latco No 2) [2002] EWCA Civ 889, [2002] 2 Lloyds
Rep 436 at [87]:
“… there is of course a middle ground between acceptance of repudiation
and affirmation of the contract, and that is the period when the innocent
party is making up his mind what to do. If he does nothing for too long, there
may come a time when the law will treat him as having affirmed. If he
maintains the contract in being for the moment, while reserving his right to
44
But see now at §5.7 below
See headnote at 632 for clauses 7.1, 9.2(b) and 9.4, and the judgment of Tomlinson J at [46] for the exercise of the
ETC, and at [106] for the judge’s conclusion (decision upheld on appeal (without these points being challenged) at
[2002] EWCA Civ 180, [2002] 2 Lloyd's Rep 165). See further at §5.5 below
14
45
treat it as repudiated if his contract partner persists in his repudiation he has
not yet elected.” 46
5.2
In the case of an actual breach of contract, it is the proper construction of the
communication (here, an express written communication) that determines whether
the innocent party has clearly and unequivocally communicated its intention either
to treat the contract as at an end or, as the case may be, to affirm. In Yukong
Line v Rendsburg Investments [1996] 2 Lloyd’s Rep 604 at 608 Moore-Bick J
took the view that
“the Court should not adopt an unduly technical approach to deciding
whether the injured party has affirmed the contract and should not be willing
to hold that the contract has been affirmed without very clear evidence that
the injured party has chosen to go on with the contract notwithstanding the
other party’s breach.”
5.3
In order to amount to an affirmation, the communication in question must
have been an unequivocal representation to the effect that the innocent
party was unreservedly electing to continue with the contract, made either
expressly or by implication from actions, or statements of an intention to act
in a manner, inconsistent with accepting the breach as discharging it from
further performance – see Yukong Line v Rendsburg Investments supra
at 608 and Cobec Brazilian Trading & Warehousing Corpn v Alfred C
Toepfer [1983] 2 Lloyd’s Rep 386, 393 (CA).
5.4
In Harrison v Norwest Holst Group Administration Ltd [1985] ICR 668
CA an employee complained of unfair dismissal based upon an anticipatory
repudiation in the form of a demotion to take effect from a specified future
date, communicated to him by his employer.
However, although the
employer had been in anticipatory repudiatory breach, it was held that the
employee had not (in the letter he relied on) unequivocally accepted such
repudiation before the breach had been remedied by the employer
withdrawing the demotion (which it did before the specified future date had
arrived).
Hence the following passage from the judgment of Sir Denys
Buckley at 683, though important, was clearly obiter:
46
Here again, the law’s flexibility produces uncertainty for the resolution of any given case (cp the citation from Treitel
at §1.1.3 above). As the Law Commission has recently put it in the context of Sale of Goods, “The flexibility of the
factual approach to a ‘reasonable period’ allows a great number of factors to influence the court, helping it to achieve a
fair result in the individual case. However, this flexibility means that it is often not possible to predict whether the
reasonable period has expired in a given case” (Consultation Paper No 188 (October 2008), Consumer Remedies for
Faulty Goods, Part 3, The Right to ‘Reject’ in UK Law, at §3.2)
15
“The effect of an acceptance of an anticipatory repudiation must, in my view,
be the immediate termination of the contract. By accepting a repudiation,
the innocent party elects to treat the contract as abrogated at the moment
when he exercises his election.
He cannot, in my judgment, affirm the
contract for a limited time down to some future date and treat it as abrogated
only from that future date.”.47
5.5
This dictum was applied by Tomlinson J in Walkinshaw v Diniz supra at [51].
This was a case brought by a Formula 1 racing driver, Mr Diniz, against (in effect)
the Arrows team.
The defendant unsuccessfully argued that the driver’s
(allegedly ineffective) notice to terminate under an ETC at the end of the calendar
year was itself a repudiatory breach, which the employer had accepted as
terminating the contract not immediately but after the last race of the F1 season.
One of the grounds on which this argument was rejected was that, in accordance
with the above dictum of Sir Denys Buckley, an acceptance postponed so as to
take effect on a future date was not possible in law.
5.6
An argument that the law’s requirement that an acceptance must be with
immediate effect is limited to cases of anticipatory breach was rejected in South
Oxon DC v SITA supra at [168], David Steel J holding that there was no relevant
distinction in this regard between actual breaches and anticipatory breach.
5.7
ETCs therefore have a distinct advantage over the common law right for the
injured party in such cases. However there are early signs that there may be a
judicial willingness to develop the common law in this regard. In Shell Egypt v
Dana Gas supra Tomlinson J (now LJ), having acknowledged that he himself had
applied the principle formulated by Sir Deny Buckley in Harrison v Norwest
Holst (set out in §5.4 above) in Walkinshaw v Diniz supra, intriguingly continued
(at [27]):
“There must I think be limits to that principle, which did not need to be
explored in either of those two cases. It would perhaps be surprising if there
were an inflexible rule that an acceptance of a repudiation can only be
effective if it purports to bring about immediate termination in circumstances
where the contract calls for no performance from either party in the interval
47
To similar effect, in one of the leading Australian judgments on the termination of contracts at common law, Jordan
C.J. (N.S.W.) said that such a termination when communicated “is at once operative”: Tramways Advertising v Luna
Park (1938) 38 S.R. (N.S.W.) 632, 643
16
before termination is expressed to take effect. In such circumstances there
would surely be no affirmation.”
Consequences of ETCs (3): Can the right to terminate be exercised in advance of the time
when the relevant performance becomes due?
6
By contrast, in this respect the common law affords greater flexibility to the innocent party.
6.1
In the case of an ‘anticipatory breach’ (of either type mentioned at §1.2 above),
there is a common law right to terminate with immediate effect, and without
waiting for the time when actual performance is due to arrive;
6.2
By contrast, the wording of most ETCs links the right to terminate to actual
breaches (see §2.2.2 above), and, as explained at §2.4.2 above, the right to give
notice of termination under an ETC must not be anticipated, and such a notice
given even slightly prematurely is of no effect.
Consequences of ETCs (4) – Measure of damages
7
By ‘loss of bargain damages’, I mean compensation for loss of the benefit of the other
party’s future performance. Given the notorious volatility of world energy prices over the
years, in a long-term contract the sums at stake can be huge.
7.1
Are loss of bargain damages only recoverable on a termination at common law?48
7.1.1
Where a contract is terminated by acceptance of a repudiation of the
contract, the innocent party can ordinarily recover loss of bargain
damages.
That may well apply even where other remedies are also
available to, and claimed by, the innocent party (for example, an express
right to recover an instalment already paid, as in Stocznia v Gearbulk,
supra), provided its recovery is not inherently inconsistent with a claim for
loss of bargain damages (for example, a claim for the recovery of wasted
expenditure)
7.1.2
As to the position where the termination takes place pursuant to an ETC
on grounds which do not also amount to a common law repudiation, Chitty
puts it thus: “[W]here a contracting party terminates further performance of
the contract pursuant to a term of the contract, and the breach which it has
caused it to exercise that power is not a repudiatory breach, the party
exercising the right to terminate may only be entitled to recover damages
in respect of the loss which it has suffered at the date of termination and
48
For a more detailed discussion of the issues raised see Randall, Express Termination Clauses in Contracts [2014]
CLJ 112, 129-138
17
not for loss of bargain damages”49 (emphasis added). I would suggest that
in Australian law (see Shevill v Builders Licensing Board infra), and (at
least until recently50) English law too,51 the position is more clear cut, and
absent an express contractual provision for the recovery of loss of bargain
damages alongside the ETC, they are not recoverable
7.1.3
As Chitty notes,52 the highest appellate courts in Commonwealth
jurisdictions have taken different views on the point
•
In giving the judgment of the Supreme Court of Canada in Keneric
Tractor Sales v Langille (1987) 43 DLR (4th) 171, Wilson J opined
(at paragraph [25]):
“damages should be assessed in the same way in both cases. Repudiation
may be triggered by either the inability or the unwillingness of a party to
perform his contractual obligations. The same is true of a breach of contract
that gives rise to a right to terminate; it may be the result of inability or
unwillingness to perform. The breach and the repudiation are merely
subdivisions within a general category of conduct, i.e., conduct which gives
the innocent party the right to treat the contract as terminated. Thus, there is
no conceptual difference between a breach of contract that gives the
innocent party the right to terminate and the repudiation of a contract so as
to justify a different assessment of damages when termination flows from the
former rather than the latter. General contract principles should be applied in
both instances.”
•
By contrast, in Shevill v Builders Licensing Board [1992] HCA 47,
149 CLR 620 the High Court of Australia held that where a contract
is terminated pursuant to an ETC on grounds which do not also
amount to a common law repudiation, prima facie loss of bargain
damages are not recoverable. As Gibbs CJ observed at [8], “it does
not follow from the fact that the contract gave the [innocent party] the
right to terminate the contract that it conferred on it the further right to
recover damages as compensation for the loss it will sustain as a
result of the failure of the [other party’s performance] for the rest of
the [contractual] term”
7.1.4
Of course, the contract may include alongside an ETC an express provision
entitling the party terminating under the ETC also to recover damages for
49
Op cit, at §22-049
Though see now Kuwait Rocks Co. v AMN Bulkcarriers Inc. (The Astra) [2013] EWHC 865 (Comm), [2013] 2
Lloyd’s Rep. 69, as to which see Randall, fn. 48 above, at 137
51
See Financings v Baldock [1963] QB 104 (CA) at 111-13, 114-15 and 120-21
52
Op cit, at §22-049, esp fn 215
18
50
loss of the other party’s future performance. In principle such a clause is
effective, unless it is invalid under the common law rule against penalties.
Provided the recovery expressly provided for is not extravagant, and follows
the sort of recovery which the common law would allow, it is unlikely to be
caught by that rule: see e.g. Esanda Finance v Plessnig [1989] HCA 7,
166 CLR 131, and Dalkia Utilities v Celtech supra at [122] (clauses not
penal); contrast Financings v Baldock [1963] 2 QB 104 (CA), AMEV-UDC
Finance v Austin [1986] HCA 63, 162 CLR 170, and Dalkia Utilities v
Celtech supra at [123] (clauses penal)
CASE STUDY: Dalkia Utilities Services v Celtech International
7.1.5
It is suggested that, consistently with the rule that the terminating party may
rely on any available ground for termination which was in fact available at
the time of termination, whether or not known, and whether or not previously
relied upon by him (see §3.1 & 3.2 above), if a party who served a notice of
termination relying (only) on an ETC was in fact also entitled to terminate at
common law for a repudiation, then:
•
he may subsequently rely on the latter right, and accordingly recover
loss of bargain damages in the usual way: see Progressive Mailing
House v Tabali [1985] HCA 14, 157 CLR 17, and Stocznia v
Gearbulk supra (in particular in respect of the termination letters re
hulls 24 and 25) at [44]-[45], and
•
at least where the grounds for termination under the ETC and the
common law were the same, any argument that the effective cause
of his loss was not the other party’s breach, but his own decision to
exercise his rights under the ETC will be rejected, on the grounds
that such a contract proceeds on the footing that if the innocent party
chooses to exercise his rights under the ETC, the other party’s
breach is to be viewed as the effective cause of the contract’s
termination (Stocznia v Gearbulk supra at [36]; quaere the
legitimate scope of the contrary views expressed by Opeskin in his
(earlier) article ‘Damages for breach of contract terminated under
express terms’ (1990) 106 LQR 293 at 315 (text to his fn 97, and
accompanying citations).
7.1.6
A related issue may arise with regard to the terminating party’s so-called
‘duty to mitigate his loss’. A breach of this duty (by failing to take reasonable
action to avoid the loss) will be taken to break the chain of causation
between the breach and the loss.
19
•
In the case of The Solholt [1983] 1 Lloyd’s Rep 605 (CA) a buyer
exercised a right under an ETC to terminate its contract to purchase
the eponymous vessel (or US$5M) for (very slightly) late delivery,
despite (i) the sellers having repeatedly sought a short extension of
time to enable the sale to go through (at the contract price), (ii) the
buyers still needing such a vessel, (iii) nothing being shown to be
wrong with The Solholt, and (iv) its market value having risen since
the contract by 10%, to $5.5M. The buyer’s actions were described
by Sir John Donaldson MR as “something of a mystery”, adding that
it was “this combination of a rise in market value and cancellation
which has created an unusual situation and may have created
unusual consequences in law” (at 607)
•
The experienced trial judge (Staughton J) held that on the facts the
buyers ought reasonably to have negotiated a new contract of
purchase with the sellers, and that if they had done so they would
have secured a new contract to buy at the original contract price, and
the Court of Appeal declined to interfere with this finding (at 609-10).
Accordingly, the buyers were not entitled to recover their $½M loss.
•
The Court’s judgment (at 608) emphasises the importance of not
confusing the unfettered right to terminate a contract under an ETC
with a right necessarily to recover all losses suffered in consequence
of so acting (the latter right is not absolute, and depends on proof of
causation, which is negated by a failure to take reasonable action to
mitigate those losses).
•
Although the same result could follow a termination at common law,
given that such a termination would generally arise in the context of
the other party having committed a repudiatory breach, it is less likely
that a court would nevertheless hold, as a matter of fact, that the
innocent party ought reasonably to have negotiated and entered into
a new contract with him.
7.2
Contract draftsman attempt to circumvent the rule mentioned at §7.1.2 above in a
number of ways:
7.2.1
By expressly providing for loss of bargain damages (or an equivalent
sum) to be payable on a termination under the ETC. As mentioned at
§7.1.4 above, such a clause will be effective provided it is not penal in
nature or effect
20
7.2.2
By expressly providing that an (otherwise) minor breach shall be a
breach of Condition in the strict sense (see at §§1.1.1 above)
7.2.3
By expressly providing that the time for performance of the relevant
obligation (late performance of which would not otherwise be of sufficient
seriousness to amount to a repudiation) shall be ‘of the essence’: see
Lombard v Butterworth supra53
Consequences of ETCs (5): Reducing the risk of an ‘own goal’ by attempted termination
8
A further consequence of Treitel’s question of very great difficulty is that an ‘innocent’ party,
faced with a breach of contract by the other party, may conclude that the breach was
sufficiently substantial to entitle him to terminate at common law54 and serve a notice
‘accepting’ the breach as terminating the contract, only to find out some time later that a judge
(or even an appeal court) takes a different view. In the meantime, an astutely advised contract
breaker may have leaped at the opportunity itself to terminate the contract, by treating the
‘innocent’ party’s termination notice as itself a repudiation of the contract, and ‘accepting’ that
repudiation as terminating the contract (if only thereby to avoid potential liability for loss of
bargain damages). The presence of an ETC may assist in saving the ‘innocent party’ from his
actions backfiring.
8.1
Under ordinary contract principles a party may assert a genuinely held view of the
effect of, or position under, a contract (e.g. that it has been validly terminated under
an ETC), because he is mistaken in good faith as to the true contractual position, and
in those circumstances he will not, without more, be taken to have repudiated the
contract, at least where (a) he makes it clear by his words and actions that he is
ready and willing to abide by his true contractual obligations as determined by the
court, and (b) his actions do not have the immediate effect of depriving the other
party of a substantial part of what he is entitled under the contract:
Woodar v Wimpey [1980] 1 WLR 277 (HL), in particular at 283A-B per Lord
Wilberforce55 and 295A-H per Lord Keith of Kinkel,56, as reconciled with The Nanfri
[1979] AC 75757 in Dalkia Utilities v Celtech supra per Christopher Clarke J at
[148]; Vaswani v Italian Motors [1996] 1 WLR 270 (PC); Eminence Property
Developments v Heaney [2010] EWCA Civ 1168, [2010] 3 EGLR 165, in particular
53
At 535-36 per Mustill LJ
Or that the term breached constitutes a strict Condition of the contract
55
Citing James Shaffer Ltd v Findley Durham & Brodie [1953] 1 WLR 106 (CA) and Sweet & Maxwell Ltd v
Universal News Services Ltd [1964] 2 QB 699 (CA)
56
Also citing Ross T Smyth and Co Ltd v T D Bailey and Son & Co (1940) 164 LT 102 at 107 per Lord Wright
57
A case of “cynical and manipulative conduct [on the part] of the ship owners” per Etherton LJ in Eminence Property
Developments v Heaney infra at [62]
21
54
at [61]-[64] per Etherton LJ for an elegant summary of the courts’ approach to such
cases.58
8.2
It is in practice a good deal easier to deploy such an argument where the basis for
termination relied on, albeit ultimately unsuccessfully, was an ETC present in the
contract. Lord Wilberforce drew attention to that aspect of the facts in Woodar v
Wimpey supra:
“… it would be a regrettable development of the law of contract to hold that a
party who bona fide relies upon an express stipulation in a contract in order
to rescind or terminate a contract should, by that fact alone, be treated as
having repudiated his contractual obligations if he turns out to be mistaken
as to his rights.”59
As Carter has put it, it was the presence of an ETC in the contract underlying “which
saved Wimpey”.60
8.3
However, it should be emphasised that it is by no means always the position that an
attempted but ineffective termination in reliance on an ETC will not be held itself to
have constituted a repudiation provided that it was attempted in good faith. In Dalkia
Utilities v Celtech supra, the time for Dalkia’s performance of its primary obligations
(which it refused on the basis that its termination had been effective) had arrived, and
there had been no discussions between the parties about leaving the true position to
be resolved by the court, with Dalkia then to perform if it turned out to be wrong. Had
the judge held Dalkia’s termination to be ineffective (which in the event he did not),
he would have held the same to have amounted to a repudiation by Dalkia, which
Celtech had validly accepted as terminating their contract (at [149]-[151].
advisers beware!
Legal
61
Some conclusions
9.1 The advantages of effecting a termination at common law include the following:
•
Preserves a claim to loss of bargain damages
•
Greater flexibility as to facts justifying termination (provided overall they are sufficient to
constitute a repudiation)
58
See to similar effect in Australia DTR Nominees v Mona Homes [1978] HCA 12, 138 CLR 423, and in New Zealand
Starlight Enterprises v Lapco Enterprises [1979] 2 NZLR 744
59
[1980] 1 WLR 277 at 283D-E, emphasis added
60
Op cit at 93-94
61
Court proceedings, even if brought on quickly enough, cannot be used to test the position in advance, because a
declaration of entitlement to terminate a contract which is still on foot is regarded as a hypothetical matter: Galaxy
Communications v Paramount Films of Australia [1998] NSWCA 48, Stein JA unsympathetically observing at [36]
that an innocent party’s concern that “they may elect to give a notice of termination which is later found to be invalid
and amount to a repudiation of the agreements … is a risk which [they] have to weigh in electing to give a notice of
termination”
22
•
If the entitlement to terminate has arisen, there is no obligation to offer the other party
the opportunity to remedy its breaches first
•
Anticipatory termination may be possible, without first waiting for the due date for
performance to arrive
•
Relief from forfeiture (if otherwise potentially available) is less likely to be granted to the
contract breaker
•
It may be less easy for the other party successfully to rely on any exclusion clause, in
particular if its repudiatory breach was deliberate
•
Any efficacious means of communication will be effective in law.
9.2 The advantages of effecting a termination under an ETC include the following:
•
Greater certainty as to whether the right to terminate has arisen
(though the grounds for doing so are limited by the exact wording of the ETC)
•
In principle, there is no need to establish a repudiatory breach as such
(though if the specified grounds under the ETC are minor/trivial, the ETC may be
construed so as to require a more serious breach)
•
Termination taking effect on the expiry of a period of notice and/or at a specified future
date may well be possible
•
It may be easier to run a Woodar v Wimpey defence, should you need to do so
•
If there is no necessary inconsistency in the consequences, you may be able to rely on
common law repudiation later, should it become necessary or desirable.
© JOHN RANDALL QC
JULY 2014
ST PHILIPS CHAMBERS
55 TEMPLE ROW
BIRMINGHAM B2 5LS
jrandall@st-philips.com
23