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Part II Performance of the Obligation, 6 The Effect of Failure to Perform on Time

John E. Stannard

From: Delay in the Performance of Contractual Obligations (2nd Edition)

John Stannard

From: Oxford Legal Research Library (http://olrl.ouplaw.com). (c) Oxford University Press, 2023. All Rights Reserved. Subscriber: null; date: 06 June 2023

(p. 129) The Effect of Failure to Perform on Time

6.01  Where there has been a delay in performance, the promisee will generally want to know what can be done about it. There are many different remedies for delay, and these will be considered in more detail in the third part of the book, but the availability of any particular remedy will depend on how the delay is categorised in legal terms. Thus for instance, where delay amounts to a breach of contract, the promisee will always be able to recover damages, but there will be no right to terminate performance unless the breach is a sufficiently serious one. Conversely, if the delay gives rise to a failure of condition precedent in the context of a unilateral contract or option, the other party will be able to refuse to perform, but will have no right to damages. But if the delay amounts to a breach of condition or some other breach going to the root of the contract, the promisee can both terminate performance and claim damages. One of the difficulties in this branch of the law is that delay may be categorised in many different ways, all of which give rise to different remedies. In the present chapter we shall consider no less than seven such categories. Some of these are elemental, in the sense that they stand alone, whilst others involve a combination of two or more of the elemental categories. The significance of this will become apparent in the ensuing discussion.

(p. 130) A.  Delay as a Breach of Contract

6.02  First of all, delay may amount to a breach of contract. Where this is the case, the promisee will be able to claim damages;1 a breach of contract may sometimes also give rise to the right to claim specific performance or bring an action for the price,2 or to issue a notice making time of the essence,3 or to terminate performance.4 For delay to amount to a breach of contract, five requirements must be met: the delay must be in the performance of an obligation under the contract; the time for performance must have passed; the promisor must have no lawful excuse for his or her failure to perform; he or she must have failed to come up to the requisite standard of performance; and the risk of the delay must be on the promisor and not the other party.

(1)  Obligation under the contract

6.03  Not all provisions under a contract for which a time is set will be obligations under that contract. Thus in a unilateral contract the promisor may agree to do a certain act if the promisee fulfils a certain contingency, such as walking to York, but the promisee is not obliged to fulfil that contingency.5 If there is no promise to fulfil the contingency in the first place, there can be no obligation to fulfil it at any particular time, and the failure to do so cannot amount to a breach. It follows that those remedies which depend on the existence of a breach, most notably damages, are not available in cases such as these.6 There are other remedies, however, which do not require proof of a breach, and these may be available; thus the other party may have the right to refuse to perform7 or to serve a notice making time of the essence.8

(2)  Time for performance passed

6.04  Damages are not available for breach (as opposed to anticipatory repudiation9) unless the time for performance of the obligation has passed and the obligation has still not been performed.10 But where this is the case, the promisee can (p. 131) recover damages if the promisor fails to perform at the time specified.11 This applies whether or not time is of the essence, so long as the time set in the contract was intended to be binding on the promisor.12 We have also seen that where no time is set for performance, the promisor is bound to perform within a reasonable time.13 In either case, failure to perform on time is a breach of contract for which damages can be claimed.

(3)  No lawful excuse for failure to perform

6.05  Even where the promisor has failed to perform on time, there may still be no breach if there is a lawful excuse for that failure. Thus, for instance, the promisor may be protected by an exemption or exclusion clause,14 or he or she may be able to rely on a variation of the contract, or some waiver or estoppel by the promisee.15 Another possibility is that the obligation in question may have been validly discharged by breach or frustration.16 These matters have been fully discussed in the previous chapter.17

(4)  The standard of performance

6.06  A related question is whether the promisor is automatically liable for failure to perform at the due date, or whether it is enough to do the best one can. Much depends on the way the obligation is drafted,18 but in the present context liability is generally strict, and the promisor cannot use ‘best endeavours’ as an excuse. Thus a seller of goods is liable for late delivery even where the delay is due to causes beyond his or her control, such as a breakdown in supplies19 or the lack of availability of shipping space.20 In the same way, the obligation of a charterer to provide a cargo is said to be absolute,21 and a builder cannot rely on a failure in the supply of bricks as an excuse for delay in carrying out the work.22

6.07  The picture is somewhat different where no time is set for performance. Here performance must be rendered within a reasonable time, and the promisor will not be liable for delays caused by supervening events beyond his or her control.23(p. 132) However, this reasoning cannot be pushed too far; just because the time of performance is determined by reasonableness does not mean that the standard of performance is necessarily one of reasonable care only. This can only be determined by the proper construction of the obligation in question.24

(5)  The question of risk

6.08  Sometimes when a delay occurs it is not at all clear who should bear the responsibility for it. This issue is often classified as a question of ‘risk’. Take a charterparty where the ship is held up because of delays in loading the cargo; is this delay the responsibility of the charterer or the shipowner? Or take a conveyance where the completion date is not met because the necessary searches have not been done with due diligence; is this the responsibility of the vendor or of the purchaser? Or say that in a building contract one subcontractor is unable to start work because another subcontractor is not off the site in time; who must bear the responsibility as between the first subcontractor and the main contractor? The question of risk has to be determined by a close analysis of the contract and of the relevant legal rules which govern it. In particular, a promisor may be made legally responsible for delay either expressly or by implication. The responsibility is express when the parties have inserted a term in the contract to that effect; it is implied where such term exists by implication either of fact or of law.

(a)  Risk allocated by express provision

6.09  The contract may allocate responsibility for delay in a number of different ways. The first and most obvious is where the promisor agrees to do something by a certain date; needless to say, this sort of thing is extremely common,25 and provision is made for it in many standard form contracts.26 Secondly, the promisor may agree to perform at a certain specified rate; thus in a charterparty the shipowner may agree to sail at a certain speed,27 or the charterer may agree to load or unload the cargo at so many tons28 or so many hatches (p. 133) per day.29 Thirdly, the speed of performance may be set by a standard of due diligence, as where a shipowner agrees to sail ‘with all convenient speed’,30 or a charterer to discharge the cargo ‘with all despatch as customary’.31 Finally, the promisor may agree to do something without any reference being made to time at all; here the law implies an obligation to perform within a reasonable time.32 All four cases have this in common, namely that if delay results from any failure in the performance of the relevant obligation, the promisor will in the absence of good excuse be held liable for that delay.

6.10  Sometimes the question of risk can involve the court in some very nice questions of construction. In The Mediolanum33 a charterer ordered the ship to a certain port for bunkering. Because of congestion in the port, the refinery authorities sent the ship elsewhere, where she ran aground. At first instance it was held that the charterers were responsible for the delay, as they were in breach of their ‘safe port’ warranty; having delegated the choice of bunkering berth to the refinery authorities, they had to bear the responsibility for their decisions.34 But on appeal it was held that the owners had to bear the loss, since the refinery authorities were not to be regarded as agents of the charterers.35 Again, in The Laura Prima36 the obligation of a charterer to nominate a berth ‘reachable on arrival’ was coupled with an exemption clause to the effect that delays caused to the vessel getting in to the berth for any reason outside the charterer’s control were not to count against laytime. Notice of readiness to load was given by the shipowners despite the fact that the ship was unable to reach the berth because of congestion. The question then arose whether laytime had commenced, and who should bear the risk of congestion in the port. At first instance it was held that the charterers should bear the risk, since they had failed to nominate a berth reachable on arrival.37 The Court of Appeal then reversed this on the ground that the charterers were covered by the exemption clause.38 Finally, the House of Lords reaffirmed the liability of the (p. 134) charterers on the ground that the clause in question only applied in the event of delays occurring beyond their control subsequent to a proper nomination being made.39 All in all, these cases show that the question of risk can sometimes only be decided by a detailed construction of the contract, bearing in mind both the factual matrix and the expectations of the parties in contracts of that sort.40

(b)  Risk allocated by implication

6.11  Even where the contract does not expressly provide who bears the responsibility for delay, it may do so by implication. Such implication, as is the case generally, can be by fact or by law.41 In some cases it will be obvious who is responsible for the delay; thus if a delay in completion in a conveyancing contract is found to be due to the default of one of the parties, that party will be held liable in damages.42 Again, in a c.i.f. contract for the sale of goods the seller will generally be liable for delays in delivery, but if the delay is due to the buyer’s failure to nominate a port of discharge in sufficient time to enable the vessel to sail there, it will be the buyer who will have to pay damages to the seller.43 In the same way, an obligation as to time imposed on one party may imply a similar obligation on the part of the other, so that where a buyer of goods under a c.i.f. contract was bound to pay against shipping documents not later than twenty days after the date of the bill of lading, the seller was held bound to tender the documents in such a time as to enable him to do so.44

6.12  Other cases involve terms implied by law in certain classes of contract. In some cases the implication is by statute; thus for instance, to take an obvious example, the Sale of Goods Act makes the seller liable for delays in delivering the goods and the buyer liable for delays in accepting the goods and paying for them.45 In the same way a carrier is made liable for delay in delivery in contracts governed by the international conventions for the carriage of goods by road46 and by air.47(p. 135) In other cases the responsibility for delay is allocated by reference to the decisions of the courts. Thus in a charterparty the charterer is generally responsible for delays caused by failure to furnish a proper cargo,48 while the shipowner is responsible for delays in sailing49 and delays caused by the unseaworthiness of the ship.50 In the same way, in the context of an f.o.b. contract for the sale of goods, it is the seller’s responsibility to ship the goods at the time specified, but the buyer is responsible for specifying when and where they should be shipped.51 Again, in a port charter the risk of delay is on the charterer once the ship arrives in port, but in a berth charter the laytime does not begin to run until the ship is at the berth.52 In such cases as these the allocation of risk is determined as much by the general law as by the terms of the contract in question.

B.  Delay as a Failure of Condition

6.13  The next important way in which delay in performance may function is as a failure of condition.53 Where this occurs, the other party is excused from performance of one or more obligations under the contract. This is something we have already looked at in a previous chapter;54 to repeat what was said there, a promise to do X if Y happens is very different from a promise to do X without any condition attached.55 In this case X stands for the obligation and Y stands for the condition. If Y does not occur, then the promisor need not do X. Any kind of event can constitute a condition of this sort, but when the event in question is the timely performance of some counter-obligation by the promisee we say that time is ‘of the essence’. The same analysis applies to unilateral contracts and options; if for instance a tenant is given the option of renewing the lease if notice is given to the landlord by a certain date, there is no obligation to give such notice, but if it is not given in time the tenant will not be able to exercise the option to renew. Once again we say that time is ‘of the essence’ in relation to the option in question.

(p. 136) 6.14  Time can be made of the essence by express words or by implication; it can also be made of the essence by notice.56 It is with the first two of these cases that we are concerned here.57 Broadly speaking, the question whether the contract expressly makes time of the essence is one of construction; the contract says that time is of the essence in so many words, or indicates in some other way that one party need not perform in the absence of timely performance by the other.58 Time can be made of the essence by implication where the subject matter of the contract or the surrounding circumstances indicate that the parties must have intended this to be the case, or where certain commonly occurring terms in contracts of a certain type are deemed to be conditions by virtue of previous common law authority or statutory provision.59 We shall examine all of this more closely when we come to look at the remedy of termination for delay.60

C.  Delay as Frustration

6.15  A frustrating delay is one which is so prolonged as to ‘go to the root of the contract’ – that is to say, one which has the effect of substantially depriving the other party of the benefit of the contract. This is merely one aspect of what Reynolds describes as ‘failure of consideration’.61 The test for this is as set out by Diplock LJ, as he then was, in The Hongkong Fir: does the occurrence of the event in question deprive the party who has further undertakings still to perform of substantially the whole benefit which it was the intention of the parties as expressed in the contract that he should obtain as the consideration for performing those undertakings?62 Though as we shall see this doctrine now manifests itself in different guises, it is an essential key to understanding the law in this area.

6.16  A frustrating delay in performance, as we shall see, may discharge the promisee whether or not it involves any breach by the promisor or any default on his or her (p. 137) part. However, since the end of the nineteenth century the doctrine of frustrating delay has split into a number of distinct branches.63 In particular, where the delay in question involves a breach of contract by the promisor, it is classified as a ‘fundamental breach’ in the sense of a ‘breach going to the root of the contract’ under the doctrine set out in The Hongkong Fir,64 or as a repudiation of the contract if the delay was wholly prospective.65 We shall be looking at these situations separately later on in the chapter.66 But where there is no breach of contract involved, the contract is discharged under the doctrine of frustration.

6.17  According to the classic statement of the doctrine of frustration by Lord Radcliffe in Davis Contractors Ltd v Fareham Urban District Council:67

… Frustration occurs whenever the law recognises that without default of either party a contractual obligation has become incapable of being performed because the circumstances in which performance is called for would render it a thing radically different from that which was undertaken by the contract. Non haec in foedera veni. It was not this I promised to do.

The doctrine of frustration, whatever else it may do, can clearly be relied upon as a defence for failure to perform by a party prejudiced by delay; indeed, the doctrine has been used not just once but over and over again in cases of delay.68 In such a case, it has been said that a party claiming frustration must show that the delay in question has been or is likely to be so protracted that69

… by it the fulfilment of the contract in the only way in which fulfilment is contemplated and practicable is so inordinately postponed that its fulfilment when the delay is over will not accomplish the only object or objects which both parties to the contract must have known that each one of them had in view at the time they made the contract and for the accomplishment of which object or objects the contract was made.

6.18  The test for computing when a delay is a frustrating one is substantially the same whether the case is one of frustrating breach or one falling under the doctrine of frustration proper. This is made clear by the judgment of Mustill J in The Hermosa,70 where one of the issues was the legal effect of a delay caused partly by unseaworthiness and partly by an excepted peril. Here Mustill J commented (p. 138) that though frustration and repudiation differed in the consequences attending the discharge of the contract, they were clearly aspects of the same general principle.71 He added that though there was an obvious difference between frustration and repudiation, nevertheless the test for deciding whether any failure or inability to perform by one party was sufficient to discharge the other was the same whichever doctrine was being invoked.72 We shall return to this point later.73

6.19  Having said that, the effect of the two doctrines is still very different. In particular, where what might be termed ‘frustrating breach’ by the promisor gives the promisee an option whether to terminate performance or not,74 ‘frustration proper’ automatically brings the entire contract to an end.75 Moreover, whereas a frustrating breach operates as a defence for one party,76 frustration proper discharges both.77 We shall be looking at these distinctions more closely, and at the ways in which frustrating delay operates in the modern law, in a later chapter.78

D.  Delay as a Breach of Condition

6.20  Where delay amounts to a breach of contract on the part of the promisor, the promisee can claim damages.79 Where it amounts to a failure of condition, the other party can refuse to perform one or more of the relevant obligations under the contract.80 Sometimes, however, delay can be both a breach and a failure of condition.81 In this situation the delay is classified as a ‘breach of condition’; once again, time is ‘of the essence’,82 but the promisee can also claim damages. Where delay is a breach of condition the promisee is said to be entitled to ‘treat the contract as repudiated’.83 This means that the promisee has a choice of remedies. The effect of this is as set out by Lord Diplock in Moschi v Lep Air Services Ltd.84 On the one hand, the promisee may choose to ‘terminate performance’, (p. 139) or, as is sometimes said, ‘cancel the contract’. Where this is done, both promisor and promisee are excused from carrying out their primary obligations under the contract in so far as they remain unperformed;85 in the case of the promisor, this is replaced by a secondary obligation to pay damages. Moreover, since the promisor’s breach is deemed to be equivalent to a repudiation of the contract, damages will have to be paid on that footing.86 On the other hand, the promisee may decide to ‘affirm the contract’. Where this is done, both parties remain liable to perform their primary obligations as before,87 but the promisor will still have the secondary obligation to pay damages. However, these will not be on the footing of total repudiation, but only in respect of the breach that has actually occurred.

6.21  The classic definition of breach of condition and its effects is as set out by Fletcher Moulton LJ in his famous dissenting judgment in Wallis, Son and Wells v Pratt and Haynes:88 ‘conditions’ are terms of the contract ‘so essential to its very nature that their non-performance may fairly be considered by the other party as a substantial failure to perform the contract at all’; In this situation the innocent party can treat the contract as being ‘completely broken’, and can sue the other party for ‘total failure to perform the contract’.89

E.  Delay as a Fundamental Breach

6.22  We have already seen how one of the effects of a ‘frustrating’ delay is to provide an excuse for failure or refusal to perform.90 Where such delay occurs without the fault of either party, the case is one of frustration in the full sense: no damages are payable, but both parties are discharged from further performance.91 But where a breach has this effect, the legal consequences are rather different in that the breach itself does not bring about the discharge of the contract; rather, the promisee has a choice whether to terminate or to affirm the contract. Such a breach can be described in a number of ways,92 but for the purposes of the present discussion (p. 140) we shall term it ‘fundamental’ in the sense of a breach going to the root of the contract.93 In the case of such a breach by the promisor, the promisee can terminate performance and claim damages just as in the case of breach of condition.94

6.23  The right of a promisee to terminate performance for fundamental breaches of this sort is well illustrated by Vigers v Cook,95 where an undertaker who had constructed the coffin so negligently that it could not be taken into church for the funeral was denied recovery of the contract price; the catastrophic effect of the breach absolved the defendant from having to perform his part of the contract. Again, in Aerial Advertising Co v Batchelors Peas (Manchester) Ltd96 the defendants hired the plaintiffs to advertise their wares by towing a banner across the sky marked ‘Eat Batchelors Peas’. The plaintiffs made the mistake of towing the banner over the middle of Salford on Armistice Day where there was a large crowd assembled to observe the two-minute silence. The effect of this blunder on the sales of Batchelors Peas in the area was held to entitle the defendants to dispense with the plaintiffs’ services without further ado. In neither case could the promisee point to breach of condition by the promisor; rather, it was the effect of the breach as a whole that gave rise to the right to terminate performance. A similar result was reached in Rubicon Computer Systems v United Paints Ltd,97 where the suppliers of a computer system installed a ‘time lock’ on the system following a dispute with a customer, as a result of which the system became inoperable. It was held that this was a breach going to the root of the contract and that as a consequence the customer was entitled to bring the contract to an end.

6.24  It is not necessary to look far to see how this principle has been applied to cases of delay. The main authority in this area is The Hongkong Fir,98 a case in which a charterer sought to terminate performance on the basis of protracted delays due to the unseaworthiness of the ship. It was argued by the owners that their obligation in relation to seaworthiness was not a ‘condition’ of the contract, and that the breach therefore sounded in damages only. However, the Court of Appeal held that the right to terminate performance could not be settled merely by asking (p. 141) whether the term broken was a condition. Rather, there were some cases, of which this was one, where the right to terminate depended on the nature of the breach and its consequences. The question to be asked in such cases was whether the effect of the breach was, in the words of Diplock LJ, to deprive the party who had further undertakings still to perform of substantially the whole benefit which it was the intention of the parties as expressed in the contract that he should obtain as the consideration for performing those undertakings.99 As indicated above, the test for deciding whether delay has this effect is the same as in relation to the doctrine of frustration, though the legal effects are markedly different.100

F.  Delay as Repudiation

6.25  Even if the time for performance is not yet due, the promisee can still terminate and sue for damages if the promisor has repudiated the contract. Though the word ‘repudiation’ is used in a number of different senses,101 it is here used to describe two closely related situations.102 The first is where the promisor indicates, either by words or conduct, an unwillingness or inability to carry out his or her outstanding obligations under the contract; this is sometimes called ‘renunciation’.103 The second is where it can be shown that at the relevant time the promisor was not going to be able to carry out those obligations; this can be called ‘prospective impossibility’. Delay in performance can come under either of these categories; indeed, both of them involve the concept of a ‘frustrating’ delay as described above, in that the promisee is excused from performance on the ground that he or she is not going to receive the exchange bargained for.104 In the discussion which follows we shall consider how delay works in this connection before looking at the legal effects of repudiation generally.

(1)  Delay as renunciation

6.26  It has been said that dissolution of a contract on the basis of renunciation is a drastic conclusion which should only be held to arise in clear cases of a refusal (p. 142) to perform contractual obligations in a respect or respects going to the root of the contract.105 Whether a delay in performance can satisfy this test depends on how it reflects on the promisor’s willingness or ability to perform the contract in future. This can be illustrated most readily by reference to instalment contracts, where default early on in the contract may entitle the promisee to terminate performance and claim damages, not only for the particular default in question but for the repudiation of the contract as a whole.106 In the case of Decro-Wall International SA v Practitioners in Marketing Ltd107 the question arose whether the repeated paying of bills over three weeks late by the defendants justified the plaintiffs in calling off the contract. In the circumstances it was decided that it did not, but it was said that the decision would have gone the other way if the delay had caused the plaintiffs to doubt the defendants’ solvency or ability to pay. The same principle can be seen at work in other areas; thus it was said in Chandler Bros v Boswell108 that slow performance by a building contractor could amount to repudiation if it evinced an intention not to be bound by the contract, and in Ditchburn Equipment v Crich109 the hirer of a faulty juke box was allowed to terminate the hire because of the owner’s delay in sending out a man to do repairs – once again, the court said that this evinced a clear intention on his part not to be bound by the contract in the future. In the same way, it has been said that if a buyer of goods fails to pay for one delivery in such circumstances as to lead to the inference that he will not be able to pay for subsequent deliveries, or if a seller delivers goods differing from the requirements of the contract and does so in such circumstances as to lead to the inference that he cannot, or will not, deliver any other kind of goods in the future, the other contracting party will be under no obligation to wait and see what may happen; he can at once cancel the contract and rid himself of the difficulty.110

6.27  In all of the cases so far mentioned the conduct on the part of the promisor involved an actual breach, but this should not obscure the fact that the breach and the renunciation are separate issues. Thus if a buyer of goods by instalments is late in paying the last instalment damages are recoverable just as they would be for delay in paying the first one; but whereas the latter might well amount to (p. 143) a renunciation of the contract, the former would certainly not have that effect.111 The distinction can perhaps best be summed up by saying that whereas breach is concerned with what the promisor has already failed to do, renunciation is concerned with what he or she may fail to do in the future.

(2)  Delay as prospective impossibility

6.28  In a case of renunciation it is only necessary to show that the promisor’s conduct was such as to lead a reasonable person to believe that he or she did not intend, or was not able, to perform.112 In some cases, however, the promisee will not be able to rely on renunciation, and will have to fall back on prospective impossibility.113 The test for this is as laid down by Devlin J in Universal Cargo Carriers Corporation v Citati:114 the promisee must prove that at the relevant time the promisor was ‘wholly and finally disabled’ from performing. This was a case involving a voyage charterparty for the carriage of a cargo of iron. When the ship arrived at the loading port no cargo was ready, nor was there any reasonable prospect of one being made available in the foreseeable future. So the shipowners threw up the charter and claimed damages from the charterers, arguing that their conduct amounted to a repudiation of the charterparty. The arbitrator found in favour of the shipowners on the grounds both of renunciation and of prospective impossibility, but the former finding had to be quashed on the grounds of error of law.115 This left the question of impossibility. In this connection it was held by Devlin J that a party could not purchase indefinite delay by paying damages, and that a charterer could not keep a ship indefinitely on demurrage; in the present case, the shipowners were entitled to throw up the charter once it became clear that the charterers were wholly and finally disabled from loading a cargo within such a time as would not frustrate the contract. The case was remitted to the arbitrators, but it was subsequently found by the Court of Appeal that this was indeed the case, and that the shipowners were entitled to act as they had done.116

6.29  Though at the end of the day the shipowners in Universal Cargo Carriers Corporation v Citati were able to succeed on the ground of prospective impossibility, it has been argued that the test of total and final disability propounded by Devlin J in that case puts too heavy a burden on the promisee.117 Say it had (p. 144) been shown in the Citati case that at the relevant time the owners were entitled to assume that no cargo was likely to be forthcoming, but that on the facts they were wrong in that assumption.118 As we shall see, if neither party had been responsible for the delay in such a case, the contract would clearly have been frustrated on the basis of the principle laid down by Scrutton J in Embiricos v Sydney Reid & Co:119 commercial men must not be asked to wait until the end of a long delay to find out from what in fact happens whether they are bound by a contract or not, but are entitled to act on reasonable commercial probabilities at the time when they are called upon to make up their minds.120 It was clearly stated by Devlin J in Universal Cargo Carriers Corporation v Citati that the principle in Embiricos v Sydney Reid & Co did not apply to questions of discharge by breach,121 but it has been pointed out that in many cases it may not be clear whether the promisor’s inability to perform is the result of a frustrating event or a breach of contract,122 and that in such a situation it seems unreasonable to treat the promisee’s termination as wrongful, if the event does not occur, when a reasonable man would have drawn the inference drawn by the promisee.123 Given, however, that most cases of prospective inability to perform can be construed in terms of renunciation,124 which does not require such a strict test,125 the point is perhaps of less practical importance than at first seems to be the case.

(3)  The effect of repudiation

6.30  Where delay in performance amounts to a repudiation on the part of the promisor, the promisee has a choice.126 The promisee may ‘accept’ the repudiation, terminate performance and sue for damages on that basis. Alternatively he or she may affirm the contract, in which case both parties are still bound; in this case damages may or may not be available depending on whether the repudiation is based on an actual breach or one that is purely anticipatory. Two points call for further consideration, the first being the need for ‘acceptance’ and the (p. 145) second the relationship between the right to terminate and the right to claim damages.

(a)  The need for acceptance

6.31  The orthodox view of repudiation in English law is that for any remedy to exist in respect of a repudiation there must be ‘acceptance’ by the promisee; in the words of Asquith LJ, an unaccepted repudiation is a thing ‘writ in water’ and of no effect.127 This means that until the repudiation is accepted the promisee is entitled neither to terminate performance nor to sue for damages on that basis. However, both of these propositions have been questioned, and need to be examined more closely.

6.32  It is clear that as a general rule repudiation does not of itself bring a contract to an end: it is up to the promisee to decide whether or not to exercise the remedy of termination.128 This must then be communicated to the promisor, though this need not be done in words; a communication by conduct will suffice provided that it unequivocally conveys to the promisor that the promisee has elected to accept the repudiation.129 If this is not done, the contract remains on foot, and both parties are still bound. In The Simona130 a voyage charterparty contained a clause giving the charterers the right to cancel if the ship was not ready to load on or before 9 July 1982. On 2 July the charterers, fearing that the owners would not be able to load, gave a notice purporting to cancel the charterparty there and then. The owners, however, continued to treat the charterparty as on foot, and gave notice that the ship would commence loading on 8 July. Notice of readiness was given on that day, but in the event the ship was not ready to load on the day stated, and the charterers sent a further cancellation notice. It was conceded by the parties that the notice of cancellation given on 2 July was premature and amounted to a repudiation of the contract, and it was argued by the owners131 that this relieved them from the obligation to have the ship ready to load on the day stated unless or until the charterers gave reasonable notice that they were once again ready and willing to perform. However, this proposition was rejected by the House of Lords, who held that in the absence of any acceptance of the repudiation the charterparty survived intact with the right of cancellation unaffected. Since at the end of the day the ship was not ready to load at the stipulated (p. 146) time, the charterers were entitled to and did give an effective notice of cancellation.132 The relevant law was summarised as follows by Lord Ackner:133

When A wrongfully repudiates his contractual obligations in anticipation of the time of their performance, he presents the innocent party B with two choices. He may either affirm the contract by treating it as still in force or he may treat it as finally and conclusively discharged. There is no third choice, as a sort of via media, to affirm the contract and yet to be absolved from tendering further performance unless and until A gives reasonable notice that he is once again able and willing to perform. Such a choice would negate the contract being kept alive for the benefit of both parties and would deny the party who unsuccessfully sought to rescind, the right to take advantage of any supervening circumstance which would justify him in declining to complete.

6.33  This does not mean that an unaccepted repudiation can have no legal effect whatsoever. As Lord Ackner pointed out, if on the facts the owners had been able to establish that the charterers had represented that they no longer required the vessel to arrive on time, and in reliance on that representation the owners had given notice of readiness only after the cancellation date, then the charterers would have been estopped from contending that they were entitled to cancel the charterparty.134 However, in the present case there was no finding of any such representation, still less that the owners had been induced thereby not to make the vessel ready to load on the stated day. On the contrary, the owners ignored the notice of cancellation and continued to insist that the ship would be ready on time. The fact that in the event she was not so ready was not due to any representation by the charterers, but to the owners’ decision to load other cargo first.

6.34  It was suggested in the past that there was an exception to the rule requiring acceptance in relation to employment contracts where an employee is unfairly dismissed.135 It is clear that in this situation the employee cannot affirm the contract in the sense that he or she may carry on working as if nothing had happened and then claim wages. However, the mere fact that the employment relationship is at an end does not mean that the contract is also at an end;136 conversely, the fact that the dismissed employee is entitled to affirm the contract generally does not mean that he or she can necessarily exercise any particular remedy in consequence of that affirmation.137 For these reasons, it has now been affirmed by the Supreme (p. 147) Court that employment contracts are subject to the general rule whereby breach does not give rise to automatic termination, but only at the option of the innocent party.138

6.35  Just as an unaccepted repudiation gives no right to terminate performance, the orthodox view is that it gives no right to damages on that basis,139 though of course the promisee may sue for damages in respect of any breaches that have occurred. Thus in Johnstone v Milling140 a tenant was held not to be entitled to sue for damages for a repudiation of the landlord’s covenant to rebuild when he had by giving notice under the lease indicated that he was affirming the contract. Clearly a repudiation unaccompanied either by an actual breach or by acceptance will have caused no loss, so even if damages were recoverable in theory it would not be worth suing for them. However, it is not clear why the law does not allow even a claim for nominal damages in this case. One possible rationale is the theory that in cases of this sort no breach takes place until performance is due, and that all the doctrine of repudiation does is to allow the promisee, by accepting the repudiation, to order his or her affairs on the assumption that it is going to take place in the future.141 Others, however, have argued that it is better to regard repudiation by anticipatory breach as a present breach of the obligation to be ready and willing to perform,142 and on this basis there is no reason why repudiation should not give rise to a right, in theory at least, to claim nominal damages even where it is not accepted. However, given the clear opinion of Lord Ackner in The Simona that an unaccepted repudiation can give rise to no cause of action whatever,143 such a claim would seem to have little chance of success.

(b)  The right to terminate and the right to claim damages

6.36  It is clear from the cases as they currently stand that in relation to repudiation the remedies of termination and damages go hand in hand: conduct on the part of the promisor which gives rise to a right to terminate also gives rise to a right to claim damages, and there is no suggestion that the promisee might be able to claim one remedy and not the other. However, while this gives rise to no (p. 148) difficulties in cases of renunciation, it causes problems where the promisee is claiming repudiation on the grounds of prospective impossibility, where the case of Universal Cargo Carriers Corporation v Citati144 requires proof that at the relevant time the promisor was ‘wholly and finally disabled’ from performing.145 This rule seems to be too harsh on the promisee in relation to termination and too harsh on the promisor in relation to damages. As far as termination is concerned, there is a lot to be said for adopting the approach in Embiricos v Sydney Reid & Co,146 which applies in the context of frustration, to cases of anticipatory breach; this would allow the promisee to terminate performance on the basis of reasonable commercial probabilities rather than having to prove total and final disablement. On the other hand, to allow the promisee to claim damages in cases of prospective impossibility seems to be excessively harsh; after all, even in cases where total and final disablement can be proved in advance, there is always an outside possibility that the promisor may be able to perform after all at the end of the day. However, the present law is that the test in Universal Cargo Carriers Corporation v Citati147 applies both to the right to terminate and the right to recover damages, and there is no authority for using a different test for the two remedies in this context.


1  Below, Chapter 9.

2  Below, Chapter 7.

3  Below, Chapter 8.

4  Below, Chapters 10 and 11.

5  Beale, Hugh G (ed), Chitty on Contracts (32nd edn, 2016) (‘Chitty’), para 1-107.

6  Below, para 9.01.

7  United Dominions Trust (Commercial) Ltd v Eagle Aircraft Services Ltd [1968] 1 WLR 74 (CA); see below, Chapter 10.

8  United Scientific Holdings Ltd v Burnley B C [1978] AC 904 (HL); see below, Chapter 8.

9  Below, paras 6.25–6.36.

10  This includes the case where there has been a purported performance on the due date, but that performance is seriously defective and requires remedy: Jarvis v Westminster Corp [1969] 1 WLR 1448 (CA).

11  Raineri v Miles [1981] AC 1050; above, paras 1.04–1.08.

12  Hubbard v Glover (1812) 3 Camp 313; above, paras 1.09–1.10.

13  Above, paras 1.11–1.30.

14  Above, paras 5.02–5.47.

15  Above, paras 5.48–5.81.

16  Above, para 5.92.

17  Above, Chapter 5.

18  Carter, J W, Carter’s Breach of Contract (Hart edition, 2010) (‘Carter’), para 2-06.

19  Intertradex SA v Lesieur-Tourteaux SARL [1978] 2 Lloyd’s Rep 509 (CA); CTI Group v Transclear SA (The Mary Nour) [2008] EWCA Civ 856, [2008] 2 CLC 112.

20  Lewis Emanuel and Son Ltd v Sammut [1959] 2 Lloyd’s Rep 629.

21  Kawasaki Steel Corp v Sardoil SpA (The Zuiho Maru) [1977] 2 Lloyd’s Rep 552.

22  Kirk and Kirk v Croydon Corporation [1956] JPL 585.

23  Above, paras 4.21–4.25.

24  Carter, above n 18, para 2-07.

25  M’Andrew v Adams (1834) 1 Bing NC 29, 131 ER 1028 (date of arrival of ship); Glaholm v Hays (1854) 9 Ex 416, 133 ER 743 (time of sailing); Bunge & Co Ltd v Tradax England Ltd [1972] 2 Lloyd’s Rep 235 (delivery of goods); Holme v Guppy (1838) 3 M & W 387, 150 ER 1195 (building contract); Raineri v Miles [1981] AC 1050 (HL) (conveyancing).

26  JCT Standard Form of Building Contract 2011 Edition, Art 1 and Contract Particulars; JCT 2005 Edition Agreement for Minor Building Works, section 2; Standard Conditions of Sale (5th edn), clause 6.1.1.

27  Lorentzen v White Shipping Co (1943) 74 Ll LR 161; Cosmos Bulk Transport Inc v China National Foreign Trade Transportation Corp (The Apollonius) [1978] 1 Lloyd’s Rep 53; Bulfracht (Cyprus) Ltd v Boneset Shipping Co Ltd (The Pamphilos) [2002] EWHC 2292 (Comm), [2002] 2 Lloyd’s Rep 681; Imperator I Maritime Co v Bunge SA (The Coral Seas) [2016] EWHC 1506 (Comm), [2016] 2 Lloyd’s Rep 293.

28  Yeoman v R [1904] 2 KB 429 (CA); Houlder v Weir [1905] 2 KB 267; Hain SS Co v Minister of Food [1949] 1 KB 492 (CA); Eder, Sir Bernard and ors (eds), Scrutton on Charterparties (23rd edn, 2015) (‘Scrutton’), para 15-021.

29  The Sandgate [1930] P 30 (CA); Compania de Navigacion Zita SA v Louis Dreyfus & Cie [1953] 2 Lloyd’s Rep 472; Lodza Compania de Navigacione SA v Govt of Ceylon (The Theraios) [1971] 1 Lloyd’s Rep 209 (CA); Scrutton, above n 28, para 15-022.

30  Freeman v Taylor (1831) 8 Bing 124, 131 ER 348; M’Andrew v Chapple (1866) LR 1 CP 643; President of India v Hariana Overseas Corp (The Tafaka) [1990] 1 Lloyd’s Rep 536; CHS Inc Iberica SL v Far East Marine SA Devon [2012] EWHC 3747 (Comm); Scrutton, above n 28, para 7-004.

31  Castlegate SS Co v Dempsey [1892] 1 QB 854; Tharsis Sulphur & Copper Co Ltd v Morel Bros & Co [1891] 2 QB 647; Scrutton, above n 28, para 15-049.

32  Above, paras 1.11–1.30.

33  Mediolanum Shipping Co v Japan Lines Ltd [1984] 1 Lloyd’s Rep 136 (CA).

34  [1982] 1 Lloyd’s Rep 47 (Robert Goff J).

35  [1984] 1 Lloyd’s Rep 136 (CA).

36  Nereide SpA di Navigazione v Bulk Oil International Ltd [1982] 1 Lloyd’s Rep 1 (HL); Palm Shipping Inc v Kuwait Petroleum Corp (The Sea Queen) [1988] 1 Lloyd’s Rep 500; Rashtriya Chemicals and Fertilizers Ltd v Huddart Parker Industries Ltd (The Boral Gas) [1988] 1 Lloyd’s Rep 342.

37  [1980] 1 Lloyd’s Rep 466 (Mocatta J).

38  [1981] 2 Lloyd’s Rep 24.

39  [1982] 1 Lloyd’s Rep 1.

40  P & O Oil Trading Ltd v Scanoil AB (The Orient Prince) [1985] 1 Lloyd’s Rep 389; Glencore Grain Ltd v Goldbeam Shipping Inc (The Mass Glory) [2002] EWHC 27, [2002] 2 Lloyd’s Rep 244; Carboex SA v Louis Dreyfus Commodities Suisse SA [2012] EWCA Civ 838, [2013] QB 789; Ganado, Max and Kindred, Hugh M, Marine Cargo Delays (1990) (‘Ganado and Kindred’), chapter 6.

41  Shell UK Ltd v Lostock Garage Ltd [1976] 1 WLR 1187 (CA) at 1196–1197 (Denning MR); Marks and Spencer plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd [2015] UKSC 72, [2016] AC 742 at [15] (Lord Neuberger); see above, para 2.49.

42  Jones v Gardiner [1902] 1 Ch 191.

43  Gatoil International Inc v Tradax Petroleum Ltd (The Rio Sun) [1985] 1 Lloyd’s Rep 350.

44  Toepfer v Lenersan-Poortman BV [1980] 1 Lloyd’s Rep 143 (CA); Mitsui OSK Lines Ltd v Garnac Grain Co Inc (The Myrtos) [1984] 2 Lloyd’s Rep 449.

45  Sale of Goods Act 1979, s 27.

46  Convention on the Contract for the International Carriage of Goods by Road (1956) (CMR) (Geneva, 19 May 1956): (Treaty Series 090/1967: Cmnd 3455), Art 17.1.

47  Convention for the Unification of Certain Rules relating to International Carriage by Air (1929) (Warsaw, 12 October 1929) (Treaty Series 011/1933: Cmd 4824), as amended by the Montreal Convention of 1999 (Treaty Series 044/2004: Cm 6369), Art 19.

48  Scrutton, above n 28, para 9-098; Grant & Co v Coverdale, Todd & Co (1884) 9 App Cas 470 (HL); Ardan SS Co v Weir [1905] AC 501 (HL(Sc)).

49  Scrutton, above n 28, para 7-044; Freeman v Taylor (1831) 8 Bing 124, 131 ER 348; Tully v Howling (1877) 2 QBD 182 (CA); Associated Portland Cement Mfrs Co v Houlder Bros & Co (1917) 22 Com Cas 279.

50  Scrutton, above n 28, para 7-019; Cohn v Davidson (1877) 2 QBD 455; Steel v State Line SS Co (1877) 3 App Cas 72 (HL(Sc)); The Marathon (1879) 40 LT 163; Hongkong Fir Shipping Co v Kawasaki Kisen Kaisha Ltd (The Hongkong Fir) [1962] 2 QB 26.

51  Miserocchi and C SpA v Agricultores Federados Argentinos SCL (The Sotir and Angelic Grace) [1982] 1 Lloyd’s Rep 202; Bridge, Michael (ed), Benjamin’s Sale of Goods, (9th edn, 2014) (‘Benjamin’), paras 20-032 (seller) and 20-046 (buyer).

52  Cosmar Compania Naviera SA v Total Transport Corp (The Isabelle) [1982] 2 Lloyd’s Rep 81 (CA).

53  Reynolds, F M B, ‘Discharge of contract by breach’ (1981) 97 LQR 541.

54  Above, paras 2.16–2.22.

55  Above, para 2.16.

56  Above, paras 2.50–2.52.

57  Where time is made of the essence by notice, the situation is analysed in terms of repudiation rather than failure of condition: below, paras 8.44–8.49.

58  Above, para 2.20.

59  Above, para 2.49.

60  Below, Chapter 11.

61  Reynolds, above n 53; Bridge, Michael, ‘Discharge for breach of the contract of sale of goods’ (1983) 28 McGill LJ 867; McElroy, R G, ‘Frustration and force majeure: the common law and the Common Market’ [1963] NZLJ 185. The concept of ‘failure of consideration’ is also used in the law of restitution to denote a situation where the promisee is entitled to recovery of money paid on the ground that no part of the performance which he or she bargained for has been rendered: Stocznia Gdanska SA v Latvian Shipping Co [1998] 1 WLR 574 (HL) at 587 (Lord Goff) and 600 (Lord Lloyd). However, Reynolds uses it in the present context to denote a ground for discharge.

62  [1962] 2 QB 26 (CA) at 66; Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd [2007] HCA 61, (2007) 233 CLR 115; RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd [2007] SGCA 39, [2007] 4 SLR 413.

63  For the historical development of the doctrine see Stannard, ‘Frustrating delay’ (1983) 46 MLR 738.

64  [1962] 2 QB 26.

65  Universal Cargo Carriers Corp v Citati [1957] 2 QB 401.

66  Below, paras 6.22–6.24 (fundamental breach) and 6.25–6.40) (repudiation).

67  [1956] AC 696 (HL) at 726.

68  So much so that it has been argued that frustration by delay is a distinct legal concept: Tsakiroglou v Noblee Thorl GmbH [1962] AC 93 (HL) at 100; McElroy, R G, and Williams, G, Impossibility of Performance (1941), Part III.

69  Admiral Shipping Co v Weidner Hopkins Ltd [1916] 1 KB 429 at 436–437 (Bailhache J).

70  Nitrate Corp of Chile Ltd v Pansuiza Compania de Navegacion SA [1980] 1 Lloyd’s Rep 638 (aff’d [1982] 1 Lloyd’s Rep 570 (CA)).

71  [1980] 1 Lloyd’s Rep 638 at 648; Jackson v Union Marine Insurance Co (1874) LR 10 CP 125; The Hongkong Fir [1962] 2 QB 26 (CA) at 69 (Diplock LJ); Universal Cargo Carriers Corp v Citati [1957] 1 QB 401 at 434 (Devlin J).

72  [1980] 1 Lloyd’s Rep 638 at 648; MSC Mediterranean Shipping Co SA v Cottonex Anstalt [2016] EWCA Civ 789 at [25].

73  Below, para 12.07.

74  The Hongkong Fir (above, n 71).

75  Hirji Mulji v Cheong Yue SS Co [1926] AC 497 (HL).

76  The Hongkong Fir (above, n 71).

77  Taylor v Caldwell (1863) 3 B & S 826, 122 ER 309.

78  Below, Chapter 12.

79  Above, para 6.02.

80  Above, para 6.13.

81  We have already sketched out how ‘breach of condition’ evolved from the older concept of ‘failure of condition’: above, paras 2.14–2.35.

82  Above, para 2.36.

83  Sale of Goods Act 1979, s 11(3).

84  [1973] AC 331 (HL) at 349–350

85  But termination for breach does not affect accrued rights: Hyundai Heavy Industries Co Ltd v Papadopoulos (HL) [1980] 1 WLR 1129; Brown v Langwoods Photo Stores [1991] 1 NZLR 173 (CA of New Zealand).

86  Lombard North Central plc v Butterworth [1987] 1 QB 527 (CA): above, para 2.35.

87  BMBF (No 12) Ltd v Harland and Wolff Shipbuilding & Heavy Industries Ltd [2001] EWCA Civ 862, [2001] 2 Lloyd’s Rep 227; Triton Navigation Ltd v Vitoil SA (The Nikmary) [2003] EWCA Civ 1715, [2004] 1 Lloyd’s Rep 55.

88  [1910] 2 KB 1003 (CA): above, para 2.31. The decision of the Court of Appeal was reversed, and the dissenting judgment of Fletcher Moulton LJ affirmed, by the House of Lords at [1911] AC 394.

89  [1910] 2 KB 1003 at 1012–1013.

90  Above, paras 6.15–6.19.

91  Above, para 6.19.

92  In particular, the word ‘repudiatory’ is often used to describe breaches of this sort, as by Mustill J in The Hermosa [1990] 1 Lloyd’s Rep 638 (discussed above at para 6.18). However, in the present context we shall avoid using the word to describe cases where the breach is wholly past, and does not reflect on the willingness or ability of the promisor to perform in the future.

93  As Lord Wilberforce points out, the term ‘fundamental breach’ can be used in two senses, namely: (1) a performance totally different from that which the contract contemplates; and (2) a breach of contract more serious than one which would entitle the other party merely to damages and which (at least) would entitle him to refuse performance or further performance under the contract: Suisse Atlantique Societe d’Armement Maritime SA v Rotterdamsche Kolen Centrale [1967] 1 AC 361 (HL) at 431. It is with this second sense of fundamental breach that we are now concerned.

94  Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd (The Hongkong Fir) [1962] 2 QB 26.

95  [1919] 2 KB 475 (CA).

96  [1938] 2 All ER 261.

97  (2000) 2 TCLR 453 (CA).

98  Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26; above, para 2.33.

99  The Hongkong Fir, above n 98 at 66.

100  Above, para 6.18.

101  Carter, above n 18, para 7-03.

102  Chilean Nitrate Sales Corp v Marine Transportation Co Ltd (The Hermosa) [1982] 1 Lloyd’s Rep 570 (CA) at 573 (Donaldson LJ).

103  Freeth v Burr (1874) LR 9 CP 208 at 213 (Coleridge J); Ross T Smyth & Co Ltd v TD Bailey, Son & Co [1940] 3 All ER 60; Woodar Investment Development Ltd v Wimpey Construction UK Ltd [1980] 1 WLR 277; Federal Commerce & Navigation Co Ltd v Molena Alpha Inc (The Nanfri) [1979] AC 757 (HL); Eminence Property Developments Ltd v Heaney [2010] EWCA Civ 1168, [2011] 2 All ER (Comm) 223. In The Hermosa (above, n 102) the term is used by Donaldson LJ to describe repudiation by anticipatory breach in general.

104  Above, paras 6.15–6.17.

105  Chilean Nitrate Sales Corp v Marine Transportation Co Ltd (The Hermosa) [1982] 1 Lloyd’s Rep 570 (CA) at 572 (Donaldson LJ); Woodar Investment Ltd v Wimpey Construction UK Ltd [1980] 1 WLR 277 (HL). It has even been said that the breach must be such as to render it purposeless for the promisee to proceed further with the performance of the contract: Thompson v Corroon [1993] NPC 54 (PC).

106  Withers v Reynolds (1831) 2 B & Ad 882, 109 ER 1370; Hoare v Rennie (1859) 5 H & N 19, 157 ER 1083; Honck v Muller (1881) 7 QBD 92 (CA); Maple Flock Co Ltd v Universal Furniture Products (Wembley) Ltd [1934] 1 KB 148 (CA); Sale of Goods Act 1979, s 31(2).

107  [1971] 1 WLR 361 (CA).

108  [1936] 3 All ER 179 (CA).

109  (1966) 110 SJ 266 (CA).

110  Millar’s Karri and Jarrah Co (1902) v Weddel Turner & Co (1908) 14 Com Cas 25 at 29 (Bigham J); Carter, above n 18, para 8-37.

111  Cornwall v Henson [1900] 2 Ch 298 (CA).

112  Chitty, above n 5, para 24-018.

113  Ibid. See for instance Universal Cargo Carriers Corporation v Citati [1957] 2 QB 401 at 441 (arbitrator’s finding on renunciation quashed); Trade and Transport Inc v Iino Kaiun Kaisha Ltd (The Angelia) [1973] 1 WLR 210 at 219 (renunciation not argued by counsel).

114  [1957] 2 QB 401; South West Water Services Ltd v International Computers Ltd [1999] BLR 420.

115  [1957] 2 QB 401 at 441.

116  Universal Cargo Carriers Corporation v Citati (No 2) [1958] 2 QB 254 (CA).

117  Carter, above n 18, para 9-27; Carter, J W, ‘The Embiricos principle and the law of anticipatory breach’ (1984) 47 MLR 422.

118  As in Sanko SS Co Ltd v Eacom Timber Sales Ltd (The Sanko Iris) [1987] 1 Lloyd’s Rep 487.

119  [1914] 3 KB 45: below, para 12.38.

120  [1914] 3 KB 45 at 54.

121  [1957] 2 QB 401 at 449.

122  For instance, it may not be clear whether the promisor’s delay is covered by a clause excluding liability for breach of contract: Jackson v Union Marine Insurance Co Ltd (1874) LR 10 CP 125.

123  Carter, above n 18, para 9-27.

124  This point is made by Devlin J in Universal Cargo Carriers Corporation v Citati itself: [1957] 2 QB 401 at 437 and 448.

125  Above, paras 6.26–6.27.

126  Chitty, above n 5, para 24-002; Fercometal SARL v Mediterranean Shipping Co SA (The Simona) [1989] 1 AC 789 (HL) at 799 (Lord Ackner). There is no ‘middle way’ as such, but the promisee is allowed a reasonable time in which to decide how to react to the breach: Fisher, Reeves & Co Ltd v Armour & Co Ltd [1920] 3 KB 614 (CA) at 624 (Scrutton LJ); Stoczia Gdanska SA v Latvian Shipping Co (No 2) [2002] EWCA Civ 889, [2002] 2 Lloyd’s Rep 436 at [87] (Rix LJ); Red River UK Ltd v Sheikh [2010] EWHC 961 (Ch); Ampurius Nu Homes Holdings Ltd v Telford Homes (Creekside) Ltd [2013] EWCA Civ 577, [2013] BLR 400 at [63].

127  Howard v Pickford Tool Co Ltd [1951] 1 KB 417 (CA) at 421. As has frequently been pointed out, this colourful metaphor, though helpful as far as it goes, cannot be pushed too far: Carter, J W, ‘ “Acceptance” of a repudiation’ (1994) 7 J Contract Law 156; ‘Failure to perform as “acceptance” of a repudiation’ (1997) 11 J Contract Law 255; Chetwin, Maree, ‘The unaccepted repudiation and legal rights’ (2012) 29 J Contract Law 231; and see Ingram and Knee & Kip Investments Ltd v Patrcroft Properties Ltd [2011] 3 NZLR 433.

128  Heyman v Darwins Ltd [1942] AC 356 (HL) at 361 (Lord Porter).

129  Vitoil SA v Norelf Ltd [1996] AC 800 (HL).

130  Fercometal SARL v MSC Mediterranean Shipping Co SA [1989] AC 788 (HL).

131  On the basis of Braithwaite v Foreign Hardwood Co [1905] 1 KB 543 (CA).

132  [1989] AC 788 at 801.

133  Ibid.

134  Cf. Austral Standard Cables Pty v Walker Nominees Pty [1992] ALMD 5513 (CA of New South Wales).

135  Thomson, J M, ‘The effect of a repudiatory breach’ (1978) 41 MLR 137.

136  Peel, Edwin (ed), Treitel: The Law of Contract (14th edn, 2015) (‘Treitel (Contract)’), para 18-006.

137  Thus as a general rule the promisee is not entitled to ignore the repudiation, continue performing, and then claim the contract price unless: (1) performance is possible without the co-operation of the other party; and (2) the promisee has a ‘legitimate interest’ in taking this course of action: White & Carter (Councils) Ltd v McGregor [1962] AC 413 (HL(Sc)) at 430–431 (Lord Reid); below, paras 7.38–7.40.

138  Geys v Societe Generale [2012] UKSC 63, [2013] 1 AC 523.

139  That is to say, damages for ‘loss of bargain’; Lombard North Central plc v Butterworth [1987] QB 527 (CA); see below para 9.126.

140  (1886) 16 QBD 460 (CA).

141  Frost v Knight (1872) LR 7 Ex 111 at 114 (Cockburn CJ); Tabachnik, E, ‘Anticipatory breach of contract’ [1972] CLP 149.

142  Carter, above n 18, paras 7-24–7-28; ‘Acceptance of a repudiation’ (1994) 7 J Contract Law 156; Liu, Q L, ‘Claiming damages on an anticipatory breach: why should an acceptance be necessary?’ (2005) 25 Legal Studies 4; Tiplady, D, ‘A Comparative Analysis of the Discharge of Contracts by Anticipatory Breach and Actual Breach’ (D Phil Thesis, University of Oxford, 1973), chapters 1 and 2; Restatement (Second) of Contracts, § 253(1).

143  [1989] AC 788 (HL) at 800.

144  [1957] 2 QB 401.

145  Above, para 6.28.

146  [1914] 3 KB 45: above, para 6.29.

147  [1957] 2 QB 401.