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.

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.

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

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.

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

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

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.

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

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.

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

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

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

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

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

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

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.

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.

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.

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.

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

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.

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.