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Anticipatory Breach

Fundamental Breach

Frustration and Fundamental Breach


Law and Sea.
Law of Contract: Breach

Under a breach of contract is usually understood such state of affairs between the contracting parties when one of them without lawful excuse fails or refuses to perform his contractual obligations. A breach is also deemed to be committed when performance rendered by a party to contract is defective, or a party disables himself from performing.
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Breach of Contract
Last updated: 06-Jul-2015

Example of absolute liability as expressed by Tindal CJ in Davis v Garrett (1830) 6 Bing 716:

But we think the real answer to the objection is that no wrongdoer can be allowed to apportion or qualify his own wrong; and that as a loss has actually happened whilst his wrongful act was in operation and force, and which is attributable to his wrongful act, he cannot set up as an answer, to the action the bare possibility of a loss if his wrongful act had never been done. It might admit of a different construction if he could show, not only that the same loss might have happened, but that it must have happened if the set complained of had not been done; but there is no evidence to that extent in the present case.

Per Blackburn J in Poussard v Spiers and Pond (1876) 1 QBD 410 at p.414:

We think that, from the nature of the engagement to take a leading, and, indeed, the principal female part (for the prima donna sang her part in male costume as the Prince de Conti) in a new opera which (as appears from the terms of the engagement) it was known might run for a longer or shorter time, and so be a profitable or losing concern to the defendants, we can, without the aid of the jury, see that it must have been of great importance to the defendants that the piece should start well, and consequently that the failure of the plaintiff’s wife to be able to perform on the opening and early performances was a very serious detriment to them. This inability having been occasioned by sickness was not any breach of contract by the plaintiff, and no action can lie against him for the failure thus occasioned.

But the damage to the defendants and the consequent failure of consideration is just as great as if it had been occasioned by the plaintiff’s fault, instead of by his wife’s misfortune. The analogy is complete between this case and that of a charterparty in the ordinary terms, where the ship is to proceed in ballast (the act of God, &c., excepted) to a port and there load a cargo. If the delay is occasioned by excepted perils, the shipowner is excused. But if it is so great as to go to the root of the matter, it frees the charterer from his obligation to furnish a cargo: see per Bramwell B, delivering the judgment of the majority of the Court of Exchequer Chamber in Jackson v Union Marine Insurance Co (1874) LR 10 CP 125

Per Popplewell J. in Spar Shipping AS v Grand China Logistics Holding (Group) Co, Ltd [2015] EWHC 718 (Comm) at paras 96-98:

96.

(1) There are essentially three categories of conduct by one party to a contract which may entitle the innocent party to treat the contract as at an end, namely (a) a total or partial failure to perform obligations which have fallen due, (b) conduct which evinces an intention not to perform future obligations when they fall due, and (c) impossibility to perform future obligations when they fall due created by the defaulting party’s own act. The first is actual breach. The second and third, commonly termed renunciation and self induced impossibility respectively, are the two forms of anticipatory breach.
(2) In the absence of any relevant contractual or statutory provision, the innocent party’s right to treat the contract as terminated will depend upon whether the term breached is to be categorised as a condition, a warranty or an innominate term. Any breach of a condition will entitle the innocent party to terminate the contract. Only a sufficiently serious breach of an innominate term will do so, often expressed as one which goes to the root of the contract or one which deprives the innocent party of substantially the whole benefit of the contract. The expression repudiatory breach is sometimes used to cover only a breach of an innominate term, in distinction to a breach of condition; sometimes it is used to cover both. I shall use it to cover both. It is also commonly used to describe the form of anticipatory breach directed to performance of future obligations, which I prefer to call renunciation. Elision between use of the terms repudiation and renunciation is common in the cases, not least because an actual breach may itself evince an intention not to perform in the future and therefore be renunciatory. But use of the word repudiatory to refer to conduct which is relevant not as actual breach in the past but only insofar as it casts light on future performance may lead to confusion of thought, and I prefer to use it only to describe a category of actual breach.
(3) Where there is a repudiatory breach or renunciation, the innocent party is entitled to elect to terminate the contract. If he does so, the consequence is that (a) each party is relieved from its obligations to render any further performance under the contract; and (b) the innocent party is entitled to damages for loss caused by the breach, which includes loss flowing from the termination. For the purpose of assessing damages, it is the defaulting party’s repudiatory breach or renunciation which is regarded as the cause of the termination, not the innocent party’s election to terminate.
(4) Other language has been used to describe a "condition", used in this sense as a term any breach of which is sufficient to give rise to a right to terminate. Where the obligation in question falls to be performed by a certain time, the question has often been formulated as "whether time is of the essence". Other formulations include whether the term is an essential term or a fundamental term, although Lord Diplock who has played a large part in the development of the jurisprudence in this area, uses the expression fundamental breach to connote a repudiatory breach of an innominate term in contradistinction to a breach of condition.
(5) It is possible by express provision in the contract to make a term a condition, even if it would not be so in the absence of such a provision. So a stipulation that time is of the essence, in relation to a particular contractual term, denotes that timely performance is a condition of the contract. The consequence is that delay in performance is treated as repudiatory, without regard to the gravity of the breach, such that the injured party may elect to terminate and recover damages in respect of the defaulting party’s outstanding obligations.

97. A contractual term may, however, provide for termination in the case of breach without the parties intending the consequences to be the same as would arise at common law if the term breached were categorised as a condition. Parties may agree that in the event of breach the innocent party should have the right to terminate the contract, so as to put an end to future performance obligations under the contract, but without intending that the defaulting party should be liable for any consequences of the termination. Such provisions are concerned solely to provide the innocent party with an option to put an end to his performance obligations, but not to confer a right to claim damages flowing from the termination itself. In such cases it is the innocent party’s election to exercise his option to terminate which is treated as the cause of the termination, and the cause of whatever loss flows from it, not the breach which triggers the innocent party’s right to cancel. I shall use the expression "option to cancel" to connote such a term, whilst recognising that contractual language couched in terms of cancellation may be equally consistent with an intention to treat the term breached as a condition with the full damages consequences which flow from that analysis.
98. Such an option to cancel leaves unaffected the innocent party’s rights to claim damages, which remain governed by the common law principles set out above. If there has been a repudiatory breach or renunciation, the right to damages is preserved; if there has been no repudiatory breach or renunciation, the option to cancel does not confer a right to damages, in the absence of clear language to the contrary, but merely confers a right to put an end to future performance obligations.


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