Anticipatory Breach in UK Law

The lodestar is that the damages should represent the value of the contractual benefits of which the claimant had been deprived by the breach of contract, no less but also no more.

Seeing that the renunciation itself is the breach, the damages must be measured by compensating the injured party for the loss he has suffered by reason of the renunciation. You must take into account all contingencies which might have reduced or extinguished the loss. It follows that if the defendant has under the contract an option which would reduce or extinguish the less, it will be assumed that he would exercise it.

One must look at the contract as a whole, and if it is clear that the innocent party has lost nothing, he should recover no more than nominal damages for the loss of his right to have the whole contract completed. The assumption has to be made that, had there been no anticipatory breach, the defendant would have performed his legal obligation and no more. The rights lost to the owners by reason of the assumed anticipatory breach were thus certain to be rendered valueless.

If the contractual rights which he has lost were capable by the terms of the contract of being rendered either less valuable or valueless in certain events, and if it can be shown that those events were, at the date of acceptance of the repudiation, pre-destined to happen, then in my view the damages which he can recover are not more than the true value, if any, of the rights which he has lost, having regard to those pre-destined events.

In my judgment, there is of course a middle ground between acceptance of repudiation and affirmation of the contract, and that is the period when the innocent party is making up his mind what to do. If he does nothing for too long, there may come a time when the law will treat him as having affirmed. If he maintains the contract in being for the moment, while reserving his right to treat it as repudiated if his contract partner persists in his repudiation, then he has not yet elected.

It seems to me that an affirmation of a repudiatory actual breach may differ from an affirmation of a merely anticipatory repudiatory breach in that the former breach is complete at the time it occurs whereas the latter breach looks to the future. An affirmation of an actual breach may therefore be said to leave nothing outstanding for the future, in that the worst has already occurred, whereas an affirmation of an anticipatory breach still leaves the future open.

(2) An act of acceptance of a repudiation requires no particular form: a communication does not have to be couched in the language of acceptance. It is sufficient that the communication or conduct clearly and unequivocally conveys to the repudiating party that that aggrieved party is treating the contract as at an end.