THE EFFECT OF A REPUDIATORY BREACH
| Author | J. M. Thomson |
| Published date | 01 March 1978 |
| DOI | http://doi.org/10.1111/j.1468-2230.1978.tb00792.x |
| Date | 01 March 1978 |
THE EFFECT OF A REPUDIATORY BREACH
IN
my note, “Repudiatory Breach, Illegality and Contracts of
Employment,”
I
put forward the thesis that
a
repudiatory breach
operates automatically to bring
a
contract to an end
unless
the
disadvantaged party chooses to waive the breach2 and firm the
contract. Consequently, there is no need for him to prove that
he accepted the breach in order
to
bring the contract to an end.
While the recent cases directly on the point have been in the field
of individual employment law,n
I
argued that there was no reason
why this should not
also
be true for the general law of contracts.
Lest it be thought that it is now too late to overturn the conventional
view that
a
repudiatory breach must be
“
accepted
”
before the
contract comes to an end, it is the purpose
of
this paper to demon-
strate why it is both sound in theory and open on authority
so
to
approach the problem.
A
repudiatory breach is simply
a
breach of contract
so
serious
that it entitles the innocent party to treat it as a repudiation of the
whole contract. This situation will arise after:
(i)
A
fundamental breach,
i.e.
a breach which has the result of
depriving the innocent party of the total benefit
of
the agreed
consideration;
or
(ii)
A
breach
of
a fundamental term,
i.e.
a
breach which has
the result of depriving the innocent party of the substantial benefit
of the agreed c~nsideration.~
1
(1975) 38
M.L.R.
346.
2
In using the term
“
to
waive the breach,” I mean simply that the disadvantaged
party elects not
to
treat the repudiation as bringing the contract
to
an end. Any
right
to
damages arising from the breach will, of course, remain. This terminology
was used by Lord Wright in
Tale and Lyle Ltd.
v.
Hain Steamship Co. Ltd.
(1936)
55
L1.L.R.
159, 178.
The case is also reported in
[1936] 2
All
E.R.
597.
8
The leading case is
Hare
v.
Murphy Bros.
[I9731
I.C.R.
331,
upheld on other
grounds by the Court
of
Appeal in
[
19741
I.C.R.
603.
The approach taken in
Hare
was approved in
Sanders
v.
Ernest
A.
Neale
[
19741 3
All E.R.
327.
It has since been
followed in the following cases,
e.g. Samways
v.
Swan
Hunter
[
19751
I.R.L.R.
190;
Foster and Brook
v.
Brook Motors
[I9751
I.R.L.R.
191;
McCarthy
v.
Burroughs
Machines Ltd.
(1975) 10
I.T.R.
46;
Burroughs Machines Ltd.
v.
Timmoney
[1976]
I.R.L.R.
343;
Waudby
v.
H.F.M. (Transport) Co Ltd.
[1976]
I.R.L.R.
35.
But
compare the approach
of
the Scottish E.A.T. in
T.H.F.
V.
Murphy
119771
I.R.L.R.
186.
It is not clear how far the modern principle is inconsistent with the views
of
Avory J. in the old case
of
Healey
V.
S.A.
Francaise Rubastic
[I91711
1
K.B.
946,
where he allowed an employee to recover wages which fell due after he had
committed
a
repudiatory breach but before his employers dismissed him; but the
employers had delayed dismissing him for several months after they had suspected
him
of
misconduct and that
seems
a
crucial factor in the decision.
As
we shall
see,
delay can operate
to
prevent a party from treating a contract as at an end as
a
result
of
a repudiatory breach. In
Chappell
v.
Times Newspapers
[1975]
I.C.R.
145
Megarry J., as he then was, refused
to
enter into this controversial area of labour law.
4
Hong Kong Fir Shipping Co.
v.
Kawasaki Kishen Kaisha Ltd.
[1962] 2
Q.B.
26
per
Diplock L.J. at p.
66.
This case has recently been followed with approval by
the Court
of
Appeal in
Cehave N.V.
v.
Bremer
[1975]
3
All E.R.
729.
137
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