Termination for Repudiation
Repudiation occurs where one of the parties renounces his or her liabilities under a contract, or if he or she evinces an intention no longer to be bound by the contract, or shows he or she intends to fulfill the contract only in a manner substantially inconsistent with his or her obligations and not in any other way: Shevill v Builders Licensing Board.
Scope of Repudiation
Where an essential term has been breached, it will be unnecessary to consider if the promisor has repudiated the contract because they will be able to terminate for breach of an essential term. However, where the term breached is not essential, the promise will have to establish repudiation before the contract may be terminated.
Examples of Repudiation
Each case depends on the terms of the particular contract and the surrounding circumstances as to whether repudiation has occurred, however, other cases are useful to argue by analogy. The inability must relate to the substantially whole of the contract, not just a minor part.
Repudiation by Words or Conduct
Express Refusal
Refusal to perform all of the obligations under the contract will amount to repudiation: Hochster v De la Tour.
In Hochster v De La Tour, before a contract of employment was due to commence, the defendant told the plaintiff that his services were no longer required, repudiating his obligation.
Repudiation may also occur where the promisor refuses to perform some of his or her obligation under a contract, provided the refusal is a sufficiently serious matter: Associated News Papers v Blanc.
In Blanc the editor printed the plaintiff’s cartoon, however, not on the first page as agreed.
Implied Refusal
Repudiation may be implied from the promisor’s words or conduct, if a reasonable person in the shoes of the innocent party would clearly infer that the other party would not be bound by the contract, or would fulfill it only in a manner substantially inconsistent with that party’s obligation, and in no other way: Laurinda v CapalabaParkShopping Center.
In Laurinda v CapalabaParkShopping Centerthe lessee executed a lease of premises with authority for the lessor to complete the lease and lodge it for registration. Nine months elapsed, and the lease was not yet registered. In deciding if the lessor had repudiated its obligation, court drew a distinction between an intention to carry out a contract only if and when it suits the party to do so and when it suits the party to do so. The first case has repudiated as the party clearly no longer intends to be bound by the contract if it does not suit them. The second case will depend on the circumstances as the party still intends to be bound, however, will perform only when it suits them. The long delay was a relevant factor in decided the lessor had repudiated its obligation.
Unjustified Interpretation of the Contract
If a party acts on an erroneous construction and breaches one or more terms of the contract or evinces an intention not to perform except in accordance with the erroneous interpretation, the party may have repudiated his or her obligation provided the requirement of seriousness is satisfied: Luna Park (NSW) v Tramways FF
In LunaPark v Tramways the defendant failed to display each and every roof board on its trams for at least eight hours each and every day. The plaintiff notified the defendant of this failure but the defendant continued with its erroneous view, claiming it was unable to control the trams and therefore could not ensure the signs would be displayed for the specified period. The court concluded that the requirement to display was a condition and the defendant repudiated the contract as it was only prepared to comply on the basis of its erroneous construction.
LunaParkshould be contracted with the exception in DTR Nominees Pty Ltd v Mona Homes Pty Ltd. In DTR the vendor agreed to sell the purchaser nine subdivisions which were set out on a plan annexed to the contract. In accordance with a term, a copy of the plan annexed was to be lodged with the council, however, a plan different to that annexed was lodged. The court held that lodgment of a different plan did not repudiate the contract. Two situations should be distinguished, as repudiation occurs:
- where, in the face of adverse comment a party insists on an interpretation of the contract which is not tenable; not
- where the party, although asserting a wrong view of a contract is willing to perform the contract according to its tenor
Because the purchaser had not advised the vendor of the error, nor given the vendor any opportunity to rectify the position, there was no basis upon which the vendor was persisting with its interpretation in the face of enunciation to the contrary.
Wrongful termination of a contract
Generally, a wrongful termination of the contract constitutes repudiation of the contract: Braidotti v Qld City Properties Ltd.
In Braidotti the vendor under in an installment contract, purported to give notice of termination before complying with s72 Property Law Act, thus, termination was invalid and considered a repudiation as it ‘signaled an unqualified intention not to proceed with the contract’.
Commencement of proceedings
The commencement of proceeding does not amount to a repudiation of a contract unless those proceedings are commenced in such circumstances as to make it plain that the party commencing them thereby evinces an intention not to be bound irrespective of the outcome: Lombok v Supentina.
As a plaintiff seeking a determination by the court will usually abides by the court’s decision, such conduct will not be repudiation: Lombok v Supetina.
Several Consecutive Breaches
While minor breaches viewed in isolation may not be considered to amount to repudiation of the contract, several consecutive minor breaches may amount to repudiation: Progressive Mailing House v Tabali.
Repudiation based on inability to perform
Express declaration by words or acts
A contract will be repudiated if there is an express declaration by words or conduct of an inability to perform: Foran v Wight
In Foran v Wight, the vendor informed the purchases he would be unable to settle on the date for completion because he was unable to remove an easement from the title prior to the required date.
Implied inability
Repudiation for an inability to perform may be inferred by words or conduct of the promisor that the promisor is unable to perform eg A promises to sell his car to B but before completion sells it to C: Universal Cargo Carriers v Citati.
Anticipatory Breach
An anticipatory breach will amount to a repudiation where a party, prior to the time for performance under the contract, evinces an intention to no longer be bound to the contract according to its terms.
A promise may terminate for an anticipatory breach immediately without waiting for the date of actual performance if the breach is of a sufficiently serious nature ie an essential term or the repudiation goes to the root of the contract.
Once the due date for performance has arrived, all rights for the anticipatory breach are lost and any termination must be based on the actual breach: Foran v Wight.