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Repudiation

Repudiation occurs when one party communicates an unequivocal intention to no longer be bound by the contract through words or conduct without lawful excuse. Repudiation can be anticipatory if it occurs before the due date for performance. The innocent party then has the option to either rescind (accept the repudiation) or affirm the contract (reject the repudiation). If they rescind, the contract ends and damages may be claimed. If they affirm, their duties are suspended but they can claim damages if an actual breach occurs later. Repudiation constitutes a continuing breach until the contract ends or is affirmed.

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23 views

Repudiation

Repudiation occurs when one party communicates an unequivocal intention to no longer be bound by the contract through words or conduct without lawful excuse. Repudiation can be anticipatory if it occurs before the due date for performance. The innocent party then has the option to either rescind (accept the repudiation) or affirm the contract (reject the repudiation). If they rescind, the contract ends and damages may be claimed. If they affirm, their duties are suspended but they can claim damages if an actual breach occurs later. Repudiation constitutes a continuing breach until the contract ends or is affirmed.

Uploaded by

snekhumalo86
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Repudiation

A party commits the breach of repudiation when, by words or conduct, and without lawful
excuse, manifests an unequivocal intention no longer to be bound by the contract or by any
obligation forming part of the contract

This includes a denial of the existence of the contract, a refusal to perform or to accept
performance and the notification of inability to perform

The intention to repudiate is judged objectively

The test is whether the party accused of repudiation has acted in such a manner as to lead
a reasonable person to believe that they do not intend to fulfil or completely fulfil their
part of the contract

If a party misunderstands the true content, meaning or effect of a contract, and in good
faith disputes their obligations under the contract, their conduct will constitute a
repudiation of the agreement if it satisfies the test above

Repudiation can be considered to be an anticipatory breach as it may occur before the time
stipulated for performance

The breach is anticipatory as it also anticipates or predicts some form of another breach

A party who gives notice in advance of the due date that they will not make or accept
the stipulated performance, or that performance will be late, defective or incomplete,
thereby gives notice that they will commit some form of a breach such as mora
debitoris

Repudiation may also occur on or after the due date for performance, in which case it will
often merely reinforce one of the other forms of breach

A mere delay in making or receiving performance should not be construed as repudiation


of the contract

At least some positive conduct is required

Repudiation constitutes as a continuing form of breach

This is because having initially elected to uphold the contract and thereby having
afforded the repudiator an opportunity to repent, the innocent party may subsequently
cancel if the repudiator persists in their refusal to be bound by the contract

Repudiation 1
For the repentance principle to apply, it is sufficient that the innocent party
reasonably perceives that the defaulting party will not remedy its breach despite
having been given the opportunity to do so, no further act of repudiation is required

Conflicting approaches to repudiation in modern law


According to the traditional approach, which still regards repudiation as being analogous to
an offer to rescind, the breach is fully constituted or completed only when the repudiation is
accepted by the innocent party and if rejected, the repudiation is a nullity with no legal effect
at all
This approach has been considered outdated, once repudiation was considered an independent
breach of contract, as it is illogical since if repudiation entailed the acceptance of an offer to
rescind, the agreement would be terminated by mutual consent and no breach would remain
on which a base a claim for damages
Effect of repudiation
The ordinary election to rescind or affirm the contract that faces the innocent party in all
serious cases of breach
Rescission of the contract (acceptance of the repudiation)
The repudiation must be of a sufficiently serious nature to merit rescission
The right to rescind depends on that nature and gravity of the non-performance or
malperformance threated by the repudiation

If that breach were to materialise and it would merit rescission of the contract, the
innocent party may forthwith rescind on account of the repudiation

Where the contract prescribes a procedure to be followed before the contract may be
rescinded for breach, the innocent party is not obligated to follow this procedure before
cancelling when the breach takes the form of repudiation

The guilty party cannot have it both ways; having repudiated the contract, they may not
seek refuge in one of its terms

When the innocent party has the right to rescind and elects to exercise it by accepting the
repudiation, the contract comes to an end upon the communication of this decision to the
other party and the usual consequences of recession ensue
Affirmation of the contract (rejection of the repudiation)

The innocent party is not obligated to accept the repudiation, if they prefer, they may ignore
or reject it and hold and other party to the agreement

Repudiation 2
If the repudiation is rejected, the innocent party does not have an immediate claim for specific
performance or damages

The innocent party’s own duty to perform is suspended for the duration of the repudiation,
provided that the innocent party makes the repudiating party aware that they are at all times
willing and able to perform should the latter chance their mind

An unaccepted repudiation may found an immediate claim for specific performance

This would not count in cases where the repudiation occurs prior to the due date for
performance as to accelerate such date would be to make a new contract for the parties

Repudiation 3

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