Performance And Breach

• Contracts may require entire performance of the promised obligation to satisfy the promise.

• Entire obligation contracts require 100% performance to receive payment for the obligation.

• Cutter v Powell (1795) and Bolton v Mahadeva (1972) are examples of cases where payment was
denied due to non-complete performance.

• High-value commercial contracts typically involve payment in instalments.

• Methods that allow for partial payment include dividing the contract into stages and substantial
performance.

• The Sale of Goods Act 1979 s.30(2A) allows for a delivery shortfall which is so slight that it would not
be reasonable to reject the goods.

• The Consumer Rights Act 2015 s.25(1) requires that a trader must pay for goods delivered to a
consumer at the contract rate, even if the quantity is wrong, and the consumer accepts them.

• A repudiatory breach is a breach that entitles the innocent party to terminate the contract.

• It can be difficult to determine if a repudiatory breach has occurred in cases of partial or

• A party alleging a repudiatory breach must prove that it has occurred.

• Whether a repudiatory breach has occurred depends on the terms of the contract, including the
standard of performance and type of term breached.

• Different terms impose different standards of performance: strict liability and reasonable care.

• Contracts for the supply of goods generally impose a strict standard of performance regarding
quality and quantity.

• Contracts for the supply of services generally require that reasonable care and skill are
exercised.

• The classification of terms as conditions, warranties, or intermediate/innominate terms is

• Only the breach of a condition or sufficiently important intermediate/innominate term gives rise
to a right to terminate the contract.

• A breach of contract does not automatically end a contract, regardless of its severity.
• A breach of a condition or a serious intermediate/innominate term gives the innocent party the
option to terminate the contract.

• The innocent party, regardless of whether or not he decides to terminate the contract, will have
the right to sue for damages.

• Damages for loss of bargain will only be available if the contract is terminated on the basis of a
repudiatory breach of contract.

• The party in breach may be unable to sue upon the contract if the obligations imposed by the
contract are dependent upon each other.

• The innocent party must communicate to the party in breach that he has elected to terminate
the contract.

• If a breach of contract is remedied before the injured party purports to exercise the right to
termination, then the fact that the breach had been remedied is an important factor for the court to
consider.

• The nature of a breach of contract is prospective. If the innocent party elects to terminate the
contract, future obligations are no longer binding and are discharged. Past obligations, however, remain.

• If an innocent party elects to terminate the contract for breach, she is no longer bound to accept
or make any performance under the contract.

• If the innocent party chooses to affirm the contract, they cannot subsequently claim that there
has been an anticipatory breach of the contract and purport to then accept the earlier breach.

• Where the innocent party elects not to terminate the contract, she is said to have ‘affirmed’ the
contract.

• In a contract of employment where there exists a good reason and an opportunity for the
innocent party to affirm the contract following a repudiation by the employer, the innocent party should
be allowed to do so according to Geys v Societe Generale (2012).

• Anticipatory breach occurs when a party either renounces the contract or disables themselves
from performing it before the performance is due.

• A renunciation must amount to a clear and absolute refusal to perform, either express or
indicated by the conduct of the party involved.

• The inability to perform must involve the breach of a contractual obligation but does not have to
be the fault of the party in breach.

• An anticipatory breach gives rise to an immediate right of action and a right to terminate if its
prospective effects satisfy the requirement of substantial failure in performance.
• Damages are determined and can be claimed at once before the time fixed for performance, by
reason of the decision in Hochster v De la Tour.

• Whether an injured party has the right to terminate for an anticipatory breach depends on the
form of the anticipatory breach.

• In the case of a renunciation, the renunciation must prove that the party in breach has acted in
such a way as to lead a reasonable person to conclude that they did not intend to fulfill their part of the
contract.

• In the case of a prospective inability, the ability of the injured party to rescind/terminate the
contract will depend on the seriousness of the consequences of the breach.

• An effect of an anticipatory breach is that the innocent party may elect to affirm the contract
and continue with performance that they know is not wanted by the other party.

• The innocent party cannot carry on with performance where they need the cooperation of the
party in breach and where they have no legitimate interest in performing the contract other than
claiming damages.

• If the innocent party elects to affirm the contract, they run the risk that the contract may later
be discharged by frustration, and they will not be able to claim for the earlier breach.

• If the innocent party affirms the contract and subsequently breaches it themselves, they will not
be able to rely on the other party's earlier breach of contract.