when can parties cancel a contract?
when there has been a serious breach/misrepresentation or repudiation
CCLA s 36?
if one party makes it clear they do not intend to perform their side of the bargain, the other may cancel the contraction
what happened in Kumar?
K agreed to buy units in the future, this was breached as no furniture included and refusal to settle. side agreement breached and inferred from conduct.
what else does kumar establish?
there must be a manifestation of clear intention; there can be two types of breaches and it is a high threshold
2 types of breaches from Kumar
- actual breach = failure to perform when performance is due (without lawful excuse)
- anticipatory breach = indication of unwillingness
Synge v Synge
D agreed to leave land title to P, left to TP, clear repudiation
Schmit v Holland
couple asked if they could exit agt, not repudiation (later conduct suggests otherwise)
Starlight
genuine dispute about proper construction of contract is normall not repudiation (willingness + intention to fulfil)
Section 37 CCLA
Party may cancel contract if induced to enter into it by misrepresentation or if term is or will be breached and it is an essential term, or
an increase in burden, decrease in benefit or substantial difference in what was represented
2 steps to cancellation
- establish the qualifying event
- was the term essential or substantial consequences following the breach?
how to establish the qualifying event?
for misrepresentation, must be a false/errenous statement of past or present fact; partial repudiation, or actual/anticipatory breach
how to establish if an express term is essential/substantial consequences?
kumar - could say e.g. “performance being essential” or “strict performance required”
Manzeal - it is reasonable notice assessed on facts e.g. “time is of essence”
Mana - if term not included, would not have entered
how to establish if an implied term is essential/substantial consequences?
kumar - would party seeking cancellation more probably than not decline to enter if term not essential?
mana - objective asessment; what did parties contemplate to be effect of breaching the term?
what are some examples of substantial consequences? and cases?
bachelor peas - must be the effect of the breach, not the breach itself (inc burde, reduce benefit, b/b substantially different) and this was repudiation
Manzeal - “significant or considerable change” and is objective
- lack of punctual payment (yes)
- Sharplin; land 25% decrease (yes)
Stine - house had no ‘rustic element’ (no)
what are the common law rules of cancellation and two cases?
can cancel for an insufficient reason when a known sufficient reason exists
Thomson - contract for 24 motel units, only had building consent for 12. tried to cancel initially, then were allowed to repudiate on basis of misrep
kumar - buyer does not lose right to cancel if cancelled for wrong reason
Section 38 CCLA - when is a party not entitled to cancel?
if they have full knowledge of repudiation, misrep or breach (can only sue them for specific performance then) and this can be expressed or implied by words/conduct
what amounts to affirmation? (4 cases)
Jansen - “firm and settled choice” (yes)
Grey - continuing payments showing intention (yes)
Wilson - verbally agreed to sort it out via arbitration (no)
White & Carter Ltd - contract for W to display Ads on council bins for 3 years, M repudiated, W entitled to cancel but continued to display ads, sued M - held he had a right to claim entire value + carry out (criticised)
Section 41 of the CCLA?
when cancellation may take effect when:
a. made known to other party
b. shown by some clear means reasonable if it is not practical to communicate, or reasonable due to conduct (Kauri Developments - party was overseas, sending letter to solicitor = efficient)
what counts as adequate notice under the CCLA?
words/conduct showing clear intention to cancel and must be enough to make other party aware of intention
5 instances where adequate cancellation and 1 not?
- phone call/email
- speedy parcels - employer repudiated, employee did not show up
- akl waterbeds - cheque is being stopped
- le page - instruction to builder to stop work and send final acc
- andas - cancellation communicated by TP Agent may be effective
- McLachland v Taylor - threat to find another buyer is not adequate because it is an ambiguous statement
section 42 of the CCLA?
a. all future performance and obligation cease
b. no automatic restitution
what are two cases under deposits?
grant v Ikeda - rights accured unconditionally before cancel and remain unperformed at time of cancel can be enforced
worsedale - no repayment of W’s deposite after W defaulted and found new buyer. deposits are guarantees and so last if a promise is broken
what can be sorted if cancellation s 43?
Power of court to grant relief
direct a party to pay to any other party the sum that the court thinks just
direct a party to do or refrain from doing, in relation to any other party, any act or thing that the court thinks just:
vest the whole or any part of any relevant property in a party:
transfer or assign the whole or any part of any relevant property to any other party:
deliver the whole or any part of the possession of any relevant property to any other party.
Section 43
Order for relief may be subject to terms and conditions
