Termination

Question 1

Moore & Co v Landauer & Co [1921]

trivial breach of a condition (size of cases)

Answer 1

The purchaser was entitled to reject the goods as they were not as described

Question 2

Bettini v Gye [1876]

singer did not arrive six days before concert; breach of a warranty

Answer 2

• Bettini was in breach of warranty and therefore the employer was not entitled to end the contract. Missing the rehearsals did not go to the root of the contract.
• Gye would only have an action in damages.

Question 3

Hong Kong Fir Shipping v Kawasaki [1962]

termination: conditions and innominate terms; seaworthiness; ‘substantially the whole benefit’

Answer 3

This case established the existence of innominate terms, which are neither conditions nor warranties until the term is breached and are then classified as one of the two depending on the seriousness of the breach

Question 4

Johnson v Agnew [1980]

effect of termination

Answer 4

• Termination is prospective - it wipes away future obligations under the contract but does not render the contract void ab initio
• Obtaining an order for specific performance does not forfeit the right to terminate and sue for breach
• Damages in contract law aim to put the innocent party, so far as money can do so, in the same position as if the contract had been performed

Question 5

The Mihalis Angelos [1971]

termination: conditions and innominate terms

Answer 5

Certain contractual terms, such as expected readiness clauses in charterparties, are invariably conditions in the interests of ensuring commercial certainty

Question 6

Bunge Corp v Tradax [1981]

termination: conditions and innominate terms

Answer 6

Time clauses are invariably conditions in commercial contracts even when breach does not deprive the innocent party substantially the whole of the benefit of the contract

Question 7

Lombard North Central Plc v Butterworth [1987]

parties identify term as condition

Answer 7

The term relating to prompt payment was a condition. The parties by their agreement had demonstrated that prompt payment was an essential term and the consequence of breach was clearly set out. Nicholls LJ stated that even one late payment would entitle the lessor to terminate irrespective of the effect of the breach.

Question 8

Schuler v Wickman Machine Tools Sales Ltd [1974]

reluctance to interpret term as condition if result would be unreasonable

Answer 8

The fact that a term is labelled as a ‘condition’ is not conclusive in legally classifying the term as a condition instead of a warranty.

Question 9

Rice (t/a Garden Guardian) v Great Yarmouth Borough Council [2003]

restrictive interpretation of termination clause

Answer 9

• the consequences of a breach depended upon the importance of the term broken, depending on whether the term can be constructed as a condition or an innominate term within the context of the contract
• parties cannot have intended that any breach of an innominate term entitles the innocent party to terminate the whole contract
• In construing whether the breaches of multiple obligations entitle an innocent party to terminate depends on whether the breach deprived the innocent party of the substantial benefit of the contract

Question 10

Stocznia Gdynia SA v Gearbulk Holdings Ltd [2009]

termination clause does not exclude damages for breach of contract

Answer 10

what it says

Question 11

Peyman v Lanjani [1985]

affirmation

Answer 11

• if a party becomes entitled to terminate a contract, it must elect whether or not to exercise that right by words or by conduct (and where the party is abandoning a right it would otherwise have, clearly and unequivocally)
• and that party must be aware of the facts giving rise to the right, as well as the right itself.

Question 12

White & Carter v McGregor [1962]

affirmation; right to keep contract alive

Answer 12

• In the event of an anticipatory breach of a contract notified to the innocent party, the innocent party can choose to affirm the contract (so as to perform the contract and thereafter sue for the contract price) if:
• it can perform without the cooperation of the defaulting party; and
• it has a legitimate interest in doing so.
• The right to affirm an anticipatory breach is not subject to any requirement of reasonableness

Question 13

Ocean Marine Navigation Ltd v Koch Carbon Inc (The ‘Dynamic’) [2003]

affirmation; right to keep contract alive

Answer 13

In certain circumstances, if the injured party has a legitimate interest (financial or otherwise) in performing the contract rather than claiming damages, it may decide not to accept the breach, continue to perform its own obligations and claim what is due under the contract (White and Carter (Councils) Ltd v McGregor [1962] AC (HL). T

Question 14

Dies v British and International Mining and Finance Corporation Ltd [1939]

contractbreaker retains common law right to restitution, subject to damages for breach

Answer 14

Restitution is possible when a contract is terminated, on the ground that the payment was conditional on something that has not happened (“failure of consideration”).
Even the contract-breaker can recover advance payments but they will still be liable to pay damages for breach

Question 15

Mann v Paterson Constructions Pty Ltd [2019]

restitution for work done before termination for which contractual right to payment not yet accrued

Answer 15

Where contractual rights have accrued under the contract, you must claim these in contract law.
But for work done for which the contractual right to payment has not yet accrued, you can claim restitution of its value (payment will be capped at contract price).