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Common Law Right To Terminate

October 13, 2020 | Silver Shemmings

Common Law Right To Terminate

In cases of breach of contract an innocent party will have a right to terminate in the following situations:

i. Where such breach is so serious in itself that it would be unreasonable to expect the innocent party to continue with the contract;

ii. Where such breach, whilst not so serious, is so protracted or repeated, despite the protests and/ or notices of the innocent party, that it either demonstrates a subjective intention not to be bound by the contract, or an objective involuntary inability to perform the contract properly:

iii. Where the innocent party is informed by the other, that he no longer intends to perform the contract, either in the present or in the future, or where the other party’s action are such as to render his future performance impossible (referred to as “anticipatory” breaches).

iv. Where the contract expressly provides for termination upon a specified breach.

Following a repudiatory breach the innocent party has the option to treat the contract as continuing (to ‘affirm’ the contract) or accept the repudiation resulting in termination.

Termination will not occur unless and until there has been a clear and unequivocal acceptance of the breach by the innocent party either by word or action.

The innocent party will not be considered to have elected to affirm the contract until after he has knowledge of:

i. the facts giving rise to the breach; and

ii. his legal right to choose between affirming the contract or accepting the repudiation.

It may be implied if, with knowledge of the breach and of his right to choose, the innocent party does some unequivocable act from which it may be inferred that

• he intends to go on with the contract regardless of the repudiatory breach;

• he will not exercise his right to treat the contract as repudiated.

Where the other party persists with the breach, the fact that the innocent party continues to press for performance this will not normally preclude the innocent party in the future from electing to accept the repudiation.

Where both parties have committed a repudiatory breach each of which give right to terminate, regard will be given to the order in which the breaches occurred.

Following the termination the innocent party will be released from all further performance of his obligations and, also will be entitled to damages, including loss of the contract, resulting from the termination.

But be warned, very rarely will the other party accept that it has committed a repudiatory breach. Rather, the other party will assert that it is you who has committed the repudiatory breach and it will seek damages.

Author Richard Silver is Senior Partner at Silver Shemmings Ash. He is multi qualified as a Barrister, Solicitor & Chartered Quantity Surveyor with over 30 years of experience in the Construction Industry

Aside from his work globally as a legal advisor, his main focus is dispute resolution, encompassing the Construction, Building, Rail & Civil Engineering sectors. Having acted as Arbitrator, Adjudicator, Mediator, Lead Representative and Expert Witness on quantum, programme & planning he is widely experienced, as Lead Representative & Advocate, in all forms of Dispute Resolution

At Silver Shemmings Ash, we provide seminars and training alongside our core activities in contentious and non-contentious matters. The purpose of these is to facilitate a greater knowledge and understanding of construction and property law. There remains a considerable lack of training in such areas for companies and this is an issue which we are looking to address

This article was originally published in the September edition of ‘London Business Matters’ the magazine for the London Chamber Of Commerce & Industry

London Business Matters September 2020

 


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