Contracts 2 Topic 4 PDF

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CONTRACTS 2 TOPIC 4: CONSEQUENCES OF AFFIRMATION OF TERMINATION; RESTRICTIONS ON THE RIGHT TO TERMINATE THE RIGHT TO ELECT -

Where there is a breach of intermediate term, condition or a repudiation the aggrieved party is entitled to terminate the contract Aggrieved party must choose to either affirm or terminate the contract Affirming does not destroy aggrieved party’s right to sue for damages

WHERE THE CONTRACT IS AFFIRMED Consequences of affirmation for the aggrieved party -

See Foran v Wight (1989) (??)

Consequences of affirmation for the non-performing party Right to rely on subsequent events -

Affirmation keeps the party alive for the benefit of both parties: Bowes v Chaleyer Party who has breached or repudiated a contract may be able to rely to his or her advantage on subsequent events, including subsequent breaches by the aggrieved party: Bowes v Chaleyer

Bowes v Chaleyer -

Buyer purported to cancel the contract, that was repudiation. BUT that repudiation was affirmed, and therefore all rights and obligations remain in place for both parties If a contract remains on foot after an innocent party affirms it, then the party in breach may become entitled to terminate if the (originally) innocent party then breaches or repudiates the contract

WHERE THE CONTRACT IS TERMINATED Consequences of termination for the aggrieved party -

Where a party terminates, that action brings all future obligations to an end Rights that have already been accrued are not discharged McDonald v Dennys Lasceles Ltd

Consequences of termination for the non-performing party -

Rights which have accrued prior to termination continue in force, and may be relied upon even by a party who has breached or repudiated the contract

Tropical Traders v Goonan -

Election to terminate does not need to be made immediately

Legione v Hateley -

Was about contract for conveyance of land where time was of the essence Purchasers entitled to enter into possession before settlement Settlement took 14 months Purchasers built a house on the land, sellers were not aware of this

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Purchasers requested extension of time before finalising agreement, Seller’s attorney’s secretary said it should be fine, but would get back to them Did not get back to the purchasers for five days, when they claimed they were entitled to terminate Majority rejected argument based on estoppel But found that the circumstances allowed for relief against forfeiture; a restriction on the right to terminate...