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The Effect of Anticipatory Repudiation: Principle and Policy

  • P. M. Nienaber (a1)

Extract

I

The facts of the recent House of Lords decision, White and Carter (Councils), Ltd. v. McGregor, were so simple and have been canvassed so thoroughly as to be now practically a matter of common knowledge. The appellants' business consisted in the placing of advertisements, for a fee, on litter bins which were then distributed to various local authorities. They agreed to run the respondents' advertisement for a period of three years. The respondents repudiated on the ground that their sales manager who had concluded the contract had no authority to do so. The appellants refused to accept the repudiation and duly displayed the advertisements for the entire period, bringing at the proper time a suit for the full amount owing under the contract. The pertinent question was: were the appellants entitled to dismiss the repudiation and give effect to the contract on their side in order to secure performance on the other side; or rather were they obliged to adopt the repudiation as the end of the contract and the beginning of a suit for damages subject to mitigation? The latter view prevailed in all but the House of Lords where a majority of three to two preferred the former.

In coming to this conclusion the House of Lords in effect overruled an earlier decision, viz., Langford and Co., Ltd. v. Dutch, the facts of which were virtually on all fours with those of the present case. In Langford's case the appellant was unsuccessful in recovering the contract price for exhibiting an advertisement film which he persisted in showing despite the respondent's repudiation of the contract.

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1 [1962] 2 W.L.R. 17; [1961] 3 All E.R. 1178 (H.L.).

2 See [1962] C.L.J. 12; (1962) 78 L.Q.R. 263; (1962) 25 M.L.R. 364; [1962] J.R. 61; (1962) 79 S.A.L.J. 309.

3 1952 S.C. 15.

4 Ibid. at p. 18.

5 Cf. Clark v. Marsiglia (1845) 1 Denio 317, quoted in (1962) 78 L.Q.R. 268.

6 Cf. De Wet & Yeats, Kontraktereg en Handelsreg, 2nd ed., 109; Weasels, Law of Contract in South Africa, 2nd ed., para. 2939.

7 1915 C.P.D. 43.

8 1918 C.P.D. 6.

9 1915 C.P.D. 43 at pp. 46, 47.

10 Cf. Castle Wine and Brandy Co., Ltd. v. De Villiers, 1921 C.P.D. 216; Kameel Tin Co. (Pty.), Ltd. v. Brollomar Tin Exploration, Ltd., 1928 T.P.D. 726; Walker's Fruit Farms, Ltd. v. Sumner, 1930 T.P.D. 394; Myers v. Abramson, 1952 (3) S.A. 121 (C).

11 De Wet & Yeats, op. cit., 111.

12 According to McKerron ((1962) 79 S.A.L.J. 309, 313) it is not unlikely that in South Africa a claim of this nature could be met successfully with the exceptio doli generalis if it can be shown that in the circumstances its enforcement by the plaintiff would be unconscionable. The plaintiff, in the instant case, however, was not acting after a considerable delay (cf. Zuurbekom, Ltd. v. Union Corporation, Ltd., 1947 (1) S.A. 514 (A)), nor was there any question of “fraud or near-fraud” (Sette v. D.H.Saker (Pty.), Ltd., 1957 (2) S.A. 87 (W)) on his part, nor was his action based on a claim more apparent than real (De Wet, Estoppel by Representation in die Suid-Afrikaanse Reg, 86)— in the present circumstances the plaintiff was doing no more than demanding to perform, in order to secure the promised counter-performance, in terms of a contract which did not suffer from any vitiating defect whatsoever. Admittedly Lord Morton did observe that the appellants' course of action was “unreasonable and oppressive” (at p. 1185), but this observation is largely nullified by the fact that the majority sanctioned it. Even if it is accepted that the exceptio doli generalis embraces a principle of substantive law (cf. De Wet, op. cit., 89, North Vaal Mineral Co., Ltd. v. Lovasz, 1961 (3) S.A. 604 (T), 607) one would hesitate to suggest that conduct thus endorsed can lightly be regarded as improper or unconscionable, particularly in South Africa where the innocent party is recognised to have “a right to specific performance of a contract” (Thompson v. Pullinger (1894) 1 O.R. 301; Farmers Co-operative Society (Reg.) v. Berry, 1912 A.D. 343).

13 Cf. Williston, “Repudiation of Contracts” (1901) 14 Harv.L.R. 317.

14 White & Carter (Councils), Ltd. v. McGregor [1961] 3 All E.R. 1178 at p. 1181.

15 (1853) 2 E. & B. 678.

16 Cf. Holland v. Harecourt (1611) 1 Bulst. 177.

17 Cf. Hankey v. Smith (1789) Peake 57; Boorman v. Nash (1829) 9 B. & C. 145; Maclean v. Dunn & Watkins (1828) 4 Bing. 722; Laird v. Pim (1841) 7 M. & W. 474; Simons v. Patchett (1857) 26 L.J.Q.B. 195. Cf. ss. 50 (1), 51 (1) of the Sale of Goods Act, 1893.

18 Compare the breach alleged in Emmens v. Elderton (1853) 13 C.B. 494, “…yet that the company did not continue to retain or employ him on the terms aforesaid, but afterwards wrongfully, and without reasonable cause, dismissed and discharged him from such employment and retainer, and from thence wholly refused to retain or employ him, or pay him the salary aforesaid…”

19 Cf. Englefield's Case (1591) 7 Co.Rep. 11 (b) on 15 (a); Sir Anthony Main's Case (1596) 5 Co.Rep. 20 (b). In 1825 in Warburton v. Storr (1825) 4 B. & C. 103, Abbott C.J. observed that it was “a well known and established rule of law, that if a party covenants to do a certain thing, and afterwards, by his own act, disables himself from performing it, that is in itself a breach of the covenant. This rule is so well established that authorities need not be cited in support of it.” Cf. Ford v. Tiley (1827) 6 B. & C. 325; Planché v. Colburn (1831) 8 Bing. 14; Lovelock v. Franklyn (1846) 8 Q.B. 371; Short v. Stone (1846) 8 Q.B. 362; Caines v. Smith (1847) 15 M. & W. 189; Ellen v. Topp (1851) 6 Ex. 424.

20 Cf. the judgments in Hochster v. De La Tour and Frost v. Knight (1872) L.R. 7 Ex. 112.

21 (1839) 5 M. & W. 475; cf. Startup and Another v. Cortazzi (1835) 2 Cr.M. & R. 165.

22 (1839) 5 M. & W. 475 at p. 477.

23 (1849) 4 Ex. 345.

24 Cf. Heinekey v. Earle (1857) 7 E. & B. 410.

25 Cf. Fitt v. Cassanet (1842) 4 Man. & G. 898.

26 Cf. Prickett v. Badger (1856) 1 C.B.(N.S.) 296.

27 Cf. Smith's Leading Cases, Vol. 2, p. 41, 11th ed.

28 Cf. Franklin v. Miller (1836) 4 Ad. & E. 599. Coleridge J., after stating. “The rule is that, in rescinding as in making a contract, both parties must concur,” commented that where there was total failure on the one side, the other was no longer bound to continue the contract.

29 Cf. Lee v. Risdon (1816) 7 Taunt. 189; Pontifex v. Wilkinson (1845) 2 C.B. 350; Ehrensperger v. Anderson (1848) 3 Ex. 148.

30 (1853) 8 Ex. 82. The facts were briefly that the defendant erected a number of seats which he proposed to let to patrons for the viewing of the funeral procession of the late Duke of Wellington. He engaged the plaintiff to advertise the scheme abroad and to dispose of tickets and undertook to reimburse him for his efforts and expenses by an allowance of a certain percentage on the tickets sold. Before the plaintiff could sell any of the tickets he was requested not to do so as the defendant had decided to sell them on the spot. Accordingly the plaintiff referred applicants directly to the defendant and presented a bill for work done and expenses incurred. The defendant refused to meet the whole bill. Plaintiff sued on a quantum meruit.

31 On the premise “refusal invites refusal” it would be a matter of law.

32 The italics are mine.

33 (1853) 2 E. & B. 678.

34 Ibid. at p. 685—the italics are mine.

35 [1919] A.C. 16, 51. “If the one party to the contract, by words or by conduct, expresses to the other party an intention not to perform his obligation under the contract when the time arrives for its performance, the latter may say, ‘I take you at your word; I accept your repudiation of your promise, and will sue you for breach.’ This is really no addition to, but a particular application of, the principle first above stated. [‘Consensus created the contract, and consensus may determine it.’] The first party has, in fact, made an offer. This offer is, ‘I am not going to perform the contract. I offer to end it here and now, and to accept the consequence of ending it, those consequences, as I know, being that you can sue me for damages for my refusal.’ The other may accept or may decline that offer. If he accepts, then by consensus the contract is determined, but with a right to damages against the party who has refused to perform.” Cf. Morison, Rescission of Contracts, pp. 21, 34, 193.

36 (1886) 16 Q.B.D. 460, 472. Cf. Michael v. Hart [1902] 1 K.B. 483; Melachrina v. Nickoll & Knight [1920] 1 K.B. 693; Guy-Pell v. Foster [1930] 2 Ch. 169; Howard v. Pickford Tool Co., Ltd. [1951] 1 K.B. 417.Cf. “The Election Theory of Relations following anticipatory repudiation of contract”—Note (1937) Col.L.R. 610.

37 Per Lord Wrenbury in Bradley v. Newsom, Sons & Co., supra.

38 Cf. Corbin, Contracts, paras. 960, 979; Williston (1901) 14 Harv.L.R. 317, 412. Cf. Frost v. Knight (1870) L.R. 5 Exch. 322, 331, reversed (1872) L.R. 7 Ex. 111.

39 Per Esher, Lord in Johnstone v. Milling, supra. Cf. Ellis & Co.'s Trustee v. Dixon Johnson [1924] 1 Ch. 342; Heyman v. Darwins, Ltd. [1942] A.C. 356.

40 Cf. note 36, supra.

41 Cf. Limburg, “Anticipatory Repudiation of Contracts” (1925) Cornell Law Q. 135; Williston, Contracts (rev. ed.), para. 1322.

42 Cf. Consorzio Veneziano di Armamento e Navigazione v. Northumberland Shipbuilding Co., Ltd. (1919) 88 L.J.K.B. 1194, per Atkin L.J.; British Electrical and Associated Industries (Cardiff), Ltd. v. Patley Pressings, Ltd., Reid Bros. (Glasgow), Ltd., Third Party, Douglas Scott, Ltd., Fourth Party [1953] 1 W.L.R. 280.

43 Or to put it differently: since repudiation is only a breach on acceptance, and since a claim for specific performance is evidence of positive non-acceptance, the plaintiff, by asking for this relief, is destroying the very breach on which he claims it.

44 [1960] A.C. 316.

45 Cf. Giles v. Edwards (1797) 7 T.R. 181; Pordage v. Cole (1669) 1 Wms.Saund. 319, rule 5; Dumpor's Case (1603) 4 Co.Rep. 119 (b); Hunt v. Silk (1804) 5 East 449; Havelock v. Geddes (1809) 10 East 555; Jones v. Gibbons (1853) 8 Ex. 918.

46 Reid v. Hoskins (1856) 5 E. & B. 729; Société Générale de Paris v. Milders (1883) 49 L.T. 55; Ex p. Halliday, re Hall (1865) 12 L.T. 624.

47 Tredegar Iron and Coal Co., Ltd. v. Hawthorn Bros. & Co. (1902) 18 T.L.R. 716; Serutton, Charterparties and Bills of Lading, 16th ed., 158.

48 Ashmore & Son v. C. S. Cox [1899] 1 Q.B. 436.

49 Michael v. Hart [1902] 1 K.B. 483.

50 Reid v. Hoskins, supra; Hudson v. Hill (1874) 43 L.J.C.P. 281; Veithardt & Hall, Ltd. v. Rylands Bros., Ltd. (1917) 87 L.J.Ch. 604; Howard v. Payne, The Times, March 21, 1953.

51 Roberts v. Brett (1859) 6 C.B.(n.s.) 636; Stevens & Sons v. Timber and General Mutual Accident Ins. Assoc., Ltd. (1933) 102 L.J.K.B. 337; Sinason-Teicher Inter-American Grain Corp. v. Oilcakes and Oilseeds Trading Co., Ltd. [1954] 1 W.L.R. 935.

52 Michael v. Hart, supra, note 49; Berners v. Fleming [1925] Ch. 264.

53 Gueret v. Andorny (1893) 62 L.J.Q.B. 633; Dansk Rekylriffel Syndikat Aktielselskab v. Snell [1908] 2 Ch. 127; Mason v. Clouet [1924] A.C. 485; Thorp v. Fasey [1949] Ch. 649.

54 Johnstone v. Milling (1886) 16 Q.B.D. 460; Re Rubel Bronze and Metal Co., Ltd. and Vos [1918] 1 K.B. 315.

55 Freeth v. Burr (1874) L.R. 9 C.P. 208; Consorzio Veneziano di Armamento e Navigazione v. Northumberland Shipbuilding Co. Ltd. (1919) 88 L.J.K.B. 1194.

56 (1872) L.R. 7 Ex. 112.

57 Compare Keith's, Lord remarks: White & Carter (Councils), Ltd. v. McGregor [1961] 3 All E.R. 1178 at p. 1186.

58 Per Asquith, L.J. in Howard v. Pickford Tool Co., Ltd. [1951] 1 K.B. 417, 421.

59 [1961] 3 All E.R. 1178 at p. 1181.

60 Ibid. at p. 1193.

61 Actual breaches of contract correspond to direct breaches of promise, e.g., failure or delay in performance, defective performance and the doing of something prohibited by the contract itself. In the absence of a real or fictional promise not to repudiate (or prevent performance), repudiation and prevention of performance are not breaches of promise. For this reason breach of contract does not invariably coincide with breach of promise. Cf. however, the remarks of Wrenbury, Lord in Bradley v. Newsom, Sons & Co. [1919] A.C. 16 at p. 53.

62 Repudiation may occur before, at, during or after the stipulated time for performance. Because of the possibility of fluctuation the White & Carter type of situation will most often occur in connection with anticipatory repudiation.

63 “So anticipatory breach means simply that a party is in breach from the moment that his actual breach becomes inevitable. Since the reason for the rule is that a party is allowed to anticipate an inevitable event and is not obliged to wait till it happens, it must follow that the breach which he anticipates is of just the same character as the breach which would actually have occurred if he had waited.” per Devlin, J. in Universal Cargo Carriers Corporation v. Citati [1957] 2 Q.B. 401, 438. This relationship determines not only the fact of breach but also the type of relief obtainable. In addition it explains such a curious feature of repudiation as retraction by the repudiator. The relief given for repudiation is normally based on the inevitability of the eventual predicted actual breach. Whereas repudiation induces an expectation of non-performance, retraction restores the original expectation of full performance and removes the justification for relief. Inasmuch, however, as the mere act of repudiation may also cause harm extraneous to the loss of the promised performance, retraction does not necessarily avert all need for granting relief. Cf. Vold, “Withdrawal of Repudiation after Anticipatory Breach of Contract” (1926) 5 Tex.L.R. 9.

64 Infringement of the promisee's right to performance by the promisor is a breach of contract; infringement of this right by a third party is a tort. Cf. Lauterpacht, “Contracts to break a contract” (1936) L.Q.R. 504. By what manner of conduct this right can be infringed always remains a question of positive law.

66 Cf. Davenport v. R. (1877) 3 App.Cas. 131.

67 Co.Litt. 148 (b).

68 In Boston Deep Sea Fishing and Ice Co. v. Ansell (1888) 39 Ch.D. 339, Bowen L.J. remarked, “He cannot recover therefore on the special contract, nor can he recover on a quantum meruit, because he cannot take advantage of his own wrongful act to insist that the contract is rescinded.”

69 Cf. Reid v. Hoskins (1856) 5 E. & B. 729; Johnstone v. Milling (1886) 16 Q.B.D. 460; Guy-Pell v. Foster [1930] 2 Ch. 169; Mason v. Clouet [1924] A.C. 980.

70 For instance, breaches of condition, fraud, undue influence, etc.

71 Cf. Sinason-Teicher Inter-American Grain Corporation v. Oilcakes and Oilseeds Trading Co. [1954] 1 W.L.R. 935.

72 Byrne & Co. v. Leon van Tienhoven & Co. (1880) 5 C.P.D. 344; Ian Stach, Ltd. v. Bosley, Ltd. [1958] 2 W.L.R. 419.

73 Johnstone v. Milling (1886) 16 Q.B.D. 460; Michael v. Hart [1902] 1 K.B. 483.

page 225note 74 The Mersey Steel and Iron Co. v. Naylor, Benzon & Co. (1884) 9 App.Cas. 434.

75 Reid v. Hoskins (1856) 5 E. & B. 729, supra.

76 Cf. Smith v. Wilson (1807) 8 East 436.

77 Shaw v. Holland (1846) 15 M. & W. 136; Ridley v. De Geerts [1945] 2 All E.R. 654.

78 Cf. Jamal v. Moolla Dawood, Sons & Co. [1916] 1 A.C. 175.

79 Cf. Cheshire and Fifoot, Law of Contract, 5th ed., p. 511.

80 Cf. Hudson v. Hill (1874) 43 L.J.C.P. 281; Tredegar Iron and Coal Co., Ltd. v. Hawthorn Bros. & Co. (1902) 18 T.L.R. 716; Melachrino v. Nickoll and Knight [1920] 1 K.B. 693.Mayne and McGregor on Damages, 13th ed., para. 149.

81 [1961] 3 All E.R. 1178 at p. 1188.

82 Cf. Hasham v. Zenab [1960] A.C. 316.

83 Cf. The British Trade [1924] P. 104; Collier v. Sunday Referee Publishing Co. [1940] 2 K.B. 647. For South African law, see Hosten, “Concursus Actionum” (1960) 23 T.H.R.H.R. 251.

84 Cf. Marks v. Lilley [1959] 2 All E.R. 647.

85 Cf. 23 Halsbury, 3rd ed., p. 559; Hill and Redman, Law of Landlord and Tenant, 13th ed., 109, 308, 319. But see McKerron, op. cit., 312.

86 Williston, op. cit., para. 1298; Corbin, op. cit., 983; Restatement of the Law of Contract, para. 388.

87 Williston, op. cit., para. 1299.

88 Re Rubel Bronze Co. and Vos [1918] 1 K.B. 315; Reigate v. Union Manufacturing Co. [1918] 1 K.B. 592.

89 Cf. Hochster v. De La Tour (1853) 2 E. & B. 678.

90 Dunn v. Murray (1829) 9 B. & C. 780; Barnsley v. Taylor (1867) 37 L.J.Q.B. 39; Measures Bros. v. Measures [1910] 1 Ch. 336.

91 Cf. Wallis v. Warren (1849) 4 Ex. 362.

92 Cutter v. Powell (1795) 6 T.R. 320; Moriarty v. Regents Garage Co. [1921] 1 K.B. 423.

93 (1816) 4 Camp. 375; cf. Pagani v. Gandolfi (1826) 2 C. & P. 369.

94 (1816) 4 Camp. 375 at p. 376.

95 Fewings v. Tisdall (1847) 1 Ex. 295; Goodman v. Pocock (1850) 15 Q.B. 576.

96 25 Halsbury, 3rd ed., p. 523.

97 Cf. Emmens v. Elderton (1853) 13 C.B. 495.

98 Turner v. Sawdon [1901] 2 K.B. 653.

99 Re Rubel Bronze and Metal Co. and Vos [1918] 1 K.B. 315; Turner v. Goldsmith [1891] 1 Q.B. 544.

1 Marbe v. George Edwardes, Ltd. [1928] 1 K.B. 269.

2 Cf. Ellen v. Topp (1851) 6 Ex. 424.

3 Cf. International Correspondence Schools, Ltd. v. Ayres (1912) 106 L.T. 845. The plaintiff, a correspondence college, enrolled the defendant for a course of instruction in telephone engineering, payment to be effected in instalments. While the contract was still running the defendant gave notice that he did not propose to continue with it, whereupon the plaintiff instituted action for the recovery of instalments due at the time of the commencement of the action. The defendant contended that the instalments could not be recovered as the instruction had not been given, but Bray J. made light of this contention, “the defendant has had the consideration for which he bargained, namely, the right to receive instruction, and if he does not choose to avail himself of it, so much the worse for him.”

3a This consideration is conclusive where it is the servant who repudiates the contract wrongfully. Boston Deep Sea Fishing and Ice Co. v. Ansell (1888) 39 Ch.D. 339; White v. Boby (1877) 37 L.T.R. 625; Blake v. Hawkey, 1912 C.P.D. 817.

4 [1961] 3 All E.R. 1178 at p. 1186.

5 Ibid. at p. 1183.

6 Ibid.

7 The question is not, surely, whether the bargain is wise or foolish, but whether the performance is wasteful.

8 The word “repudiation” is used in several senses: Heyman v. Darwins, Ltd. [1942] A.C. 356, 378. In particular it is used in the sense of breach of contract and in the sense of rescission. (Cf. Hamzeh Malass & Sons v. British Imex Industries, Ltd. [1958] 2 W.L.R. 100.) In the first sense the repudiation is wrongful, in the second it is justified.

9 [1961] 3 All E.R. 1178 at pp. 1183 (Lord Reid), 1184 (Lord Morton), 1190 (Lord Keith).

10 For Scotland, see the remarks of Lord Watson in Stewart v. Kennedy (1890) 17 R. (H.L.) 1, 9; for Roman-Dutch law, see the remarks of Keith, Lord in Abdeen v. Thaheer [1958] A.C. 116.

11 Cf. Lord Keith's remark [1962] 3 All E.R. 1178 at p. 1187.

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