Termination By Breach Or Repudiation - Contract

TERMINATION BY BREACH OR REPUDIATION Right to rescind o Rescission ab initio SS? Discharge from the beginning o Can the parties returned, (substantially), to their original position? SS? Misrepresentation, mistake, unconscionable conduct, duress, undue influence, and or misleading or deceptive conduct * Right to terminate o Right to terminate the performance of the contract in futuro o Accrued rights may still be enforceable but not future rights SS? Breach and repudiation * Repudiation gives right to terminate Right to Terminate * Every breach of contract gives rise to a right to damages * Not every breach entitles the promise the right to terminate the contract * Right to terminate can come from: o Termination clause in the contract SS? Allows parties to alter the common law and is a question of construction SS? Statute * Rare, but certain legislation does give this right o Sale of Goods, ACL etc. SS? Cannot contract out of ACL SS? Remedies are also through the statute SS? Common Law * Arises in 3 situations: o Breach of a condition SS? An essential term in the contract o A fundamental breach of an intermediate term o Repudiation SS? Words or conduct amounting to a refusal to perform the contract Termination for Breach of a Condition * All breaches of a condition will give rise to the right to terminate, regardless of the gravity of the breach o Arcos v Ronaasen * Express or implied * A term can be deemed a condition o By statute SS? ACL s54 "guarantee as to acceptable quality" SS? By designation * Need a clear intention for term to have status as 'condition' * Use of the word condition is not decisive o Schuler v Wickman Machine Tool Sales o By construction SS? "the test of essentiality is whether it appears from the general nature of the contract, that the promise is of such importance that the promisee would not have entered into the contract unless he had been assured of a strict or substantial performance of the promise and this ought to have been apparent to the promisor" - Jordan CJ *