Chapter 12 Guidance on answering the questions in the book

Breach of contract and termination

1. 'Identifying when a party can terminate a contract for breach raises difficult technical and policy questions.' Discuss.

See 12.2.1The effect of termination

12.2.3 How are terms classified?

12.2.4 Electing termination

12.2.5 Loss of the right to terminate

This question invites you to discuss the question of when a party can terminate a contract for breach.  The sub-issues you need to address include:

  • (a) Put breach in the context of other ways of ending a contract, (b) put termination in the context of other remedies for breach and (c) contrast termination with other circumstances when a party need not perform.
  • What are the pros and cons of the remedy of termination for the claimant?  For the contract breaker? Are the parties' interests appropriately balanced by the law?  These are the 'difficult policy questions'.
  • What is/are the test/s for determining whether the claimant can terminate a contract for breach?  When can the right to terminate be lost?  Critically analyse them.  To what extent do these raise difficult technical questions?
  • Do you have any suggestions for reform to make the law less technical and/or more balanced in policy terms?

2. Should all terms be treated as innominate terms?

See 12.2.1The effect of termination

12.2.3 How are terms classified?

12.2.4 Electing termination

12.2.5 Loss of the right to terminate

This question addresses similar issues to question 1 but 'backwards', as it were, by starting with a reform suggestion and asking for your assessment of its desirability and workability.  Align your arguments for and against the suggestion.  Whichever side you favour, do not neglect to address the counter-arguments. Note that this is the approach adopted by the European Draft Common Frame of Reference.

3. Ida, a gizmo manufacturer, hires Jack to deliver her gizmos to her customers in London for one year. The contract states that 'It is a condition that gizmos should be collected before 6pm each day and delivered by 8.30am the next morning'. Jack is late in two collections and three deliveries in the second week. Ida's customers have not complained. Meanwhile, Ida discovers a much cheaper way of making the deliveries. On Monday morning of the third week, Jack shouts sexist abuse at one of Ida's employees and Ida terminates the contract because of Jack's sexist views. Advise Jack.

Ida wants out of this more expensive contract so she can enter a cheaper one.  Can Ida lawfully terminate the contract with Jack?  There are two possible bases:

  1. The late delivery - does this entitle Ida to terminate?  What are the arguments for and against?  What further facts do you need to know?   Is the likelihood of further breaches relevant?
  2. The sexist abuse of Ida's employee - does this entitle Ida to terminate?  Even if it does not, does it matter that Ida relies on this as the ground for termination?  What further facts do you need to know?

4. Explain and distinguish each of the following, giving examples:

  1. Termination, breach of an entire obligations clause, rescission and discharge.
  2. Breach, anticipatory breach and repudiatory breach

This is a straightforward question but you will give more shape to your answer if you see:

  • the list in (a) as different ways of being excused from further performance of the contract (what is the effect of each? When is a claimant entitled to each?); see 12.2 Termination for breach, 5.2 Rescission for misrepresentation 7.6.1 The effect of frustration, especially 7.6.1 Automatic discharge
  • the list in (b) as different ways of breaching one's contractual obligation, giving the innocent party a possible choice between different remedies for breach (when does each occur?  What remedies may be available for each?). See 12.1. Breach of contract

5. 'The sanctity of contract requires, at the very least, that the innocent party be permitted to continue with the contract even if the other party commits a repudiatory breach.' Discuss.

See 12.3 Affirmation.

This question invites you to discuss the scope of affirmation for an anticipatory breach. 

The sub-issues you need to address include:

  • The election available to the innocent party on the other's repudiatory breach.
  • How the election to terminate or affirm is made. 
  • When the right to terminate is lost (by definition, the innocent party will have affirmed).
  • The restrictions on the right to affirm.  What policies are in play here (the quotation suggests one)?  Is the current law clear and appropriate in policy terms?  Is there any way of improving the law?