1

O'Sullivan & Hilliard's The Law of Contract (2018 8 ed). p. 376.

15.54 Acceptance of a repudiatory breach must be clear and unequivocal, but need not be by express words. As the court said in Heyman v Darwins (1942):

The other party may … ’accept the repudiation’ by so acting as to make it plain that, in view of the wrongful action of the party who has repudiated, he claims to treat the contract as at an end, in which case he can sue at once for damages.

This acceptance must generally be communicated to the other party (described as a ‘basic and well known principle’ by the Privy Council in Sookraj v Samaroo (2004)) or at least ‘overtly evinced’ to him, but can the innocent party accept the repudiation by mere failure to perform its future obligations? In State Trading Corpn [not a typo] of India (1989), the Court of Appeal suggested not, since ‘such conduct would be equivocal and equally consistent with a decision not to exercise the right to treat the contract as repudiated’.

How's the emboldened phrase true?

Suppose a promisee contracted to do/not do something. If he then doesn't/does it, can't the promisor infer that the promisee's mere failure to perform future obligations consists with the promisee's decision to repudiate the contract?


Westlaw has The State Trading Corporation of India Limited v M. Golodetz Limited:

This brings me to what I would respectfully regard as a red herring in the argument on behalf of STC which the learned judge considered at p. 188 of his judgment. STC sought to counter the arbitrators' finding that on 23rd December the sellers had brought the contract to an end (in the popular sense) by submitting that STC's silence or continuing unwillingness to open the letter of credit between 19th and 23rd December might in itself be regarded as an acceptance of the sellers' assumed breach of condition. In my view this is not a tenable proposition. What is commonly referred to as an acceptance of a repudiation must be communicated to the party in breach or at least overtly evinced: see e.g. Chitty on Contracts, 25th ed. vol. 1 para. 1598, Heyman v. Darwins (1942) AC 356 at p. 361 and The Mihalis Angelos (1971) 1 QB 164 explicitly at p. 204 E per Megaw LJ. The decision of the High Court of Australia in Holland v. Wiltshire (1954) 90 CLR 409 shows that an unequivocal overt act which is inconsistent with the subsistence of the contract may be sufficient, without any concurrent manifestation of intent directed to the other party. But saying and doing nothing at all, other than a continuing failure to perform, cannot constitute an acceptance of a repudiation even if the grounds for such an acceptance then exist. Such conduct would be equivocal and equally consistent with a decision not to exercise the right to treat the contract as repudiated.

It follows that I cannot accept that STC's silence and inactivity between 18th and 23rd December can be regarded as having had any legal consequences. No doubt they were reluctant, if not unwilling, to pay a large sum in U.S. dollars against documents for a cargo lying at the bottom of the sea, perhaps in particular since it was insured in India and therefore not necessarily in some external currency. Such a reaction would be commercially understandable although legally incorrect.

2

The wronged party has to clearly communicate to the other party that they accept their repudiatory breach

This can be done by:

  1. telling the other party,
  2. engaging in actions that make it clear that the wronged party considers the contract to be at an end - a landlord moving all the tenant's belongings to the kerb changing all the locks for example.

Remaining silent for a period of time is not a clear and unequivocal acceptance of the repudiation. It leaves the other party unaware of the status of the contract.

For example, image a contract where time is of the essence and you are required to deliver to me a widget on the 1st of the month for which I have to pay you on the 31st. On the 28th of the month you advise me that you will be unable to deliver until the 3rd. This is clearly a repudiatory breach and I have the option to accept your repudiation and terminate the contract or affirm the contract is on still on foot (I can sue for damages in either case). The default position is that the contract continues.

If I choose to accept the repudiation I have communicate that to you within a reasonable time. As I have no obligation to do anything under the contract until the 31st, my not paying you is consistent with both accepting the repudiation and affirming the contract and communicates nothing.

In the context of this hypothetical contract, a reasonable time is going to be quite short - maybe a day, possibly less because the choice I make will affect your rights and obligations. If I repudiate you are free to cancel your order for the widget or sell it to someone else, if I affirm you have to opportunity to work your guts out to find me a widget on the 2nd or even the 1st if you are lucky/skillful. Conversely, I have an obligation to you to minimize the damages I can claim - if I repudiate on the 28th I can spend the time between then and the 1st looking for another widget - I may get one on time cheaper than you were selling for in which case the damages are zero.

1

If you don't alert the other party when the contract is broken it is essentially the same thing as agreeing it is not broken.

Basically, how would they decipher between you saying it is OK that the other party made a mistake verses you decided the contract is broken if you do not tell them?

The courts do not want to be filled with people who OKed the mistake at first, but then decided they were not fine with it.

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