“Repudiation in the context of this case is taken to describe the
circumstances where “one party so acts or expresses himself as to show
that he does not mean to accept the obligations of a contract any
further” – see Heyman v Darwins[1942] AC 356 at 361 per Lord Simon.
In
normal circumstances a breach of contract by one party does not entitle
the other party to bring the contract to an end. There are two
exceptions to this rule:
(1)
where the contracting parties have agreed whether by express words or
by implication of law that any (or a particular) breach of contract
shall bring the contract to an end;
(2) where
the event resulting from the breach of contract has the effect of
depriving the other party of substantially the whole benefit which it
was the intention of the parties that it should obtain from the contract, i.e. where there is a fundamental breach – see Lord Diplock in Photo Products v Securicor [1980] AC 827 at 849.
In
the second case the court must consider the commercial significance of
the breach or breaches of contract. To amount to a fundamental breach it
must go to the root of the contract - see Federal Commerce v Molena Alpha [1997] AC 757 at 779.
Repudiation requires acceptance if it is to bring the contract to an end. Failure tocontinue
to perform may be sufficient notice that the innocent party has elected
to treat the contract as at an end. See Lord Steyn in Vitol SA v Norelf Ltd [1996] AC 800 at 810/811.
In
general, mere negligent omissions or bad workmanship, where the work
is substantially completed, does not go to the root of the contract and
is not therefore repudiation - see Hoenig v Isaacs [1952] 2 All ER 176.
However,
an accumulation of breaches may indicate an inability on the part of a
contractor to deliver the contract to a reasonable standard. In Sutcliffe v Chippendale & Edmonson [1971] 18 BLR 157 at 161 the court held that:
“the
contractors’ manifest inability to comply with the completion date
requirements, the nature and number of complaints from sub-contractors
and [the architect’s] own admission
that in May and June the quality of work was deteriorating and the
number of defects was multiplying, many of which he had tried
unsuccessfully to have put right, all point to the truth of the
complainant’s expressed view that the contractors had neither the
ability, competence or the will by this time to complete the work in the
manner required by the contract”.
Where
time is not of the essence, delay on the part of the contractor does
not amount to a repudiation unless it is shown that he cannot complete
the contract within a reasonable time or that the delay is such as to
deprive the innocent party of substantially the whole benefit of the
contract.
In Felton v Wharrie (1906)
HBC, Vol 2, 398, the contractor had not finished the work by the
completion date and when asked how long it would take he said he could
not say. The contractor continued to work on site and two weeks later he
was forcibly ejected. The Court of Appeal held that the employer had no
right to determine the contract.
“If
he were going to act upon the claimant’s conduct as being evidence of
his not going on, he ought to have told him of it and to have said, ‘I
treat that as a refusal’, and the man would know of it but the fact of
allowing him to go on cannot be any evidence of justification of
re-entry.”
“As
far as the employer is concerned, if the employer wrongfully and by his
own act and without lawful excuse renders completion of the contract
impossible, that amounts to a repudiation. This must apply to the
situation where the employer ejects the contractor from site before
completion.”
Hayes & Others –v- Gallant [2008]
