Last updateTue, 24 Feb 2015 5pm

David Sawtell investigates recent case law on repudiatory breach

When a defaulting party is in repudiatory breach of an agreement, the injured party can either accept the repudiation, bringing it to an end, or choose to affirm the contract. This discretion, although a broad one, still has limits, particularly if there is no good reason to affirm the agreement. Deciding whether to terminate an agreement for repudiatory breach of contract has very important repercussions, especially where the agreement governs a long-term relationship rather than a single transaction. Knowing where the boundaries lie is therefore important in the context of contract management. Does a decision-maker in this position need to approach the choice in good faith? Unfortunately, the law in this area has become somewhat confused following the decision in MSC Mediterranean Shipping Company SA v Cottonex Anstalt [2015].

Additional Info

  • Case(s) Referenced:

    Abrahams v The Performing Right Society [1995] EWCA Civ 35

    Gator Shipping Corporation v Trans-Asiatic Oil Ltd SA, ‘The Odenfeld’ [1978] 2 Lloyd’s Rep 357

    Isabella Shipowner SA v Shagang Shipping Co Ltd (‘The Aquafaith’) [2012] EWHC 1077 (Comm)

    MSC Mediterranean Shipping Company SA v Cottonex Anstalt [2015] EWHC 283 (Comm)

    Stocznia Gdanska SA v Latvian Shipping Co [1996] 2 Lloyd’s Rep 132

    The President of India v Lips Maritime Corporation (‘The Lips’) [1988] AC 395

    White & Carter (Councils) Ltd v McGregor [1962] AC 413