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Audio recording 26.1 transcript
Chapter twenty-six is closely linked to chapter twenty-five, but in terms of twenty-six, we're focused on anticipatory breach. Which is still a breach that entitles the innocent party to terminate the contract, but the key feature of anticipatory breach is that the date for performance of the obligation has not yet fallen due, and in anticipation of not performing the contractual obligation at the contract date, the defendant typically is making it clear in advance that it won't perform. And that gives the claimant the right to accept the anticipatory breach and to terminate the contract. Now the theoretical basis of anticipated breach is a bit murky, but it's clear that pragmatically it's a very useful doctrine, and pragmatically it's clearly here to stay. But it does give rise to some particular difficulties, particularly as a regards to the remedies that are available if the innocent party does not accept the renunciation with anticipatory breach. And of course, the innocent party is not bound to do so. And an unaccepted repudiation is a thing writ in water. And in some situations, the innocent party will be able to keep on performing its side of the bargain without the cooperation of the defendants. Without the cooperation of the party who's committed anticipatory breach. And then the question is whether the innocent party can indeed just continue to perform the contract and sue for the contract price, and sue for a liquidated sum. And this, and the leading case in this area is White & Carter v McGregor, which is discussed in detail in the chapter. She's a really top contract law case to think about where the House of Lords split three to two, and the issues are very hard, I think. But when framing your approach to this case, it's important to realise that if the innocent party does keep on performing the contracts and sues for the contract price, sues in debt for the liquidated sum, then that party is seeking to enforce its prime, or to enforce the primary obligations under the contract. So, it's not a claim for damages, it's not a claim for secondary obligation for damages. Which might be subject to rules that shares mitigation and remoteness, and subject to judicial assessment. Instead suing for the prime obligation, there's some stipulated in the contract, which is probably going to be more, and procedurally it's much easier because you don't need a judge to assess damages. You just say, well, look, this is the sum that I'm owed and you try to enforce the debt. And of course, a particularly difficult issue in White & Carter v McGregor is whether or not the innocent party should be able to do that. And Lord Reed conjured up in his judgment the idea that the innocent party should not be able to sue for the agreed sum, where the innocent party had no legitimate interest in keeping the contract alive in doing so. And that's a very difficult notion, okay? It wasn't argued in the case, it's an idea from Lord Reed, and has got this huge importance and prominence in the discussion of this area since White & Carter. And because Lord Reed was in the majority in White & Carter, it must be that he thought that there was a legitimate interest in that case for keeping the contracts alive and suing for the agreed sum. But it's not clear what that is, it looks to me like it might just be purely financial. But if the legitimate interest is purely financial, in other words, I'll get more money through suing in debt then I would do in damages because of doctrines such as mitigation, then you're almost invariably going to find that the party has a legitimate interest in keeping the contract alive and suing for the agreed sum. Which maybe is, is a good thing, right? It's a difficult thing for you to assess whether you'd be with the majority or the minority in White & Carter. And maybe we should never prevent an innocent party from keeping the contract alive and suing in debt. Unless perhaps that would enable one party to keep an obligation going in perpetuity, because the law is generally against perpetual obligations. And that's an argument that's made by Janet O'Sullivan in her article, in the further reading at the end of the handout, which I think would be worth reading if you're interested in taking this topic further.