Chapter 15 Guidance on questions in the book

Question

Alice contracts with Book-a-Month Ltd, a mail order company, to buy the twelve-volume Knowall Encyclopaedia on an instalment basis. The company agrees that it will post one volume to her on the first of every month, and she agrees to send the price of £20 on receipt of each volume ‘by return of post’. Consider each of the following alternative situations:

(a) Alice has received the first three volumes on the 4th of January, February and March, and the company has received in return a cheque for £20 posted on 11th January and another cheque for £40 posted on 25th March. On 27th March, Book-a-Month asks your advice.

(b) Alice has been sent the first three volumes but not Volume 4. On 4th May she receives Volume 5, together with a note from the company explaining that, because of editorial difficulties, Volume 4 has been cancelled and will not now be produced. Advise Alice.

Answer guidance

(a) Remember you are asked to advise Book-a-Month. In practice, it would be vital to check the contractual terms, to see for example if there was any requirement for Alice to pay interest on late instalments, but for the purposes of the problem question you should concentrate on the issue of whether Book-a-Month can treat Alice as in repudiatory breach, to give it the option to terminate the contract, cease delivery of further instalments and claim damages, if any. You will need to consider whether time is expressly or impliedly of the essence for the payments and also advise Book-a-Month of the possibility of making time of the essence by notice for future payments. More significantly, apply the approach in the Decro Wall, Alan Auld and Valilas v Januzaj cases to determine whether Alice’s delays to date amount to a substantial failure of performance.

(b) This time you are asked to advise Alice. There is no doubt that she can decline to pay for the absent fourth instalment, but the salient question is whether she can go further and treat Book-a-Month as being in repudiatory breach, giving her the option to terminate the contract and claim damages, if any. First check whether the contract provides that delivery of each instalment is a condition and, if not, whether that term would be regarded as a condition for any other reason. If you conclude that it is an innominate term, the Maple Flock test is a useful guide to whether Alice can treat the breach as repudiatory, which tells you to consider ‘first the ratio quantitatively which the breach bears to the contract as a whole, and secondly the degree of probability or improbability of such breach being repeated.’ You will also need to consider the law on entire obligations, although Alice will find it hard to argue that her obligation to pay the price only accrues once Book-a-Month has performed in full, since the contract provides expressly for payment for each instalment.