Repudiation

When does a party repudiate a contract giving rise to another party the right to terminate the contract for such repudiation?

The test is whether the conduct of one party is such as to convey to a reasonable person, in the situation of the other party, renunciation either of the contract as a whole or of a fundamental obligation under it.

• Exhibition Marketing Pty Limited ACN 010 519 329 v Richmond Valley Council ¹⁾

• Koompahtoo Local Aboriginal Land Council v Sanpine Pty Limited ²⁾
  • The term repudiation is used in different senses.
  • First, it may refer to conduct which evinces an unwillingness or an inability to render substantial performance of the contract.
  • This is sometimes described as conduct of a party which evinces an intention no longer to be bound by the contract or to fulfil it only in a manner substantially inconsistent with the party's obligations.
  • It may be termed renunciation.
  • The test is whether the conduct of one party is such as to convey to a reasonable person, in the situation of the other party, renunciation either of the contract as a whole or of a fundamental obligation under it.
  • In this case, we are not concerned with the issues that arise where the alleged repudiation takes the form of asserting an erroneous interpretation of the contract.
  • Nor are we concerned with questions of inability as distinct from unwillingness.
  • Secondly, it may refer to any breach of contract which justifies termination by the other party.
  • It will be necessary to return to the matter of classifying such breaches.
  • Campbell J said this was the sense in which he would use the word “repudiation” in his reasons.
  • There may be cases where a failure to perform,
  • even if not a breach of an essential term (as to which more will be said),
  • manifests unwillingness or inability to perform
  • in such circumstances that the other party is entitled to conclude that the contract will not be performed substantially according to its requirements.
  • This overlapping between renunciation and failure of performance may appear conceptually untidy, but unwillingness or inability to perform a contract often is manifested most clearly by the conduct of a party when the time for performance arrives.
  • In contractual renunciation, actions may speak louder than words.

• The Millstream Pty Limited v Shultz ³⁾, McLelland J

• Carr v J A Berriman ⁴⁾