BetterLawNotes-5 (2)

CONTRACT LAW

With an actual breach of contract, what matters is whether the proffered performance satisfies the requirements of the contract. In general, it is irrelevant that the performing party thinks that what he is doing is in line with his contractual obligations. If his performance does not meet the requirements of the contract, the party is in breach notwithstanding that he thought he had ‘done enough’ or that he done his best.

Again, it seems that the position with anticipatory breach is different. In a nutshell the next case, Woodar v Wimpey, seems to establish that one party will not be committing an anticipatory breach if that party believes in good faith that it is acting in accordance with the contract even if, looked at objectively, it is not.

Woodar Investment Development Ltd v Wimpey Construction UK Ltd [1980] 1 WLR 277

Wimpey had agreed to buy a plot of land from Woodar. The contract provided that Wimpey could serve notice rescinding (ie terminating) the contract if prior to the completion date, a relevant authority had begun a procedure for the compulsory acquisition of the land. Wimpey, relying on this provision, did serve such a notice. Woodar claimed that the notice was invalid as the circumstances which had arisen did not fall within the scope of the provision. Woodar further claimed that by serving an invalid notice, Wimpey had committed an anticipatory breach. The House of Lords, by a bare majority, held that there was no anticipatory breach because by serving (an albeit invalid) notice Wimpey was evincing an intention to rely on, rather than abandon, the contract.

‘[I]t would be a regrettable development of the law of contract to hold that a party who bona fide relies upon an express stipulation in a contract in order to rescind or terminate a contract should, by that fact alone, be treated as having repudiated his contractual obligations if he turns out to be mistaken as to his rights. Repudiation is a drastic conclusion which should only be held to arise in clear cases of a refusal, in a matter going to the root of the contract, to perform contractual obligations.’

Lord Wilberforce.

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