G. A Definition of Repudiatory Breach

• Author: John D. McCamus
• Profession: Professor of Law. Osgoode Hall Law School, York University
• Pages: 639-641

Page 639

From the foregoing account, a definition of the concept of repudiatory breach can be devised in the following terms:

A repudiatory breach, giving the party not at fault a right to terminate the agreement, occurs where the breach is a breach of a term that is properly classified as

a) a "condition," being a term so classified by any one of the following means:

i) legislation imposing statutory conditions in particular contract types such a those for the sale of goods;

ii) stipulation of a term as a "condition" within an agreement though, in the absence of plain language, the courts may lean against construing a particular provision as a "condition," even where it is identified as a "condition" in the agreement where so construing the term would lead to unreasonable results and another interpretation of the provision is plausible;

iii) where not expressly so stipulated in an agreement, nonetheless a proper construction of the agreement indicates that it is the intention of the parties that the particular term be treated as a condition, with respect to which construction, the existing common low doctrine identifying particular contractual terms as being conditions will be considered helpful; or

iv) on the basis of the Hong Kong Fir test, the term is of such a nature that every conceivable breach of the term gives rise to an event that "will deprive the party not in default of substantially

Page 640

the whole benefit which it was intended that he should obtain from the contract," or

b) an innominate or intermediate term where, on the basis of the Hong Kong Fir test, the particular breach that has occurred is an event that deprives the party not at fault of substantially the whole benefit which it was intended that he or she should have obtained from the contract.

This brief summary requires some elaboration. First, with respect to

(a)(i), we have seen that even though, as in the case of the Sale of Goods Act, a number of statutory conditions are imported into a type of contract by a legislative scheme, the Hong Kong Fir innominate term analysis may nonetheless apply to other terms in such agreements.

With respect to (a)(ii), it is not necessary of course to use the term "condition" to stipulate that breach of a particular term will give rise to the right of the other party to elect to treat the contract as discharged. Use of the term "condition" may be the most common device employed for this purpose, but plain language indicating...