D. Exercising the Right to Affirm

• Author: John D. McCamus
• Profession: Professor of Law. Osgoode Hall Law School, York University
• Pages: 665-671

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When confronted by an anticipatory repudiation, the innocent party also has the option of affirming the contract and, subject to the limitations discussed below, awaiting performance of the agreement. As we have noted above,⁵⁹the fact that the innocent party has urged the repudiating party to retract the repudiation or has attempted to settle the dispute will not constitute an affirmation that precludes subsequent disaffirmation by the innocent party. Further, a mere failure to communicate an election to disaffirm to the repudiating party will not preclude a subsequent election to disaffirm unless the passage of time has resulted in significant prejudice to the repudiating party or, in the circumstances, the silence of the innocent party is reasonably

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interpreted as evidence of a decision to affirm the agreement.⁶⁰If the innocent party does affirm the agreement, however, the election is sometimes said to be irrevocable.⁶¹Arguably, however, the better view is that unless the repudiating party has suffered prejudice as a result of the affirmation, the innocent party should be considered to retain a right to disaffirm up to the time for performance.⁶²Otherwise, the innocent party, having been irrevocably committed to the contract by the affirmation, would be obliged to continue to perform the agreement, notwithstanding the unretracted and persisting anticipatory repudiation of the repudiating party.

Affirmation of the agreement must be distinguished from a waiver by the innocent party of the proposed breach by the repudiating party. Waiver of a proposed breach of contract excuses the repudiating party from the breach and may prevent the innocent party from seeking redress for losses sustained as a result.⁶³Affirmation of the agreement in the face of an anticipatory repudiation, however, preserves the rights of the innocent party against the innocent party and affirms the repudiating party’s obligation to perform. An election to affirm, however, carries with it certain risks for the innocent party. Thus, as the affirmed agreement remains in full force and effect, the repudiating party is entitled to take advantage of any subsequent events that may provide the repudiating party with a defence to the innocent party’s claim for damages for breach of contract. As the affirming innocent party is under a continuing obligation to perform the agreement, subsequent breach by the innocent party may provide a defence for the repudiating party. Thus, a service provider confronted with an anticipatory repudiation who affirms the agreement must maintain a readiness and willingness to perform.⁶⁴A claim to enforce a contract for the sale of goods based on the buyer’s anticipatory repudiation failed on the basis that the seller, who had affirmed the contract, failed to comply with certain conditions precedent to the closing of the transaction.⁶⁵Similarly, subsequent events may make performance of the contract by the

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repudiating party impossible or unlawful, thus providing a defence to the innocent party’s claim.⁶⁶Subsequent events may also have the effect of reducing the innocent party’s loss with subsequent benefit to the repudiating party.⁶⁷If the contract has been affirmed, the repudiating party may have a change of heart and decide to perform. In such circumstances, the innocent party is obliged to accept that performance.⁶⁸Although the affirming innocent party has lost the right to dis-affirm on grounds of anticipatory repudiation, the innocent party retains, of course, an entitlement to bring an action for damages for breach of contract against the repudiating party for any past and future breaches of the repudiating party’s obligations.⁶⁹As an alternative, however, it may be that the innocent party can bring an action for specific performance of the future obligation. Such relief has been awarded in the context of contracts for the purchase and sale of land, though the decrees granted would not be enforceable until the date for performance of the obligation.⁷⁰A more difficult question, however, is whether the innocent party’s decision to affirm the contract is constrained by a duty to mitigate loss. Thus, in a case where continuing to affirm the contract will run up damages that might otherwise be avoided by dis-affirmation and mitigation by the innocent party, it may be considered whether the innocent party is obliged to disaffirm and take reasonable steps in mitigation of loss. The policy considerations that support the general principle precluding recovery for avoidable loss⁷¹suggest an affirmative answer to this question. A somewhat surprising decision of the House of Lords in White & Carter (Councils) Ltd. v. MCGREGOR,⁷² however, appeared to suggest that the innocent party was not substan-

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tially constrained...