B. The Elements of Anticipatory Repudiation

• Author: John D. McCamus
• Profession: Professor of Law. Osgoode Hall Law School, York University
• Pages: 655-658

Page 655

An anticipatory repudiation consists of an "intimation of an intention to abandon and altogether to refuse performance of the contract."¹¹Such an intention may be intimated either by words or by conduct. The determination as to whether such an intention has been evinced by conduct may, of course, require the making of difficult factual inferences. As Devlin J. observed in a leading English case,¹²the basic test to be applied is "whether the party renunciating has acted in such a way as to lead a reasonable person to the conclusion that he does not intent to fulfil his part of the contract."¹³Such conduct could include, for example, the sale of the subject matter of the agreement to a third party¹⁴or otherwise making one’s performance impossible,¹⁵preventing the innocent party from performing¹⁶or purporting to exercise contractual rights that do not exist, such as a non-existent right to cancel the agreement.¹⁷The problem of determining how grave the anticipated non-performance must be in order to treat the agreement as terminable on grounds of anticipatory repudiation is precisely parallel to the problem of determining whether an actual breach of contract provides a basis for the innocent party to elect to treat the contract as discharged by breach. As we have seen,¹⁸the conceptual framework within which this issue is analyzed in the context of actual breach has evolved to some extent over time. Under the modern analysis, the test for determining whether a repudiatory breach giving rise to the right to terminate the agreement has occurred is to consider whether the consequences of the breach in the particular circumstances of the case deprive the innocent

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party of "substantially the whole benefit"¹⁹that it was the intention of the parties that the innocent party would obtain from performance of the agreement. In the context of anticipatory repudiation, then, the parallel test would be whether the future performance that the repudiating party evinces an intention not to perform meets this threshold. The validity of this approach was confirmed by Lord Diplock in Afovos Shipping Co. S.A. v. Pagnan,²⁰in the following terms:

The doctrine of anticipatory breach is but a species of the genus repudiation and applies only to fundamental breach. If one party to a contract states expressly or by implication to the other party in advance that he will not be able to perform the particular primary obligation on his part under the contract when the time for performance arrives, the question whether the other party may elect to treat the statement as a repudiation depends upon whether the threatened non-performance would have the effect of depriving that other party of substantially the whole benefit which it was the intention of the parties that he should obtain from the primary obligations of the parties under the contract then remaining unperformed. If it would not have that effect there is no repudiation, and the other party cannot elect to put an end to such primary obligations remaining to be performed. The non-performance threatened must itself satisfy the criteria of a fundamental breach.²¹

Consistently with the history of the doctrine of repudiatory breach itself, a variety of expressions have been used to attempt to characterize the level of gravity of the threatened non-performance that is required to engage...