Donaldson LJ summarised the law as regards renunciation of a contract, saying: ‘The learned Judge formulated the test to be applied as being ‘whether MTC and the owners acted in such a way as to lead a reasonable person to conclude that they did not intend to fulfil their part of the contract’, and referred to the judgment of Mr. Justice Devlin in Universal Cargo Carriers Corporation v. Citati, [1957] 1 Lloyd’s Rep. 174; [1957] 2 Q.B. 401 at pp 193 and 436, and Maple Flock Co. v. Universal Furniture Products (Wembley) Ltd., [1934] 1 K.B. 148 at p. 157 . Since Mr. Justice Mustill gave judgment, the House of Lords has given judgment in Woodar Investment Ltd. v. Wimpey Construction U.K. Ltd. [1980] 1 WLR 277. While that decision is not directly in point it is useful for its review of the authorities. For present purposes we take from it the following propositions:
(a) Dissolution of a contract upon the basis of renunciation is a drastic conclusion which should only be held to arise in clear cases of a refusal to perform contractual obligations in a respect or respects going to the root of the contract.
(b) The refusal must not only be clear, but must be absolute. Where a party declares his intention to act or refrain from acting in a particular way on the basis of a particular appreciation of his obligations, either as a matter of fact or of law, the declaration gives rise to a right of dissolution only if in all the circumstances it is clear that it is not conditional upon his present appreciation of his obligations proving correct when the time for performance arrives.
(c) What does or does not amount to a sufficient refusal is to be judged in the light of whether a reasonable person in the position of the party claiming to be freed from the contract would regard the refusal as being clear and absolute?
One further proposition must be added, although it is not gleaned from or confirmed by the decision in Woodar’s case, namely, that (d) the conduct relied upon is to be considered as at the time when it is treated as terminating the contract, in the light of the then existing circumstances. These circumstances will include the history of the transaction or relationship. Later events are irrelevant, save to the extent that they may point to matters which the parties should have considered as hypothetical possibilities at the relevant time.’
Judges:
Donaldson LJ
Citations:
[1982] 1 Lloyd’s Rep 570
Jurisdiction:
England and Wales
Cited by:
Cited – SK Shipping (S) Pte Ltd v Petroexport Ltd ComC 24-Nov-2009
The parties disputed the termination of a charterparty for anticipatory repudiatory breach.
Held: To the extent that the dispute relied on disputes of fact, the court preferred the evidence of the claimant. The defendant had displayed an . .
Cited – Eminence Property Developments Ltd v Heaney CA 21-Oct-2010
The court was asked whether a vendor of land, who served a notice to complete making the time for completion of the essence of the sale contract, and then, mistakenly, treated the contract as at an end prior to the expiry of the notice, was thereby . .
Lists of cited by and citing cases may be incomplete.
Contract
Updated: 07 May 2022; Ref: scu.381488
