Appeal against rejection of claim for novation of contract.
Held: Aikens LJ summarised the analysis by Lord Goff of the principles of affirmation by election in Kanchenjunga as follows: ‘i) If a contract gives a party a right to terminate upon the occurrence of defined actions or inactions of the other party and those actions or inactions occur, the innocent party is entitled to exercise that right. The innocent party has to decide whether or not to do so. Its decision is, in law, an election.
ii) It is a prerequisite to the exercise of the election that the party concerned is aware of the facts giving rise to its right and the right itself.
iii) The innocent party has to make a decision, because if it does not do so then ‘the time may come when the law takes the decision out of [its] hands, either by holding [it] to have elected not to exercise the right which has become available to [it] or sometimes by holding [it] to have elected to exercise it’.
iv) Where, with knowledge of the relevant facts, the party that has the right to terminate the contract acts in a manner which is consistent only with it having chosen one or other of two alternative and inconsistent courses of action open to it (i.e. to terminate or affirm the contract), then it would be held to have made its election accordingly.
v) An election can be communicated to the other party by words or conduct. However, in cases where it is alleged that a party has elected not to exercise a right, such as a right to terminate a contract on the happening of defined events, it will only be held to have elected not to exercise that right if the party ‘has so communicated [its] election to the other party in clear and unequivocal terms’.
Judges:
Aikens LJ
Citations:
[2009] EWCA Civ 9
Links:
Jurisdiction:
England and Wales
Citing:
Explained – Motor Oil Hellas (Corinth) Refineries SA v Shipping Corporation of India (The Kanchenjunga) HL 1990
A ship was caught in harbour when an air raid broke out. The master took the ship to sea where it suffered damage.
Held: The shipowners were protected by a war risks clause in the charterparty agreement. As to waiver by election, Lord Goff of . .
Appeal from – Tele2 International Card Company Sa and others v Post Office Ltd QBD 25-Feb-2008
. .
Cited by:
Cited – Force India Formula One Team Ltd v Etihad Airways PJSC and Another QBD 4-Nov-2009
The parties had entered into a sponsorship agreement, with the claimants undertaking to display the name of the defendants on their car. After the agreement, the claimant company had been taken over by parties with interests competing with those of . .
Lists of cited by and citing cases may be incomplete.
Contract
Updated: 22 July 2022; Ref: scu.280070