Peter Turnbull v Mundus Trading- Contract continues; both parties required to perform obligations.
Slight exception where innocent party is not liable to keep performing, where, although they have affirmed, the other party intimates that performance would be futile.
Renunciation occurs where one party by words or conduct evidences an intention not to perform part or all of the contract prior to the time that performance is due (the old terminology knows this as repudiation).
There are two ways of establishing repudiation:
1. by reference to the promisor’s words and conduct; and
2. by reference to the promisor’s actual position.
In each case the promisee must establish that the absence of readiness or willingness is, or will be, a serious matter. Either:
1. that the absence of readiness or willingness relied on extends to all the promisor’s obligations; or
May be an issue with the bona fides of the promisor.
2. that it clearly indicates that promisor will breach the contract in a way which gives rise to right to terminate.
Renunciation based on words or conduct
Express renunciation (express refusal to perform)
Occurs when there is a refusal to perform all of the contract.
Hochster v De La Tour - D wrote to P before services due and told him he was no longer needed; this was an express renunciation that went through the whole of the contract. Plaintiff accepted repudiation anticipatory breach
A renunciation may arise in less extreme cases (ie renunciation of part of the contract), provided that the requirement of seriousness (see above) is satisfied.
In such a case there can be repudiation even if there is no express refusal to perform a particular term.
Implied refusal to perform
Can infer from promisor’s words or conduct.
Whether the acts or conduct. . . amount to an intimation of an intention to abandon and altogether to refuse performance of the contract (Freeth v Burr per Coleridge CJ).
Bancks - newspaper not printing the cartoon on the front page was conduct that was equivalent to an express renunciation.
In Capalaba it was said that the conduct by itself wasn’t sufficient, but it was sufficient because it was combined with a notice to perform.
Erroneous construction of the contract
Where a promisor adopts an erroneous construction of the contract a repudiation (renunciation) may occur if the promisor acts on the construction by breaching one or more terms, or by evincing an intention to perform only in accordance with his or her construction.
General rule: wrongful termination of the performance of a contract constitutes a repudiation.
Renunciation based on inability
Declared inability and disabling conduct
Promisor expressly declares that it is unable to perform all contractual obligations.
Can be inferred from conduct if the only reasonable inference from the promisor’s words or conduct is an inability to perform the contract (Universal Cargo Carriers).
Not necessary to show as a matter of fact that the defendant was unable to perform.
The seriousness requirement may be satisfied because the words or conduct relate to all (or substantially all) obligations. However, the words or conduct need not go that far.
Foran v Wright - vendors told purchasers they would be unable to settle on time. This was a repudiation (renunciation) by the vendors because time was of the essence.
Factual inability
Necessary to show that the defendant was as a matter of fact unable to perform (Bowdell v Parsons).
Must prove promisor was wholly and finally disabled (Beningtons).
Universal Cargo Carriers v Citati – not enough to have reasonable grounds - had to be able to prove metal definitely couldn’t have been loaded on time.
Rowson v Hobbs- sale of land, held the vendor was disabled from performing because it was proved that they would not have been able to obtain title to the land before the conveyancing date.
Inferred inability
Termination based on the ground that a reasonable person in the promisee’s position would draw the inference that the promisor is wholly and finally disabled from performing.
Renunciation based on erroneous belief
General rule is the fact that the defendant operated under an erroneous belief about what the contract required is not relevant: Luna Park.
No inquiry into the state of mind of the renunciating party (this would create uncertainty).
Nevertheless the honest or bona fide belief of the defendant may mean that the renunciation has no legal effect because they are not really renunciating the contract.
Woodar Investments v Wimpy - sale of land, P purported to bring contract to an end based on a contractual clause (genuinely thought they were allowed to do this). P argued they hadn’t renunciated because they could not have had the requisite intention. HoL accepted this argument. Parties were friendly, simply wanted a determination of the legal position (potentially distinguishable). Viewed narrowly by Australian courts.
DTR Nominees v Mona Homes (pre- Woodar)- ultimately whether a party renunciates or not is a matter of intention. Courts have to ask whether they intended to renunciate. HC said that where supposed renunciation concerned a condition, it is not possible to argue you did not intend to renunciate. Reason: condition is seen as an essential term of the contract. Where you say you will not be performing, difficult to come to any other conclusion than that you intend to renunciate.
