This is a revised version, the first edition having appeared in 1984 and the second in 1991. The author, Professor at the University of Sydney and a consultant to a law firm, is a leading commentator in the contractual field. The origin of this study lies in a Cambridge Ph. D., begun in the late 1970s, Len Sealy having been the supervisor.
This is a substantial and well-organised work. The complex Anglo-Australian rules and doctrines on this topic are presented in a scientific, accessible, detailed, and comprehensive manner. English leading cases are a major feature, but, given the author's domicile, Australian case law predominates. A special feature is that the author attempts to extract from the extensive case law a set of black-letter propositions, presented in the Appendix as a mini-code.
Besides chapters in the leading English textbooks, this work now sits alongside many other specialist works, which include: J. Birds, R. Bradgate, C. Villiers, Termination of Contracts (London 1995); M.A. Clarke, N. Andrews, A.M. Tettenborn, G. Virgo, Contractual Duties: Performance Breach, Termination and Remedies (London 2012) (breach section by N. Andrews); Q. Liu, Anticipatory Breach (Hart, Oxford, 2011); A. Farnsworth, Contracts (4th edn., New York 2004), ch. 8; Gareth Jones and with Peter Schlechtriem, ‘Breach of Contract’, in International Encyclopaedia of Comparative Law, vol. VII (Contracts in General), ch. 15, (Tübingen 1999); M. Mustill, ‘Anticipatory Breach’, Butterworths Lectures 1989–90 (London 1990); J.E. Stannard, Delay in the Performance of Contractual Obligations (Oxford 2007).
Carter prefers not to refer to ‘renunciation’ (by words and/or conduct). Instead he employs the language of ‘repudiation’ (7.03, and 7.07), although ‘anticipatory breach’ is separately mentioned as a ‘repudiation prior to the arrival or expiry of the time for performance by the promisor’ (7.08).
Amongst the topics raising difficulty in the English case law, the following are noteworthy (references to Carter's discussion are given below):
(1) repudiation justifying termination: on this topic, see Carter (2012), chs. 8 and 9, notably at 8.29. Lord Wilberforce in Federal Commerce & Navigation Co. v Molena Alpha Inc, ‘The Nanfri’ [1979] A.C. 757, 778, H.L., suggested that the law concerning repudiatory breach is ‘perspicuous’: ‘this is one of the more perspicuous branches of the law of contract and the modern position is clear.’ This curious observation is hard to reconcile with the fact that the leading House of Lords decisions (‘The Nanfri’, ibid, and Woodar Investment Development Ltd v Wimpey Construction U.K. Ltd. [1980] 1 W.L.R 277, H.L.) have proved hard to reconcile. Attempting a reconciliation, Etherton L.J. said in Eminence Property Developments Ltd v Heaney [2010] EWCA Civ 1168, at [61]: ‘the legal test is simply stated, or, as Lord Wilberforce put it, “perspicuous”. It is whether, looking at all the circumstances objectively, that is from the perspective of a reasonable person in the position of the innocent party, the contract breaker has clearly shown an intention to abandon and altogether refuse to perform the contact.’ This has been approved in Oates v Hooper [2010] EWCA Civ 1346, [2010] N.P.C. 119 and Samarenko v Dawn Hill House Ltd. [2011] EWCA Civ 1445, [2012] 3 WLR 638.
(2) express rights to terminate for breach: on this topic, see Carter (2012), ch. 10, notably at 10.08 ff.; 13.08. The (English) Court of Appeal in Stocznia Gdynia S.A. v Gearbulk Holdings Ltd. [2009] EWCA Civ 75, [2010] QB 27 (noted E. Peel (2009) 125 L.Q.R. 378) held that an innocent party can exercise simultaneously an express power to terminate for breach and the common law right to terminate a contract because of the other party's repudiatory breach. Furthermore, it was held that an express and guaranteed right to recover pre-payments can co-exist with the background common law right to terminate the contract by reason of repudiatory breach.
(3) characterisation of contractual obligations as strict or non-strict: on this topic, see Carter (2012), 2.33 to 2.67. The Court of Appeal in Platform Funding Ltd. v Bank of Scotland plc [2008] EWCA Civ 930, [2009] QB 426 acknowledged that normally in a contract for professional services the relevant professional will merely owe a duty to exercise due care, rather than a strict obligation whereby he impliedly guarantees the success of the task. But the court also noted that there can be exceptions based on (i) the specific terms of the agreement, or of a ‘certificate’ or warranty given by the professional in the course of his performance, or (ii) the relevant context (at [48], per Rix L.J.). The majority (Moore-Bick and Rix L.JJ., Sir Anthony Clarke M.R. dissenting) held that, on the facts, a valuer's failure to inspect the relevant property was a breach of an implied strict obligation to view the relevant property, and his certificate, stating that he had inspected the named property, constituted an express warranty (negligence had not been pleaded). The dissenting judge, Sir Anthony Clarke M.R. was not persuaded that the giving of the certificate should trigger strict liability.
(4) ‘reasonable/best endeavours’ clauses: On this related topic, the English courts have been quite active in recent times: for example, Vos J. in the (‘Chelsea Barracks case’) CPC Group Ltd. v Qatari Diar Real Estate Investment Company [2010] EWHC 1535, [2010] N.P.C. 74: see N. Andrews, Contract Law (Cambridge University Press, 2011), 2.07 to 2.12. There are references to non-English cases on this topic in Carter (2012), 2.68 ff.
(5) express classification of promissory terms: Rather than use the word ‘condition’, it will be safer for parties to spell out the innocent party's unqualified right to terminate for any breach of the relevant obligation. However, the Court of Appeal's decision in Rice v Great Yarmouth B.C. (26 July 2000, The Times, CA; (2001) 3 L.G.L.R. 4, CA) reveals that achieving such an unqualified right to terminate the contract requires very careful drafting indeed. There is discussion of parallel Australian case law in Carter (2012), 5.04 ff., but the Rice case is not considered.
(6) ‘innominate’ or ‘intermediate’ terms: the English Court of Appeal re-discovered this category of term in Hongkong Fir Shipping Co. Ltd. v Kawasaki Kisen Kaisha Ltd. [1962] 2 Q.B. 1 (on which, Carter (2012), 4.25 ff., 6.21 ff, notably at 4.25 n. 164, citing other Commonwealth case law). In Koompahtoo Local Aboriginal Land Council v Sanpine Pty. Ltd. [2007] HCA 61, (2007) 82 A.L.J.R. 345, the High Court of Australia, by a majority (Gleeson CJ, Gummow, Heydon, Crennan JJ.), approved the trichotomous classification of promissory terms as conditions, innominate terms, and warranties (see also New Zealand adoption of this classification in Holmes v Burgess [1975] 2 N.Z.L.R. 311; and on the Koompahtoo case see Carter (2012), 4.29, and Andrews in M.A. Clarke, et al., Contractual Duties: Performance. Breach, Termination and Remedies (London 2012), 12.022 to 12.25). However, in the Koompahtoo case Kirby J. dissented (notably, at [113] to [116]), preferring a dichotomy of ‘essential’ obligations (viz., conditions) and inessential obligations (viz., covering the joint ground of intermediate terms and warranties, but without adopting that differentiation between those species of inessential terms). Kirby J.'s approach removes from the system of contractual classification the ‘inessential’ term which in England is now classified as a ‘warranty’. Such a term imposes a contractual obligation breach of which will not justify termination (even if the actual consequences of breach on the facts prove to be serious, so that – had it instead been an intermediate term—the innocent party would have been entitled to terminate). Perhaps Kirby J. would have been prepared to acknowledge the parties' power ex ante to classify a term as a warranty in the sense that breach of that term will not justify termination. This would be consistent with the principle of freedom of contract. If this is accepted, a trichotomy of promissory terms seems inevitable, despite Kirby J.'s taxonomical contention that two categories are enough. But he does not address this point. The majority in this case did not discuss Kirby J.'s argument and instead saw virtue in the three-fold classification of conditions, innominate terms, and warranties.
(7) anticipatory breach: Carter (2012), at 13.13, notes the controversial majority decision of the House of Lords in Golden Strait Corporation v Nippon Yusen Kubishika Kaisha (‘The Golden Victory’), where it was held that damages should reflect post-breach events if they reduce or eliminate the claimant's loss: [2007] UKHL 12, [2007] 2 A.C. 353; noted Lord Mustill (2008) 124 L.Q.R. 569; J. Morgan [2007] C.L.J. 263; C. Nicholls (2008) J.B.L. 91; B. Coote (2007) 123 L.Q.R. 503; Sir Bernard Rix, in M. Andenas and D. Fairgrieve (eds.), Tom Bingham and the Transformation of the Law: A Liber Amicorum (Oxford 2009), at 679–83. Lords Bingham and Walker dissented, the latter saying, at [46]: ‘In this case an objective and well-informed observer, looking at the matter [at the time of the renunciation] would have thought...that the prospect of the war clause option being exercised … was a mere possibility carrying little or no weight in commercial terms.’ Lord Mustill in the L.Q.R. (see above) supports the dissentients, suggesting that the cause of action based on anticipatory breach, where the innocent party has terminated the contract in response, should be conceptualised as loss of contractual rights as they stood in value at the time of termination. That loss should be the market value of those rights, with appropriate adjustment to reflect contingencies then also affecting the value of those rights. It is submitted that the majority's decision in ‘The Golden Victory’ (2007) is unsound.
(8) nature of termination for breach: Carter (2012), at 3.24 ff., notably, at 3.41, offers a convincing analysis of termination for breach: ‘The contract is never terminated by a promisee's election to terminate. What is terminated is the duty of the parties to perform, and to be ready and willing to perform.’ As modern case law makes clear, various incidents of the contract survive ‘termination’, although not the primary duties to perform.
(9) the entire obligation rule: there is learned discussion of this topic in Carter (2012), at 6.84 to 6.93. The leading English decisions (all Court of Appeal) are Sumpter v Hedges [1898] 1 Q.B. 673, Hoenig v Isaacs [1952] 2 All E.R. 176, and Bolton v Mahadeva [1972] 1 W.L.R. 1010. An important discussion is B. McFarlane and R. Stevens (2002) 118 L.Q.R. 569.
Carter's Breach of Contract will continue to be consulted as a mine of useful information and stimulating analysis on this fundamental branch of contract law. This new edition renders this important work more accessible within the Common Law world and maintains important contact between its jurisdictions.
