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To be just and reasonable – the doctrine of ‘Repudiation’

23 October 2019

“The doctrine of repudiation must of course be applied in a just and reasonable manner…” – McCardie J[1].

You entered a contract with your counterparty. The contract expressly provided for each parties’ rights, obligations and inter alia the contractual procedures to execute in the event of a possible default and or failure by a party to execute or perform its envisaged obligations. Your contractual obligation to notify the defaulting party in order to afford it an opportunity to rectify, has been actioned and exhausted. No response to your notification to rectify is forthcoming, no further performance by the defaulting party and it plainly remains silent to any demands or requests directed in terms of the contract.

Such act or conduct (inter alia silence, non-responsive, refusal to perform), can lead a reasonable person to question the defaulting party’s true intentions under the circumstances.

The test for repudiation was confirmed by the courts and dates as far back as the late 1800’s, when Lord Colebridge LCJ expressed as follows[2]:

“the true question is whether the acts or conduct of the party evince an intention no longer be bound by the contract.

The circumstances and facts will differ from case to case and not every conduct or act of refusal or malperformance under a contract can be canvassed and alleged to be an act of repudiation. In Re Rubel Bronze and Metal Co and Vos [1918] 1 KB at p3222 McCardie J said as follows:

…In every case the question of repudiation must depend on the character of the contract, the number and weight of the wrongful acts or assertions, the intention indicated by such acts or words, the deliberation or otherwise with which they are committed or uttered, and the general circumstance of the case.”[3] The conduct must exhibit a deliberate and unequivocal intention to no longer be bound.[4]

The onus lies on the party who asserts repudiation to proof that the other party has repudiated the contract. In Datacolor International (Pty) Ltd v Intamarket (Pty) Ltd[5], the court held:

Repudiation is…not a matter of intention, it is a matter of perception. The perception is that of a reasonable person placed in the position of the aggrieved party. The test is whether such notional reasonable person would concluded that proper performance (in accordance with the true interpretation of the agreement) will not be forthcoming…The conduct from which the inference or impending non- or malperformance is to be drawn must be clearcut and unequivocal…Repudiation, it has often been stated, is a “serious matter”…requiring anxious consideration and – because parties must be assumed to be predisposed to respect rather than to disregard their contractual commitments – not lightly to be presumed.’[6]

Conduct and or an act of repudiation takes many forms. The author of Christie’s Law of Contract in South Africa (7th edition)[7], sets out some of these forms and separates conduct before performance is due and conduct when performance is due. These are inter alia:

  • a statement that the party concerned is not going to carry out the contract (anticipatory breach);
  • an unequivocal tender to perform less than is due;
  • an unwarranted but unequivocal refusal by the employer (buyer) to pay the full certified payment certificate (purchase price);
  • taking some action inconsistent with the intention to perform;
  • fulfilment of a term that does not form part of the contract; or
  • refusing to perform a disputed term on which the parties had no meeting of the minds.

Another party’s conduct of repudiation does not provide the innocent party with an open window to cease total compliance of its contractual obligations. When another party’s cooperation and performance of its contractual obligations is necessarily required to place you in a position of performance, but he/she fails and or refuses to perform (repudiates its contractual obligations), the innocent party can be relieved from further performance. However, considering the repudiating party’s conduct, it remains important that the he/she is informed and or has knowledge that the innocent party remains willing and able to perform.

The writer concludes and hereby suggest that in circumstances, when the parties are seeking cooperation and or are already entangled in flared and angry emotions, carefully consider the circumstances. Ensure you execute and exhaust all your contractual obligations and remedies available to you under the contract. If all has been exhausted and the default remains unrectified, consider the doctrine of repudiation and seek proper legal advice before hastily taking any action.

  1. In Re Rubel Bronze and Metal Co and Vos [1918] 1 KB at p3222
  2. See Freeth v Burr (1874) LR 9 CP at p 214. See further, Christie’s – Law of Contract in South Africa, 7th edition at pp610
  3. Christie’s – Law of Contract in South Africa, 7th edition at pp611
  4. Streets v Dublin [1961] 2 All SA 334, 1961 (2) SA 4 (W) 10
  5. [2001] 1 All SA 581, 2001 (2) SA 284 (SCA) [16]
  6. See Christie at pp612
  7. See Christie’s at pp611-612