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 636

CHAPTER V.

BREACH OF CONTRACT.
PAGB
Breach of contract-remedies-acts equivalent to breach ...... 63.5
Breach by promiser disabling himself from performance........ 636
Breach by renunciation of contract-renunciatiou not accepted-
may be withdrawn-effect of renunciation in waiving con-
ditions precedent ........................................ 637
Effect of bankruptcy or insolvency of promiser .............. 640
Discharge of right of action for breach ...................... 640

A BREACH or default in performance discharges a contract in the Breach of

. . contract.
sense that it converts it into a right of action for damages or
pecuniary compensation; and any subsequent performance of the
terms affords no defence to such action, but operates only by way
of reparation and in mitigation of the damages (a).-At common Remedies.
law the right of action for damages was the only remedy. But the
Court of Chancery exercised the jurisdiction of compelling specific
performance of the contract upon equitable terms, in those cases
which admitted of such remedy, and where the contract could
still be substantially performed notwithstanding the breach. The
courts now constituted under the Judicature Acts administer either
remedy which is appropriate to the case, and to which the party
may appear entitled. But actions for specific performance are
assigned primarily to the Chancery Division of the High Court;
and an action in which specific performance is advanced by way
of counterclaim may be transferred to that division(b).-
The performance of contracts has been treated in a former Acts
chapter; and any default in performance as there explained con- enivalent
to breach.
stitutes a direct breach (c). It remains here to notice some cases
which are regarded in law as equivalent to a breach of contract,
and have a like effect in giving a right of action:-namely, where,
before the time appointed for performance, the promiser disables
himself from performance; and where, before the time for per-
formance, he absolutely renounces the intention to perform.

(a) CallanderY. Hawkins (1877), 2C. P. London Land Co. v. Harris (1884), 53
D. 592. See Bastin v. Bidwell (1881), L. J. Q. B. 536; 13 Q. B. D. 640.
18 Ch. D. 238. (c) See ante, p. 601.
(b) Judicature Act, 1873, s. 34
636 DISCHARGE OF CONTRACTS.

PART IV. An act of the promiser which disables him from performance
Breach by may be equivalent to a breach in giving an immediate cause of
Sroam!er action. Where performance is due at a certain future time, dis-
himself from ability is in general no breach until the time has arrived; but
performance. where performance is due upon a contingency which may happen
at any time, and which therefore requires a continuing ability and
readiness, the promiser by disabling himself becomes presently
liable to an action for breach of contract. As if a person contracts
to sell or lease land to another upon a request made, or upon a
payment of money, or other discretionary condition, he must con-
tinue ready to do so; and if he disables himself by conveying or
demising the land to a third party, he thereby dispenses with
request or tender or any other condition precedent, and becomes
liable to an immediate action for breach (d). So upon a sale of
specific goods to be delivered upon request, if the seller sells and
delivers them to a third party, he is at once liable to an action for
breach of contract without request, because he has disabled himself
from delivering them (e).-- Upon this principle a promise of
marriage is broken immediately by marriage with another party;
all conditions precedent under the contract, as a request, or the
lapse of an appointed or a reasonable time, are thereby dispensed
with; and it is immaterial that the marriage becomes dissolved by
death or otherwise before such conditions are satisfied (f).--A
contract of employment in a business for a certain term at a fixed
salary is broken by the employer abandoning or selling the busi-
ness; and the salary for the whole term may be claimed imme-
diately; but no claim can be made for prospective commission or
profits on business which the employer might carry on or not as
he pleased (g). But where the servant is to be remunerated by
a commission on orders or sales, it is an implied term that, during
the period fixed for the duration of the employment, the master
will do everything on his part to enable the servant to earn his
commission, and may include the carrying on of business (h). So

(d) Ford v. Tiley (1827), 5 L. J. 0. S. 686 L. R. 5 Ch. 737; Rhodesv. Forwood

K. B. 169 ; 6 B. & C. 325 ; Lovelock v.
Franklyn (1846), 15 L. J. Q. B. 146;
8 Q. B. 371.
(e) Bowdell v. Parsons (1808), 10 East,
359.
(f) Short v. Stone (1846), 15 L. J.
Q. B. 143; 8 Q. B. 358; Caines v. Smith
(1146), 15 L. J. Ex. 106; 15 M. & W.
189.
(g) (1870), 39 L.
.
(1876), 47 L. J. Ex. 396; 1 Ap. Ca.
256. See Hanlyn v. Wood (1891), 60
L.J.Q.B. 734; (1891)2 Q. B. 488;
Devonald v. Rosser (1906),75 L. J. K. B.
688; (1906) 2 K. B. 728.
(A) Re Patent Floor Cloth Co. (1872),
41 L. J. C. 476; Turner v. Goldsmith
(1891), 60 L. J. Q. B. 247; (1891) 1
Q. B. 644.
(a4lure's
8a7e
8.
 BREACH OF CONTRACT. 637

an offer to divide a bonus amongst customers may entitle a customer Cnl. V.

who has complied with the conditions on which the offer is based
to damages if the business is transferred (i). The compulsory
winding-up of a company operates as a dismissal of the manager
and other agents of the company, and entitles them to prove for
compensation as for a breach of contract, but a voluntary winding-
up has not this effect (k). And the same result follows from the
transfer of the business to another company (1); and from the
appointment of a manager and receiver who takes over the business
for creditors (m). The winding-up of an insurance company
operates as an immediate breach of the contract with a policy-
holder; it exonerates him from further payment of premiums and
entitles him to an immediate claim for damages, the measure of
which is the sum required to procure a similar policy of the same
amount (n).

If before the time appointed for performing the contract one Breach by
renunciation
party gives notice to the other of his intention not to perform it, of contract.
he may be charged in an immediate action as for a breach; in
which action the other party may claim prospectively such
damages as would be caused by a breach at the appointed time
subject to any circumstances which may operate in mitigation of
the damages (o). The notice for this purpose must express an
absolute and unequivocal intention of renouncing and repudiating
the contract (p). A mistaken construction of the contract or an
imperfect tender which may be amended in time, or an expression
of present disability to perform it, is not sufficient (q). And a
party has no right before performance is due to demand and have
a distinct notice whether the other party intends to perform the
contract or not (r); and upon a similar principle where a charter-

(i) Ogdens Ld. v. Nelson (1905), 74 v. Knight (1872), 41 L. J. Ex. 79; L. R.

L. J. K. B. 433; (1905) A. C. 109. 7 Ex. 111.
(k) 3fcDowall's case (1886), 55 L. J. (p) Joe v. Gibbons (1853), 22 L. J.
C. 620; 32 Ch. D. 366; Alidland Cos. Ex. 317; 8 Ex. 920; Mersey Steel Co. v,
Bk. v. Attwood (1904), 74 L. J. C. 286 ; Natlor (1884), 63 L. J. Q. B. 497; 9
(1905) 1 Ch. 357. Ap. Ca. 434; Cornwall v. Henson (1900),
(1) Stirling v. Maitland(1864), 34 L. j.(1900) 2 h. 298
B. 1; 5 B. & S. 840. (q) Mhrsey Steel Co. v. Naylor (1884),
) 1; v(no)Rei
Bm . 3 L. J. Q.v. B.
840 . o. 185), 6 6 Brrowosan 497; 9 Ap. Ca. 434;
v.Exposies Free (1878), 48 L. J. Q. B.
L. J. Q. B. 388; 19 Q. B. D. 264. 66; 4 Q. B. D. 600; Johnsonev. Milling
(n) Holdich's case (1873), 42 L. J. C. (t886), 66 L. J. Q. B. 167; 16 Q. B. D.
612 ; L. R. 14 Eq. 72. 460.
(o) Hochster v. De la Tour (1853), 22 (r) Riple v. Mlre (1849), 18 L. J,
L.J.Q.B.4 2 E.&B.86788; Frost Ex.419; 4 Ex. 345.
638 DISCHARGE OF CONTRACTS.

PAT IV.- party gave the charterer an option to cancel the contract if the
ship were not an " arrived ship " at a named port by a named date,
the shipowner cannot call upon the charterer to exercise his option
although the day fixed for arrival be passed (s). The renuncia-
tion does not operate as a rescission of the contract, because one
party to a contract cannot alone rescind; but the other party
may adopt such renunciation with the effect that the contract is
at an end, except for the purpose of bringing an action for the
damages consequent upon the renunciation (t).-Where a person
engaged a courier from an appointed future day for three months
certain at a monthly salary, and before the appointed day wrote
to decline his services, it was held that an action would lie as for
a breach of the contract without waiting for the time appointed
to commence the employment (u). So with a contract for the
sale and delivery of goods at a future time, or in instalments at
future times, a notice by the seller to the buyer of his intention
not to deliver may be accepted and acted upon as an immediate
breach; and the buyer is primd facie entitled to damages measured
by the difference between the contract price and the market price
at the appointed time or times of delivery, leaving it to the seller
to show in mitigation that he could in the interval have obtained
a new contract upon better terms; or if the time for delivery has
not elapsed when the damages are assessed, the future damages
must be estimated prospectively (x). Where a shipowner repu-
diated a contract for the carriage of goods to be shipped on A
certain date, as having been made by an agent without authority,
it was held that the owner of the goods was entitled to accept -such
repudiation as a breach of the contract and to maintain an action
for damages; though the shipowner when the time arrived, and
before any new arrangement had been made, offered to take the
goods and perform the contract (y). Upon the same principle
where a man promised to marry a woman upon the death of his
father, and afterwards, whilst his father was living, announced to
her his intention of not fulfilling his promise; it was held that she

(s) Moel Tryvan Ship Co. v. Andrew (t)Tochster v. be ln Tour (1953), 22

Weir 4 Oo. (,910), 79 L. J. K. B. 898; L. J. Q. B. 455; 2 E. & B. 678.
(1910) 2 K. B. 844. (x) )rwn v. (1972), 41 L. J.
(ti JAhntone v. Millinq (1885), 55 L. J. Ex. 214 L. R. 7 Ex. 319; Roper v.
Q. B. 167; 19 Q. B. D. 460; Gen. Bill- Johnson (1872),42 L. J. 0. P. 65; L. R.
Posting Co v. Atkinson (1908), 78 L J. 8 C P. 167.
C. 77; (1909) A. C. 118. See Measures (y) Danube By. v. Xenos (1862), 31
Bros. v. Measures (1910), 59 L. J. C. 707; L. J. C. P. 284; 13 C. B. N. S. 825.
2 Ch. 248. L1.10)
 BREACH OF CONTRACT. 639

was entitled immediately to treat the announcement as a breach of CaP. V.

contract, without waiting for the death of the father (z).
Renunciation of the contract will operate as a present breach Renunciation
only if accepted and acted upon as such by the other party; who not accepted.
may, if he pleases, disregard it and insist upon performance
according to the terms. " The promisee may treat the notice of
intention as inoperative and await the time when the contract is
to be executed, and then hold the other party responsible for all
the consequences of non-performance. But in that case he keeps
the contract alive for the benefit of the other party as well as his
own; he remains subject to all his own obligations and liabilities
under it, and enables the other party not only to complete the con-
tract, if so advised, notwithstanding his previous repudiation of
it, but also to take advantage of any supervening circumstance
which would justify him in declining to complete it " (a). If
the seller of goods for delivery at a future day gives notice of his
intention not to deliver, or if the buyer gives notice of his inten-
tion not to accept, in either case the other party may abide by the
contract and await the appointed day; and if the contract be not
then performed, he may claim full compensation according to the
market price at that day (b). And where the charterer of a ship
gave notice to the shipowner that he should be unable to provide a
cargo, and requested him to leave the port; but the shipowner
insisted upon having a cargo in fulfilment of the charter-party;
and whilst the days allowed for loading were still unexpired, a
declaration of war put an end to the charter-party; it was held
that the charterer was thereby discharged (c).
Renunciation of the contract, if not accepted by the other parfy Renunciation
as a present breach, may be withdrawn at any time before the per- withdrawn.
formance is due; but if not in fact withdrawn it is evidence of
continued intention to the same effect (d).-Therefore it operates Effect in
waing
as a continuing waiver and discharge of all conditions precedent conditiona
to the liability for the performance; such as a demand of perform- precedent.
ance, the lapse of a reasonable time or an appointed time, the
tender of money or goods, or the like (e). Where a contract was
(z) Frost v. Knight (1872), 41 L. J. Hart Co. (1902), 71 L. J. K. B. 265
Ex. 78; L. R. 7 Ex. 111. (1902) 1 K. B. 482.
(a) Per cur. Frost v. Knight (1872), 41 (c) .Aversi v. Bowden (1856), 26 L. J.
L. J. Ex. 79: L. R. 7Ex. 112; Johnstone Q. B. 3 6E. & B. 953.
v. MSling (1885), 55 L. J. Q. B. 167; (d) Ripley v. M'Clie (1849), IS L. J.
16 Q. B. D. 460. Ex. 419; 4 Ex. 346.
(b) Leigh v. Paterson (1818), 8 Taunt. (e) Ripley v. H'Chire (1849), 18 L. J.
540; Phillpotts v. Evans (1839), 9 L. J. Ex. 419; 4 Ex. 345.
Ex. 33; 5 It. & W. 475; v. 6ichael
 640 DISCHARGE OF CONTRACTS.

PART IV. made for the manufacture and supply of goods to be delivered in
certain quantities monthly, and the buyer after accepting a portion
of the goods gave notice to the seller that he had no occasion for
more and would not accept or pay for them; it was held that the
seller might claim for a breach of the contract without manufac-
turing or tendering the rest of the goods (f).
Bankruptcy Bankruptcy or insolvency is not alone such an incapacity to per-
or insolvency
of promiser. form a contract as to entitle the other party at once to treat it as
broken and to claim damages; as it may be for the benefit of the
bankrupt or insolvent or of his estate to complete the contract, and
the representatives of his estate may be authorised to do so (g).
Thus, where a banking company, after giving a letter of credid
undertaking to accept bills to be drawn against bills of lading,
stopped payment before it was used; it was held that there was
no breach for which the holder of the letter could prove damages
in the winding-up; because there had been no refusal to accept
bills, and the liquidator might be authorised to carry out the con-
tract and accept them (h). Nor does bankruptcy or insolvency
alone entitle the other party to rescind the contract; but a notifi-
cation by a party of his insolvency may be taken as presumptively
importing an offer to rescind, which the other party may accept;
and it would, at least, justify a refusal on his part to complete the
contract, unless the insolvent or his representatives should prove
their ability and readiness to complete on their part (i).
Discharge of The claim or right of action arising from a breach of contract,
right of
action for in common with rights of action arising from wrongs of other
breach. kinds, may be discharged by proceeding to judgment in the
ordinary course of legal procedure, thus merging the original cause
of action; and the judgment may be satisfied and discharged by
execution. The law of Practice and Procedure, regulating the
course of proceedings in actions, is not within the scope of the
present work. But besides the ordinary course of legal procedure,
there are some other modes of discharging rights of action, which,
so far as they apply especially to those arising from contract, may
be considered to require notice here; and they are therefore treated
in the following chapters.
(f) Cort v. Amberqate Ry. (1851), 20 37; L. R. 8 Ch. 294; Morgan v. Rain
L. J. Q. B. 460; 17 Q. B. 127. (1874), 44 L. J. C. P. 47; L. R. 10
(g) Exp. Stapleton (1878), 10 Ch. D. C. P. 15; Re Phewnix Bessemer Stet
586. See post, Pt. VI., Chap. VI. (1876), 46 L. J. C. 115: 4 Ch. D. 108.
(h) Ex p. Tondeur (1868), 37 L. J. C. See Sale of Goods Act, 1893, ss. 18. r. 1,
121; L. R. 5 Eq. 160. 42; and see post, Pt. VI., Chap. VI.
(i) Ex p. Chahners (1872), 42 L. J. Bk.