Unpacking Repudiation In Contract

• Published date: 28 September 2021
• Subject Matter: Corporate/Commercial Law, Contracts and Commercial Law
• Law Firm: Schoemanlaw Inc.
• Author: Raeesa Ebrahim Atkinson

Contracting parties are often weary of certain risks which may apply to the contractual relationship they are entering into.

Be that as it may, if we are truly honest, most contracting parties do not really want to focus on the potential failure of the agreement or souring of the contractual relationship.

In saying that however, from a legal standpoint it is important to be aware of the possible eventualities, regardless of how bleak they may seem.

Repudiation of an agreement is one of the most severe forms of breach of contract and can have serious ramifications for the contracting party on the receiving end.

Overview

Repudiation occurs where a contracting party, without valid grounds, indicates to the other party its unequivocal intention not to be bound by the contract.

Such intention may be expressed verbally, in written form or by way of conduct. The definition of repudiation as indicated above has been confirmed in Van Rooyen v Minister van Openbare Werke en Gemeenskapsbou 1978 (2) SA 3 835 (A).

In respect of same, the receiving party may elect either to claim specific performance on the terms expressed in the contract or accept the repudiation and claim for damages sustained as a result of the repudiation.

Furthermore, in Denmark Productions Ltd v Boscobel Productions Ltd [1969] 1 QB 699 it was stated that: "Where A and B are parties to an executory contract, if A intimates by word or conduct that he no longer intends, or is unable, to perform it, or to perform it in a particular manner, he is, in effect, making an offer to B to treat the contract as dissolved or varied so far as it relates to the future. If B elects to treat the contract as thereby repudiated, he is deemed, according to the language of many decided cases, to 'accept the repudiation' and is thereupon entitled (a) to sue for damages in respect of any earlier breach committed by A and for damages in respect of the repudiation, (b) to refrain from himself...