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Scope of CCLA.pdf
Scope_of_CCLA.pdf
Showing 9-10 out of 15
Scope of CCLA.pdf-Scope of CCLA Exclusion of Sale
Scope_of_CCLA.pdf-Scope of CCLA Exclusion of Sale
Scope of CCLA.pdf-Scope of CCLA Exc...
Scope_of_CCLA.pdf-Scope of CCLA Exclusion of Sale
Page 9
ss 41, 42
On its face, CCLA contemplates that a
wrongful repudiation (or breach of an essential term
or a breach having substantial effects)
gives the innocent party an election.
●
The choice must be evidenced overtly and communicated to the counterparty
●
s 40:
ss 36-39 to have effect in place of common law and equity governing the circs in
which a party may rescind it, or treat it as discharged, for misrep, repudiation or breach.
Problem:
the election does not meet the problems posed by the
unaccepted repudiation
as it
requires the innocent party to manifest its choice by electing to cancel.
●
Decided cases show how difficult it is to marry the merits of a decision with statute
requirements
because that obligation was no long dependent on duty to nominate a vessel
THIRD OPTION FOR INNOCENT PARTY:
●
Don’t have to just affirm or cancel - can wait and then sue for actual breach without
having to fulfil their own obligations (this is conditional on the repudiation remaining
continued and unretracted)
Accepted by NZSC in
Ingram
Innocent party must show that they were ready and willing to perform up until the
repudiation
FACTS
●
Rent overdue
●
One day before landlord is entitled to terminate the contract - he unlawfully enters the
premises and refuses the tenants entry
○
This was an unlawful repudiation
●
Tenants did nothing - therefore contract remained on foot
●
Landlord tried to cancel contract - tenants did not pay rent
COURT
●
The contracting party who has repudiated
cannot enforce the agreement
●
The unaccepted repudiation may
absolve the innocent party’s duty to perform
●
Tenants were
ready and willing
to perform and would have performed but for the
repudiation
●
They were not in breach by failing to pay the rent as the
obligation had been waived
due to the landlord's unretracted repudiation.
●
Therefore, since the landlord was repudiating, the landlord cannot claim that the
tenants were in breach by refusing the pay the rent.
Cancellation
s 41: cancellation must be communicated in order to take effect
Page 10
Schmidt v Holland
FACTS
●
Sale of land
●
Purchaser failed to pay and settle
●
Vendor did nothing - did not make time of the essence, did not communicate
cancellation
○
Sold property to another person
●
Real estate agent who had brokered sale sued vendor for commission and recovered it -
vendor sought counterclaim against purchaser.
Same broad position as Turnbull:
purchaser repudiated, vendor acts but does not settle - does
not show readiness and willingness on settlement date
COURT
●
Repudiation gives rise to an election
●
Until cancellation - the obligation subsist
●
An acceptance of repudiation must be communicated before the innocent party can sue
for wrongful repudiation
●
If innocent party does not communicate an acceptance - the innocent party must be
regarded as not accepting therefore the contract remains on foot
●
Therefore - both parties obliged to continue performing until cancellation is
communicated
○
On settlement date: vendor needed needs to tender and disable itself by
reselling
●
Innocent party (vendor)
has no claim for damages for loss of bargain
until a
valid
cancellation brings the bargain to and end and discharges both parties
from
further performance
○
Mrs Holland fails to recover and Schmidt walks away
○
Logical but UNJUST
Chatfield v Jones
FACTS
●
Vendor has made an agreement to sell shares
●
Purchaser fails to settle
●
Vendor seeks specific performance and affirms contract
●
Vendor resells and
then
cancels
Purchaser:
vendor affirmed contract - relied on equivalent of
s 38 CCLA
(no cancellation if
contract is affirmed)
COURT
●
Refinement of cancellation: distinction between act of cancellation and
legal effect
of
cancellation (when the cancellation becomes effective)
●
Repudiation wass continuing and unretracted -
this gave rise to more than one right
to elect
●
Vendor elected to cancel by reselling - the selling itself was a
manifestation of the the
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