Fortune Plum: Commercial Court confirms owners’ affirmation of charterparty does not prevent later acceptance of continuing renunciatory breach

Existing case law on repudiatory breach of contract demonstrates that there is a middle ground between the innocent party’s acceptance of repudiation and affirmation of the contract, when the innocent party is making up his mind what to do.

The case White Rosebay Shipping SA v Hong Kong Chain Glory Shipping Ltd (Fortune Plum) [2013] EWHC 1355 (Comm) highlights the difficulties faced by a ship owner in deciding whether his charterer has evinced an intention not to perform the charterparty. The owner must avoid terminating the charterparty too early, with the result that he finds himself in repudiatory breach because the charterer had not in fact evinced such an intention. On the other hand, the owner must not be too late in accepting the renunciation as terminating the charterparty, with the consequence that he is held to have affirmed the charter and foregone his right to terminate.

Mr Justice Teare’s judgment is significant because it confirms that, if an owner is held to have affirmed a charterparty but the charterer continues to renounce the charter thereafter, the owner may subsequently terminate the charter lawfully and claim damages…

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