When is a breach repudiatory?

In October 2007, Ampurius and Telford entered into a contract for the development of property on a site in south London. The contract included clauses requiring Telford to ensure the work was carried out with ‘due diligence’ and that Telford would use ‘reasonable endeavours to procure’ that the work was completed by the target dates or as soon as reasonably possible thereafter.

Set against the backdrop of the ‘credit crunch’ and collapse of the property market, in March 2009 Telford put part of the development on hold. In October 2010 — just after Telford had recommenced work — Ampurius sought to end the contract on the basis that the cessation of work amounted to a repudiatory breach (in other words, a breach that entitles the aggrieved party to terminate the contract and sue for damages).

The High Court agreed that there had been a repudiatory breach. Telford appealed. The Court of Appeal reviewed the leading authorities on the test for repudiatory breach and that the test was whether the breach deprived the injured party of substantially the whole of the benefit of the contract. However, the court went further and stated that there was also authority for the test being whether the innocent party was deprived of a ‘substantial part of the benefit’, as opposed to substantially the whole benefit. The court said that, in practice, these were merely different applications of the same test…

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