Unintended Acceptance of Repudiatory Breach and Loss of Bargain Damages

Qiao Liu
(2021) 37 Journal of Contract Law 49

Qiao Liu, ‘Unintended Acceptance of Repudiatory Breach and Loss of Bargain Damages’ (2021) 37 JCL 49

Abstract

This article critically examines the proposition that an exercise of a contractual right of termination without reference to a repudiatory breach is, as a matter of legal principle, incapable of constituting an ‘acceptance’ of that breach. Following a close analysis of Phones 4U Ltd (in administration) v EE Ltd and related cases, it advocates a broader and more natural understanding of the concept of ‘acceptance’, the Boston Deep Sea principle and the requisite causal linkage between a repudiatory breach and the loss of the bargain. It is submitted that a purely contractual termination is capable of being characterised as an ‘acceptance’ of a repudiatory breach and of giving rise to a claim for loss of bargain damages, provided that proper construction of the termination notice does not preclude such a result and that the terminating party would not have disregarded the repudiatory breach had it been known at the time of the termination.