LLB170 Lecture 6: Week 6 – Termination and Remedies
Week 6 – Termination and Remedies
Termination for Delay
• Delay in performance gives rise to breach → right of termination in the same
circumstances as repudiation or other terms of a contract
• “time is of the essence”
At what time is performance required?
• Express term stipulating exact time to be performed?
• General time to be performed? E.g. within the month
• Or more generally – “within a reasonable time”
• No express time = construed to be a reasonable time
• Reasonableness depends on the circumstances of the case
Need to distinguish between a breach because something was not performed as contracted
to a breach by the passing of time
• Where a party isn’t meeting deadlines
• Just because there is delay doesn’t mean there is any loss
• Necessary to determine if the delay in time has caused economic loss
• Determine if the breach of time requirement will be grounds for termination
1. Determine if there is a date requirement in the contract (express provision)
- If no date stipulated, then imply a reasonable deadline (Perri)
- If the time stipulation in the contract is construed as a ‘condition’:
▪ Determine if time is a condition – express/implied
▪ Is time of essence?
▪ If so, has the deadline been met?
▪ Yes = good
▪ No = then there is a right to terminate the contract for delay (Carr v
Berriman). No notice needs to be given
▪ If not, was the missed date a serious breach of an intermediate term)
▪ Was the delay a repudiation – (must be substantial)
- If not a condition:
▪ Notice must be provided
▪ New date must be provided
▪ Reasonable period
▪ Time is of the essence
Where time is of the essence
• ANY delay amounting to breach of time entitles the aggrieved party to elect to
terminate
• If there is no express stipulation:
- Time is only considered of the essence if parties intend this result
• Just because there is an express provision of time in the contract does not mean it is
a condition
• If the term is not expressly stated it may still be an implied condition
• Sale of goods and shipping contracts tend to have time of the essence
If the time stipulation is NOT a ‘condition’
• No automatic right to terminate for delay
• In the absence of notice, termination will only be justified where there is delay
amounting to repudiation
• A right to terminate will only arise where:
1. Missing the term stipulation was a serious breach of an intermediate term
(principles [23.40]); or
2. Delay was so substantial that it amounts to repudiation – i.e. it evinces an
‘intention, objectively ascertained, not to be bound’/’amounts to refusal to be
bound’ (Carr v Berriman); or
3. Notice is given to complete the requirement in a reasonable time (Carr v
Berriman; Perri v Coolangatta)
The notice procedure
• Where D is in breach by its delay in performing a non-essential obligation, P can
make time essential by:
- Serving a notice on the party in breach that requires D to perform the
outstanding obligation by a specified date, which allows a reasonable time for
performance; and
- Makes it clear that ‘time is of the essence’ in relation to the specified date, so
that P will consider itself entitled to terminate if deadline not met
- See Carr v Berriman; Perri v Coolangatta; Louinder v Leis
Notice Requirements
1. Must specify a time for performance
2. The time given must be reasonable
3. The notice states time is of the essence and the contract will be terminated if not
complied with (Laurinda Pty Ltd v Capalaba Park Shopping Centre)
• The party giving the notice must be ready and willing to perform his/her contractual
obligations at the time the notice is issued
• A notice that doesn’t satisfy the requirements will not be effective
• See Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd → principles pg 473
• Notice must be given in relation to the time stipulation that has been breached →
cannot be some other obligation (Louinder v Leis → principles pg 474)
What is reasonable notice?
• Look at the subject matter of the contract
• What is left to be completed
• If performance has already been requested
• Whether there have been unnecessary delays on the part of the party in breach
before the notice was given
• Expert advice about the time required to perform the obligation
See principles pg 474
Where the contract is silent about the time for performance
• Term implied to be a reasonable time
• Only a breach of implied time if there is unreasonable delay
• To terminate for breach of an implied stipulation to perform within a reasonable
time, an aggrieved party must usually rely on either repudiation or non-compliance
with a notice by the party in breach
The effect of an extension of the time for performance
• Binding on the party who has granted it
• Extension may give rise to an estoppel preventing the party who has given the
extension from exercising his/her original rights under the contract
• If time was originally of the essence and the extension specifies a new time, time
generally will remain of the essence
• Party granting the extension entitled to terminate the contract immediately should
the obligation not be performed by the time specified in the extension
• If time was originally of the essence but extension doesn’t stipulate new time, only
that late performance will be accepted, time will no longer be of the essence
• To regain entitlement of termination, the party must give notice or show repudiation
• Not originally of the essence = still not of the essence = must show repudiation or
give notice
Document Summary
Termination for delay: delay in performance gives rise to breach right of termination in the same circumstances as repudiation or other terms of a contract, time is of the essence . E. g. within the month: or more generally within a reasonable time , no express time = construed to be a reasonable time, reasonableness depends on the circumstances of the case. Need to distinguish between a breach because something was not performed as contracted to a breach by the passing of time. If no date stipulated, then imply a reasonable deadline (perri) If the time stipulation in the contract is construed as a condition": If so, has the deadline been met: determine if time is a condition express/implied, yes = good, no = then there is a right to terminate the contract for delay (carr v. If not, was the missed date a serious breach of an intermediate term: was the delay a repudiation (must be substantial)