THE OPTIONS OPEN TO A PARTY FACED BY A REPUDIATORY BREACH

Stocznia Gdanska SA v Latvian Shipping Company (No 2) [2002] EWCA Civ 889

It is sometimes said that a party who is faced by a defendant who has committed a repudiatory breach of contract must elect between affirmation of the contract and termination: there is no ‘middle way’ or ‘third choice’ open to the innocent party ( Bentsen v Taylor [1893] 2 QB 274, 279 and Fercometal SARL v Mediterranean Shipping Co. SA [1989] AC 788, 799-801). This is true in the sense that there is no ‘third choice, as a sort of via media, to affirm the contract and yet be absolved from tendering further performance unless and until [the breaching party] gives reasonable notice that he is once again able and willing to perform’( Fercometal SARL v Mediterranean Shipping Co. SA [1989] AC 788, 801). But the proposition that there is no middle way can be over-stated. There is a sense in which there is a middle way open to the innocent party in that it is given a period of time in which to make up its mind whether it is going to affirm the contract or terminate. The Court of Appeal so concluded in the recent case of Stocznia Gdanska SA v Latvian Shipping Company (No 2) [2002] EWCA Civ 889 (in dismissing an appeal from the decision of Mr Justice Thomas, on which see our January 2002 issue, pp.10–11).