Q&As

What is the meaning of ‘severe breach’? What is the meaning of fundamental or repudiatory breach? What termination rights and rights to claim damages may arise in the event of any such breach?

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Published on LexisPSL on 02/09/2016

The following Commercial Q&A provides comprehensive and up to date legal information covering:

  • What is the meaning of ‘severe breach’? What is the meaning of fundamental or repudiatory breach? What termination rights and rights to claim damages may arise in the event of any such breach?
  • What is a 'fundamental breach'?
  • What are the potential implications of committing a repudiatory/fundamental breach?
  • What are the potential implications of committing a breach within the ambit of the express provisions of a termination clause?
  • What will determine the meaning of 'severe breach'?
  • Under what circumstances does a right to damages arise for breach of contract?

What is the meaning of ‘severe breach’? What is the meaning of fundamental or repudiatory breach? What termination rights and rights to claim damages may arise in the event of any such breach?

What is a 'fundamental breach'?

Following the decision in Photo Production Ltd v Securicor Transport Ltd, it has now been settled that a fundamental breach is no more than a repudiatory breach and so the commentary referred to generally uses that expression. For further information, see commentary: Fundamental breach: Halsbury’s Laws of England [350].

A repudiatory breach will be deemed to have occurred where a party to a contract declares his intention (either by words or conduct) not to perform his primary obligations under the contract. These primary obligations will be at the core of any contract and will give the innocent party the right to treat the contract as being disregarded and entitle the innocent party to refuse to be bound by its terms.

What amounts to a repudiatory breach will vary with each contract. Repudiation is a serious matter and is not to be lightly found or inferred and treating the contract as at an end where the other party is not in repudiatory breach will be an unlawful termination and may itself be a repudiatory breach. For further information, see Practice Note: Repudiation.

What are the potential implications of committing a repudiatory/fundamental breach?

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