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Concurrent and Independent Rights to

Terminate for Breach of Contract
J W Carter* and Yihan Goh†
In this article we consider the interaction between an express right to
terminate a contract for breach and a termination right conferred by the
common law. The article argues that a systematic approach is necessary to
deal with the position of a promisee who enjoys multiple termination rights.
Our thesis is based on a distinction between ‘concurrent’ or ‘independent’
and whether the rights at issue are coordinate or discordant. We test the
thesis against the recent decision in Stocznia Gdynia SA v Gearbulk
Holdings Ltd, three other English decisions, the effect of exercise of the
power of resale and the ‘alternative rights’ cases.

Introduction
Consider two travellers, Alice and Bill. Alice passes a signpost pointing to a
path ‘To Tweedledum’s House’. Later she stops at a signpost pointing ‘To
Tweedledee’s House’. Bill has stopped at a signpost pointing in two
directions: ‘To the White Rabbit’s House’ and ‘To the Croquet Lawn’. Given
that Tweedledum’s House is also Tweedledee’s House, the signposts that Alice
sees point to the same destination. But Bill has two different destinations to
choose from. It is also true — as any lawyer would quickly point out — that
Alice and Bill actually have another choice. Either may decline the invitations
of the signposts and continue on their way.
Promisees not infrequently have similar choices. For example, P1 is a
vendor under a contract for the sale of land that provides for payment of the
price by instalments and makes time of the essence. If the purchaser fails to
make the first payment on time, P1 is entitled to terminate the contract.1 P1 has
the same right if the purchaser also fails to make the second payment on time.
P1 can choose to exercise either right to terminate. Since the ‘destination’ on
termination is the same on either basis — the parties are discharged — P1’s
position resembles that of Alice.
A second promisee, P2, is the buyer under a shipbuilding contract which
includes an express right to terminate the contract if the builder fails to
achieve two consecutive construction milestones on time. If the express right
is enlivened, the conduct of the builder may also amount to a repudiation of
obligation. Accordingly, P2 may justify termination of the contract by
reference to both the express right and P2’s common law right. However, the
contract provides that if P2 serves notice under the express right the builder
must within three months sell the partially constructed vessel and pay to P2
the sum of:

* Professor of Commercial Law, University of Sydney; General Editor, Journal of Contract

Law; Consultant, Freehills.
† Faculty of Law, National University of Singapore.
1 By ‘terminate’ we mean ‘elect to terminate the obligation of the parties to perform the
contract’.

103
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104 (2010) 26 Journal of Contract Law

(1) all payments made by P2 under the contract;

(2) the difference (if any) between the amount received on sale of the
partially constructed vessel and all payments made by P2; and
(3) interest (as defined) on all payments made by P2.
It would therefore appear that, like Bill but unlike P1 and Alice, P2’s
‘destination’ on termination differs according to which right is exercised.
Equally, however, P1 and P2 have a third choice, namely, to reject their
termination options. Either may, as it is termed, ‘affirm’ the contract.2
All of the above examples are necessarily hypothetical. The allusions to
works of fiction3 in the references to Alice and Bill stamp those examples as
also occurring in a fictional world, rather than the ‘real’ world of contract law.
Nevertheless, the journeys that Alice and Bill may undertake can be envisaged
as physical journeys. On the other hand, the ‘journeys’ of P1 and P2 to
discharge are metaphorical. So also is the idea that the contract may be
affirmed. It would necessarily take some time for Alice and Bill to reach their
destinations. But P1 and P2 are instantly ‘transported’ to the point of discharge
— as are the purchaser and the builder — on exercise of their termination
rights. That is not, of course, to deny the remedies to which P1 and P2 are
necessarily entitled. Each is presumed to be entitled to loss of bargain
damages, and P2 has specific remedial entitlements under the express right.
However, unlike the right to be discharged — which is a self-help remedy4 —
those remedial entitlements depend on the cooperation of the purchaser or
builder, or an order of a court or arbitrator.
In the recent decision of the English Court of Appeal in Stocznia Gdynia SA
v Gearbulk Holdings Ltd5 (Gearbulk), the court referred to, but did not adopt,
the idea that exercise of a right to terminate a contract may in certain
circumstances amount to affirmation of the contract. That is one issue
discussed in this article. From a broader perspective, given the frequency with
which courts deal with the interaction between express rights of termination
and those conferred by law,6 it is perhaps surprising that the courts have not
applied a more systematic approach in analysing the position of promisees
such as P1 and P2. The principal purpose of this article is to suggest such an
approach.
The Thesis
Labels are necessary to explain situations in which a promisee, such as P1 or
P2, enjoys more than one right of termination at a given time.7 In this article,
we draw distinctions at two levels. The first level concerns the events which
give rise to the right to terminate. This is principally time-related: when do the

2 By ‘affirmation’ we mean ‘an election to continue with the performance of the contract
notwithstanding the right to terminate’.
3 Lewis Carroll’s Through the Looking Glass and Alice’s Adventures in Wonderland.
4 F M B Reynolds, ‘Discharge for Breach as a Remedy’ in P D Finn, ed, Essays on Contract,
Law Book Co Ltd, Sydney, 1987, p 183.
5 [2010] QB 27; [2009] EWCA Civ 75.
6 That is, on breach of condition, for repudiation or for the sufficiently serious breach of an
intermediate term (‘fundamental breach’).
7 The terminology which we employ has been chosen for reasons of convenience, rather than
on the basis that no other labels are permissible.
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Concurrent and Independent Rights to Terminate 105

rights accrue? Drawing upon the analogies above, this is when the travellers,
Alice and Bill, reach the signposts, and the time at which the purchaser and
builder commit the breaches which entitle P1 and P2 to terminate their
respective contracts. At this level, the principal distinction is between
concurrent and independent rights, although for completeness we also refer to
‘several’ rights. Whether concurrent or independent, a promisee’s termination
rights may be implied by law or expressly conferred by the contract. The main
situation with which we deal is where a promisee enjoys two such rights, one
implied by law and the other expressly conferred by the contract.
The second level is content-related. This is whether or not the concurrent or
independent rights are ‘coordinate’. Drawing on the examples above,
‘content’ comprises the benefit to Alice and Bill of their journeys, or what
benefit exercise of their termination rights secure for P1 and P2. If termination
rights are coordinate, as is analogous to Alice’s case, a promisee is not
required to choose between them. However, when termination rights are not
coordinate, they may be ‘discordant’ from more than one perspective.
Nevertheless, the mere fact that concurrent or independent rights are not
wholly coordinate does not mean that the promisee cannot exercise both
simultaneously.
Whether (and when) a promisee must choose between two termination
rights depends on whether (and in what respect) they are discordant. Our
conclusion is that although in a great many cases the termination rights are
coordinate, where they are not it is important to distinguish between
inconsistency of exercise and inconsistency of consequences. In other words,
inconsistency may relate to the rights themselves or the remedies to which the
promisee becomes entitled on exercise of the rights.
On the assumption that more than one right is enjoyed, the systematic
approach to dealing with termination rights which we outline in this article
may be expressed in the following steps:
(1) Are the rights concurrent or independent?
(2) Are the concurrent or independent rights coordinate or discordant?
(3) If the rights are discordant, in what respect is that the case?
Before explaining the details of our thesis, certain background principles
need to be stated. These comprise one set of general principles and four
specific principles.

Background Principles
General Principles of Election
The relevant general principles relate to election between inconsistent rights
and remedies. In United Australia Ltd v Barclays Bank Ltd,8 Lord Atkin
explained that, in relation to alternative remedies, a plaintiff cannot be
required to elect between them until the claim is ‘brought to judgment’. Once
made, the election is generally final, whether or not the judgment is satisfied.9

8 [1941] AC 1 at 30 (adopted Ciavarella v Balmer (1983) 153 CLR 438 at 449; 48 ALR 407).
9 O’Connor v S P Bray Ltd (1936) 36 SR (NSW) 248 at 261–2 (reversed on other grounds
(1937) 56 CLR 464).
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But, in relation to inconsistent rights, Lord Atkin said10 that once a person has
‘done an unequivocal act showing that he has chosen the one he cannot pursue
the other’. In this context also, election is generally final, although in the
context of the right to terminate a contract, only an election to terminate is
necessarily a final election.11
Although easily stated, the distinction between alternative remedies and
inconsistent rights is often blurred, particularly in these times of ‘remedial
discretion’. Lord Atkin’s statement in relation to alternative remedies12 was an
explanation of why the plaintiff had not, by bringing proceedings against
MFG Trust Ltd,13 made an election in relation to its remedy against
Barclays.14 The need to consider election between remedies rarely arises in the
contractual context. However, it occurs where a vendor or purchaser of land
brings proceedings making alternative claims for specific performance and
damages based on termination of the contract. If the court finds in favour of
the claimant, a choice must be made between the remedies.15
Of course, the ability of a promisee to elect between remedies available
against a promisor assumes that no prior election has been made by the
promisee between the inconsistent rights which underlie those remedies. A
vendor or purchaser of land who makes alternative claims for specific
performance and damages based on termination of the contract does not make
an election between the inconsistent rights of affirmation and termination
which (respectively) underlie those remedies.16 If the contract is terminated,
there is no question of the promisee seeking specific performance; but that is
not because the promisee has elected between alternative remedies. At no time
could it be said that the promisee was entitled to an order for specific
performance. Rather, if the promisee has elected to terminate the contract, the
remedy of specific performance is forestalled by the election between rights.
The fact that promisees, such as P1 and P2, sometimes enjoy multiple
termination rights necessarily raises the questions whether, and when, the
promisee must elect between those rights. After all, a contract can be
terminated only once! Although, in the context of termination, discussion of
election between rights naturally focuses on termination and affirmation as
being inconsistent rights, where multiple termination rights arise exercise of
one such right may be inconsistent with the exercise of any other right.
Specific Principles
Four specific principles are relevant. With one exception, these are
applications of or deductions from the general principles of election between

10 [1941] AC 1 at 30.
11 See Yukong Line Ltd of Korea v Rendsburg Investments Corp of Liberia (The Rialto) [1996]
2 Lloyd’s Rep 604 at 607 per Moore-Bick J (‘irrevocable’).
12 Cf K R Handley, Estoppel by Conduct and Election, Thomson Sweet & Maxwell, London,
2008, §14-048 (election in procedure).
13 MFG Trust Ltd were indorsees of a cheque for £1900 payable to the order of United
Australia. The indorsement had been made without authority and the action was for
restitution.
14 The claim was for damages in conversion.
15 Lowe v Hope [1970] 1 Ch 94; Rightside Properties Ltd v Gray [1975] Ch 72.
16 Johnson v Agnew [1980] AC 367 at 392; Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR
245 at 259; 77 ALR 205.
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Concurrent and Independent Rights to Terminate 107

rights. First, where a promisee elects to terminate a contract, what matters is

whether the promisee is entitled to do so, not the basis given. As a general
rule, the promisee is neither required to specify the ground for termination nor
bound by any specification. Therefore, provided that a promisee was entitled
to terminate, the termination will be attributed to a valid basis.17 We refer to
this as the ‘attribution’ principle.
Second, under the general law an election to terminate a contract merely
requires ‘unequivocal’ words or conduct.18 It is therefore sufficient for the
promisee to do an unequivocal act even though it may not be done with the
intention of electing to terminate. For example, a seller’s refusal to ship goods
may be an election to terminate for breach by the buyer.19 We refer to this as
the ‘inconsistent act’ principle.
Third, subject to statute, the requirements for an effective election to
terminate depend on the intention of the parties. As a default rule, the
inconsistent act principle assumes that the contract does not specify a
procedure to be followed by a promisee when electing to terminate the
contract. If the contract does specify the termination procedure, we assume
that the specification is mandatory. We therefore term it the ‘mandatory
procedure’ principle.
Fourth, the one specific principle which is not derived from principles of
election is the ‘presumption in favour of common law rights’.20 In the present
context this may manifest itself in a presumption:
(1) that any express rights of termination conferred by a contract operate
in addition to any common law rights of termination;21 and
(2) that the consequences of termination in exercise of an express right
do not prejudice the promisee’s common law rights.22
The second manifestation is, however, a source of some of the confusion in the
recent cases.

Independent and Concurrent Rights of Termination

Independent Rights
Rights of termination are independent if they accrue from different events.
Almost invariably, such rights will arise at different times. Just as Alice has

17 British and Beningtons Ltd v North Western Cachar Tea Co Ltd [1923] AC 48 at 71;
Shepherd v Felt and Textiles of Australia Ltd (1931) 45 CLR 359; Sunbird Plaza Pty Ltd v
Maloney (1988) 166 CLR 245 at 262, 274–5; 77 ALR 205; Stocznia Gdanska SA v Latvian
Shipping Co [No 3] [2002] 2 Lloyd’s Rep 436 at 443; [2002] EWCA Civ 889 at [32].
18 Gearbulk [2010] QB 27 at 46; [2009] EWCA Civ 75 at [44].
19 Glencore Grain Rotterdam BV v Lebanese Organisation for International Commerce [1997]
4 All ER 514.
20 Gilbert-Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd [1974] AC 689 at 717
(approved Beaufort Developments (NI) Ltd v Gilbert-Ash NI Ltd [1999] 1 AC 266 at 279,
286–7). See also Gearbulk [2010] QB 27 at 38; [2009] EWCA Civ 75 at [20].
21 L Schuler AG v Wickman Machine Tool Sales Ltd [1974] AC 235 (termination for breach of
condition); Stocznia Gdanska SA v Latvian Shipping Co [1998] 1 WLR 574 (termination for
repudiation). See also Concut Pty Ltd v Worrell (2000) 176 ALR 693 at 699–700.
22 Hyundai Heavy Industries Co Ltd v Papadopoulos [1980] 1 WLR 1129; [1980] 2 All ER 29
(recovery of sum due at the time of termination); Progressive Mailing House Pty Ltd v
Tabali Pty Ltd (1985) 157 CLR 17; 57 ALR 609 (loss of bargain damages).
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two opportunities to visit the house at which Tweedledum and Tweedledee

live, so P1 also has two opportunities to terminate its contract with the
purchaser. The fact that Alice might choose not to take the path to
Tweedledum’s House would not impact on her ability to take the path to
Tweedledee’s House. Indeed, she may choose to retrace her steps and take the
path to Tweedledum’s House. Similarly, if payment for the first instalment is
still outstanding at the time when the purchaser defaults in payment of the
second instalment, P1 may exercise the first right of termination. Of course,
P1 need not retrace its steps: since termination is not retrospective,23 it is
irrelevant, so far as discharge is concerned, to which of the independent rights
the election to terminate is attributed.
The principal significance of rights of termination being independent is that
affirmation of the contract in respect of one right will not usually impact on
exercise of the other.24 Therefore, if P1 chooses to accept late payment of the
first instalment by the purchaser, that affirmation of the contract will not
prevent P1 electing to terminate the contract for the failure of the purchaser to
pay the second instalment when it falls due.25
Concurrent Rights
Rights of termination are concurrent if they arise from the same event. They
will therefore usually arise at the same time. P2 enjoys concurrent termination
rights because the (assumed) right to terminate for repudiation accrues in
respect of the same event — and at the same time — as the right to exercise
the express right. Similarly, Bill enjoys concurrent ‘rights’ to journey to the
White Rabbit’s House and the Croquet Lawn.
Of course, because a contract can be terminated only once, the parties
cannot be discharged ‘twice over’ from their unperformed obligations. From
that perspective, Bill looks to have a right of election. Choice of one path
involves the abandonment of the other. However, Bill can in fact journey to
both the White Rabbit’s House and the Croquet Lawn because, having visited
one, he could return to the signpost and take the other path. That would, of
necessity, take Bill on a new and different journey. Therein lies a difference
between the physical world and the metaphorical world of contract law. Even
if the exercise of termination rights lead to different destinations, a promisee
may — unlike Bill — simultaneously travel down two different paths, at least
for a time. The extent to which that is the case depends on a further question,
namely, whether the rights are coordinate and consistent.
So far as affirmation of the contract is concerned, the main significance of
a promisee enjoying concurrent termination rights is that, generally, any
affirmation by the promisee will extend to all bases for termination which are

23 Boston Deep Sea Fishing and Ice Co v Ansell (1888) 39 Ch D 339 at 365; Larratt v Bankers
and Traders Insurance Co Ltd (1941) 41 SR (NSW) 215 at 226.
24 See Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) 38 SR (NSW) 632 at 645
(reversed on other grounds sub nom Luna Park (NSW) Ltd v Tramways Advertising Pty Ltd
(1938) 61 CLR 286).
25 Acceptance of the late payment is not an election in respect of any future breach. But P1
might in some circumstances be estopped in relation to exercise of the second right of
termination. See Bull v Gaul [1950] VLR 377 (vendor had led the purchaser to believe that
she would not insist on punctual payment).
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Concurrent and Independent Rights to Terminate 109

at that time within the promisee’s knowledge.26 For example, if a seller

delivers defective goods, and the buyer with knowledge of the defects accepts
the goods, the buyer loses the right of termination. It makes no difference that
the goods are not of merchantable (or ‘satisfactory’) quality and also not fit for
their purpose. Therefore, affirmation of the contract causes the simultaneous
loss of all concurrent rights of termination.27

Several Rights
For the purposes of this article, ‘several’ rights are concurrent or independent
termination rights available against different promisors or in relation to several
parts of a contract. If A, B and C enter into a contract under which the
obligations are several, the fact that A enjoys a right of termination by reason
of a breach by B does not entitle A to terminate the contract with C.28 More
relevantly, where A enjoys several rights of termination against both B and C,
A may terminate the contract with B without terminating the contract with C.
For example, C may be a guarantor of B’s performance of B’s contract with
A.29
‘Several’ rights of termination within a contract and against the same
promisor are necessarily cumulative, and generally independent rather than
concurrent. They may arise at common law.30 For example, if a contract for
the sale of goods by instalments requires payment for each delivery by the
seller, the buyer’s entitlement to reject a delivery is a several right of
termination. Because the rights are independent, acceptance of one instalment
delivery does not prevent rejection of a later delivery, assuming that the right
arises.31
Alternatively, several rights of termination may be conferred expressly. In
some contexts very sophisticated regimes for termination may be agreed. For
example, an ‘outsourcing’ agreement under which a supplier agrees to provide
various services may provide that if the supplier fails to meet an agreed
performance standard in respect of a service the customer may terminate the
contract so far as it relates to that service. At any given time the
customer-promisee may enjoy two or more several rights. Assuming no
affirmation, it may choose to exercise one or more of those rights.32
In addition to enjoying a several right of termination — relating to part of
a contract — a promisee may enjoy a right to terminate all unperformed
obligations under the contract. For example, breach or breaches by the seller
entitling the buyer to reject one or more deliveries may also amount to a

26 R v Paulson [1921] 1 AC 271 at 280 per the Privy Council (‘all antecedent breaches of
which’ the promisee was aware).
27 Nor would it matter that the goods were also delivered late. Although the right to terminate
for delay will have accrued prior to delivery, and is in that sense an independent right,
acceptance of the goods is also an affirmation in respect of that right.
28 Bank of NSW v Commonwealth Savings Bank of Australia (1985) 6 FCR 524.
29 Cf Moschi v Lep Air Services Ltd [1973] AC 331.
30 See J W Carter, ‘Partial Termination of Contracts’ (2008) 24 JCL 1.
31 Rosenthal & Sons Ltd v Esmail [1965] 1 WLR 1117 at 1132.
32 It is conceivable that rights of termination may accrue concurrently, that is, in respect of two
or more services at the same time.
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repudiation of a contract for the sale of goods by instalments.33 And where a

right of termination arises under the outsourcing contract, the contract may
expressly entitle the customer to terminate the particular service to which the
breach relates or the contract as a whole. Such rights are concurrent rights, but
they are not coordinate rights of termination.

Coordinate Rights
Whether independent or concurrent, where more than one right of termination
is available to a promisee at a given time, those rights may or may not be
coordinate. It is this level of analysis which is crucial in relation to P2’s
termination rights. However, there is no single test for whether rights are
coordinate. The starting point — which provides the basis for the discussion
below of express rights — is the position in relation to independent or
concurrent common law rights.
Subject to two exceptions, common law rights of termination are coordinate
in four respects:
(1) the requirement for valid exercise of each right — unequivocal
conduct;34
(2) the extent of discharge — both parties are discharged from their
unperformed obligations;35
(3) the remedial consequences of exercise of the right — accrued rights
and obligations are not divested;36 and
(4) the accrued rights of the promisee include the right to recover loss of
bargain damages.
It follows that if a promisee enjoys independent or concurrent rights of
termination at common law, those rights are coordinate and the exercise of one
is the simultaneous exercise of all. Common law rights are also coordinate in
relation to claims for restitution: termination is a sufficient basis for a claim in
restitution.37 However, because such restitutionary entitlements are not
contractual,38 but instead depend on proof of unjust enrichment, they do not
fall within the concept of ‘accrued rights and obligations’.
The first of the two exceptions is that the contract may provide to the
contrary.39 The second is that if a promisee enjoys a right to terminate part of
the contract and a right to terminate the contract as a whole, the rights are not
coordinate and the extent of discharge will obviously differ according to
which right is exercised. It is the first exception which is important. Although
even a common law right may be the subject of provisions which affect one

33 Millars’ Karri and Jarrah Co (1902) v Weddel Turner & Co (1908) 14 Com Cas 25 at 29,
31.
34 Heyman v Darwins Ltd [1942] AC 356 at 361.
35 McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 at 470, 477; Photo Production Ltd v
Securicor Transport Ltd [1980] AC 827 at 849.
36 McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 at 476–7; Johnson v Agnew [1980]
AC 367 at 396. Such (accrued) rights may be enjoyed by both parties.
37 McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457; Fibrosa Spolka Akcyjna v Fairbairn
Lawson Combe Barbour Ltd [1943] AC 32; Baltic Shipping Co v Dillon (The Mikhail
Lermontov) (1993) 176 CLR 344; 111 ALR 289.
38 But cf Stocznia Gdanska SA v Latvian Shipping Co [1998] 1 WLR 574 at 589.
39 So also may statute, although this may be ignored for present purposes.
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Concurrent and Independent Rights to Terminate 111

or more of the four respects in which common law rights are coordinate, it is
sufficient to focus on express rights which are not coordinate with common
law rights.

Inconsistent Rights and Inconsistent Remedies

Introduction
It follows from the brief discussion above that where a promisee enjoys the
benefit of both an express right of termination and a common law right,
inconsistency between the two may relate to rights or remedies. Of course,
express rights of termination vary considerably. The situations in which they
differ from — are not coordinate with — common law rights do not follow a
consistent pattern. From the perspective of the four respects in which common
law rights are coordinate, the possible permutations are infinite in number.
Nevertheless, in practice express rights of termination and common law
rights will be inconsistent in two situations:
(1) where exercise of the express right does not bring about immediate
termination; and
(2) where the remedial consequences differ.
In the second situation there are two possibilities. The first is that the contract
is silent on the remedial consequences of the express right. The second is
where the express right includes an agreement for remedial consequences of
termination which differ from common law entitlements.
Immediate and Postponed Termination
An express right to terminate is always to some extent coordinate with any
concurrent common law right which the promisee also enjoys. Thus, if the
contract does no more than confer a right to terminate for breach,40
termination of the contract is a simultaneous exercise of both the express right
and any common law right that the promisee enjoys because an unequivocal
act is sufficient to exercise both. Similarly, the combined effect of the
inconsistent act principle and the presumption in favour of common law
termination rights is that in many cases a promisee who complies with any
mandatory procedure (applicable to an express right) will also have complied
with the common law requirement of unequivocal conduct. Again, the
discharge of the parties is the same, and termination will not affect accrued
rights and obligations.41 But an express right will not be coordinate with any
common law right which the promisee enjoys if the mandatory procedure
principle applies to the express right. For example, the contract may require
the promisee to specify the basis for termination. More importantly, these
examples assume that the express right provides for immediate termination.
Perhaps the most common form of express right is one which requires the
promisee to provide the promisor with a ‘second chance’. For example, the

40 Even if the contract provides that it is to become ‘void’ on breach, election will nevertheless
normally be required. See, eg Kilmer v British Columbia Orchard Lands Ltd [1913] AC 319.
41 It is irrelevant whether the contract expressly preserves common law rights: Stocznia
Gdanska SA v Latvian Shipping Co [1998] 1 WLR 574 at 591–2.
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contract may provide for a right of termination in respect of a material or

substantial breach, but require the promisee to provide the promisor with a
period of, say, 14 days in which to remedy the breach.42 Alternatively, the
contract may require the promisee to provide the promisor with an opportunity
to show cause why the contract should not be terminated.43 Similarly, a
contract which confers a right to terminate for failure to pay on time may
require the promisee to give a certain period of notice. If the payment is not
made, the promisee may terminate the contract on the expiry of the notice.44
Where such express rights are validly exercised, there is no immediate
termination. The election to terminate is — in effect — conditional on the
promisor not doing the act required by the clause.45
This is in marked contrast with a valid election to terminate in reference to
a common law right.46 Even though the event which activates the express
clause may also give rise to a concurrent right to terminate on a common law
basis, notice under the clause cannot count as an election to terminate in
respect of the common law right. Although the conduct of the promisee is not
of itself an affirmation of the contract, having (in effect) served a notice to
perform, the promisee is precluded from exercising the common law right
unless the contract provides otherwise.47 It therefore follows that if the
promisee activates the express right, and the promisor does the required act,
the parties are not discharged. It must also follow that, so far as any concurrent
common law right to terminate is concerned, the promisee is in the same
position as if it had elected to affirm the contract. In these cases, the principal
relevance of concurrent rights of termination is where the promisee does not
exercise its express right,48 or if the attempt to exercise the express right is
invalid.49
Remedial Consequences
The fact that the remedial consequences of the exercise of an express right
differ markedly from the common law position following termination does not

42 See Western Bulk Carriers K/S v Li Hai Maritime Inc (The Li Hai) [2005] 2 Lloyd’s Rep
389; [2005] EWHC 735 (Comm) (failure to pay or rectify breach after notice to do so). Cf
L Schuler AG v Wickman Machine Tool Sales Ltd [1974] AC 235 where, although the
contract included an express right of termination for failure to remedy a material breach, the
crucial issue was whether termination could be justified on the basis of breach of condition.
43 As in Amann Aviation Pty Ltd v The Commonwealth (1990) 92 ALR 601 (affirmed sub nom
Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64; 104 ALR 1). See
also Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR
234.
44 As in Afovos Shipping Co SA v Pagnan [1983] 1 WLR 195. See also Schelde Delta Shipping
BV v Astarte Shipping BV (The Pamela) [1995] 2 Lloyd’s Rep 249 at 253.
45 But cf Legione v Hateley (1983) 152 CLR 406; 46 ALR 1 (automatic termination on expiry
of notice).
46 But cf Millichamp v Jones [1982] 1 WLR 1422.
47 Compare the doctrine of Barclay v Messenger (1874) 43 LJ Ch 449 at 456. See also
Nichimen Corp v Gatoil Overseas Inc [1987] 2 Lloyd’s Rep 46.
48 L Schuler AG v Wickman Machine Tool Sales Ltd [1974] AC 235 (failed attempt to rely on
breach of condition where express right not invoked).
49 Rawson v Hobbs (1961) 107 CLR 466 (successful reliance on anticipatory breach where
termination in reliance on express right was premature); Afovos Shipping Co SA v Pagnan
[1983] 1 WLR 195 (failed attempt to rely on anticipatory breach where termination in
reliance on express right was premature).
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of itself prevent concurrent exercise of the rights. However, because the rights
are not coordinate, the differences may require the promisee to elect between
the remedial consequences. The difficult issue is when that choice must be
regarded as having been made.
The first situation is where the contract is silent on remedial consequences.
In this situation, the remedial consequences at common law may be more
beneficial to the promisee than those applicable under the express provision.
The element of discordance relates to loss of bargain damages. The fact that
an express right of termination is activated by breach is not in itself sufficient
to entitle the promisee to claim loss of bargain damages.50 The usual case is
where the express right of termination is activated by a failure to pay on time.
Unless the contract also makes time of payment of the essence, there is no
entitlement to loss of bargain damages.51 But if the promisee can also establish
a repudiation or fundamental breach by the promisor, the promisee may rely
on the right to terminate for repudiation or fundamental breach for the purpose
of recovering loss of bargain damages.52
It might be thought that in this situation if the agreed consequences of the
exercise of the express right are the same as those which apply at common
law, the express right is coordinate with any common law right. However,
since an express agreement for loss of bargain damages may be a penalty, the
rights are not coordinate, at least under English law.53
Discordance is more obvious where the contract provides for consequences
which differ from those applicable at common law. But that does not prevent
the simultaneous exercise of rights. Consider the position of P2. If P2 serves
notice under the express clause, so that the builder is required to sell the
partially completed vessel, this is not of itself inconsistent with exercise by P2
of the right to terminate for repudiation. There are two important points. First,
the procedure under which the builder must sell the partially constructed
vessel is stipulated to occur after the notice of termination. The right to receive
performance of those obligations accrues to P2 because the contract has been
terminated. Clearly, P2 has not, by serving notice of termination, affirmed the

50 There is much to be said for the contrary view, namely, that loss of bargain damages are
prima facie recoverable. See Larratt v Bankers and Traders Insurance Co Ltd (1941) 41 SR
(NSW) 215 at 225–6; Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR
17 at 55; 57 ALR 609; AMEV-UDC Finance Ltd v Austin (1986) 162 CLR 170 at 206,
216–17; 68 ALR 185. Indeed, the contrary view was treated as good law in Stocznia
Gdanska SA v Latvian Shipping Co [No 3] [2002] 2 Lloyd’s Rep 436; [2002] EWCA Civ
889 (see below, text at n 81).
51 AMEV-UDC Finance Ltd v Austin (1986) 162 CLR 170 at 186; 68 ALR 185. See, eg
Financings Ltd v Baldock [1963] 2 QB 104 (late payment under hire-purchase contract);
Shevill v Builders Licensing Board (1982) 149 CLR 620; 42 ALR 305 (late payment of rent).
52 Leslie Shipping Co v Welstead [1921] 3 KB 420 at 426 (repudiation of time charterparty by
failure to pay two instalments of hire on dishonour of bills of exchange); Financings Ltd v
Baldock [1963] 2 QB 104 at 112–13 (dictum in context of hire-purchase contract);
Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17; 57 ALR 609
(repudiation or fundamental breach of lease). The decision in Sotiros Shipping Inc v Sameiet
Solholt (The Solholt) [1983] 1 Lloyd’s Rep 605 may be explained on the basis that late
delivery — which was the subject of the express right — was also a breach of condition.
53 See Capital Finance Co Ltd v Donati (1977) 121 SJ 270; Lombard North Central Plc v
Butterworth [1987] QB 527. Contrast Esanda Finance Corp Ltd v Plessnig (1989) 166 CLR
131; 84 ALR 99.
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contract! Moreover, since the notice is an unequivocal act, P2 has

(simultaneously) exercised its common law right to terminate for repudiation.
Second, ‘what happens next’ is important. If P2 gives notice of termination
under the express right and the builder acts on the notice, by selling the vessel
and accounting to P2 in accordance with the clause, P2 ceases to be entitled
to invoke the common law consequences to which P2 is entitled on the basis
of termination for repudiation. The cause of action which arose on breach by
the builder has been satisfied and there is no question of P2 being awarded loss
of bargain damages. However, if the builder disputes the notice of termination
and refuses to sell the partially completed vessel, there is nothing to prevent
P2 from invoking its common law right. Accordingly, P2 may choose to bring
proceedings seeking alternative relief, namely:
(1) an order that the builder sell the vessel and account to P2 under the
contract; and
(2) a declaration that the contract has been validly terminated for
repudiation and consequential relief, namely, loss of bargain
damages.54
In each case, the election by P2 is between inconsistent remedies.
The best illustrations of the above analysis are the cases on agreed damages
clauses.55 A typical situation involves the termination by a finance company
under an express clause activated by non-payment of hire under a chattel
lease. The fact that the contract provides that exercise of the right entitles the
finance company to recover agreed damages is not inconsistent with
termination by the finance company on the basis of repudiation or
fundamental breach by the lessee. If the lessee chooses to pay the agreed
damages that is the end of the matter: the cause of action which arose on
breach by the lessee is satisfied. Loss of bargain damages, which the finance
company could have sought on the basis of exercise of the common law right,
cease to be available. However, if the clause is a penalty, any common law
right to loss of bargain damages remains. It follows that if the finance
company enjoyed a common law right to terminate, damages are assessed on
the basis of exercise of that right.56 If the law were otherwise, that is, if notice
under the express provision were regarded as inconsistent with the exercise of
the common law right, the finance company would only ever recover sums
overdue at the time of termination and nominal damages. That is simply not
the law.57

54 Although P2 would also be entitled to restitution, an equivalent sum might be awarded as

damages. Cf McRae v Commonwealth Disposals Commission (1951) 84 CLR 377 (damages
assessed on reliance basis).
55 See also above, text at n 51 (exercise of contractual right to terminate for non-payment).
56 Lombard North Central Plc v Butterworth [1987] QB 527. But see United Dominions Trust
(Commercial) Ltd v Ennis [1968] 1 QB 54 (below, text at n 58).
57 Of course, the finance company is frequently limited to such a claim because of an inability
to prove breach of condition, repudiation or fundamental breach. See, eg Bridge v Campbell
Discount Co Ltd [1962] AC 600; O’Dea v Allstates Leasing System (WA) Pty Ltd (1983) 152
CLR 359; 45 ALR 632; AMEV-UDC Finance Ltd v Austin (1986) 162 CLR 170; 68 ALR
185.
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Concurrent and Independent Rights to Terminate 115

Illustrations
Introduction
In this section we seek to test our thesis against Gearbulk and three other
English decisions, the effect of exercise of the power of resale which sellers
sometimes enjoy and the ‘alternative rights cases’, that is, cases illustrating
exceptions to the attribution principle.
Ennis
The decision in United Dominions Trust (Commercial) Ltd v Ennis58 (Ennis)
concerned the familiar scenario of hire-purchase cases in the 1960s. Mr Ennis
(the hirer) took a car on hire-purchase terms from UDT under which he agreed
to pay an initial sum (£219) and 48 monthly instalments each of £24 9s 1d.
After making the initial payment he fell on hard times and decided to exercise
his right to terminate the contract. Clause 10 entitled him to do so, but required
return of the car to UDT. Clause 8 provided that if the hirer failed to pay any
instalment the company might without notice terminate the hiring. Under
cl 11, if UDT exercised its right under cl 8 or if the hirer exercised his right
under cl 10, the hirer was required to pay an agreed sum. UDT issued
proceedings for the agreed sum. However, following the decision in Bridge v
Campbell Discount Co Ltd,59 in which a provision in the same terms as cl 11
was held to be a penalty, UDT amended its writ to include an alternative claim
for loss of bargain damages. Judge Glazebrook in the county court held that
the hirer had exercised his right under cl 10 and gave judgment in favour of
UDT for £271 16s.60
Three issues arose in the subsequent appeal to the Court of Appeal. First,
did the hirer exercise his right under cl 10? It was held that his exercise of that
right was invalid because the hirer had returned the car to the dealers, rather
than to UDT.61
Second, had the hirer repudiated the contract? Lord Denning MR doubted
whether there was a repudiation.62 However, Harman and Salmon LJJ
considered63 that the facts disclosed a repudiation.
Third, was UDT entitled to loss of bargain damages? Each member of the
court addressed this issue, but the reasoning is not easy to follow. The unifying
feature is that UDT had not accepted any repudiation by the hirer. Lord
Denning MR said:64
But even if it be treated as a repudiation, it is clear that the repudiation was never
accepted by the finance company. After receiving his letter, they treated the contract
as being still continuing. They claimed under the minimum payment clause, which

58 [1968] 1 QB 54.
59 [1962] AC 600.
60 In fact, under cl 11 UDT was entitled to £709 10s 8d. The lesser sum was (in substance) loss
of bargain damages and UDT released the hirer from the balance.
61 [1968] 1 QB 54 at 67–8, 69–70. Lord Denning MR considered ([1968] 1 QB 54 at 64–5) that
there was no attempt to exercise the right.
62 [1968] 1 QB 54 at 65.
63 [1968] 1 QB 54 at 68, 71.
64 [1968] 1 QB 54 at 65–6.
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is a thing they could not possibly have done if there had been an acceptance of
repudiation. By so doing, they elected to treat it as continuing. [Counsel for UDT]
said they accepted the repudiation by retaking possession of the car. But that was not
pleaded. Nor has it ever been suggested hitherto. The county court judge said they
accepted the repudiation in November 1963, when they amended their pleading.
That was far too late. They had already evinced their intention to treat the agreement
as continuing. I do not think they can rely on the alleged repudiation.
Harman LJ also concluded that if there was a repudiation it had not been
accepted by UDT, saying:65
[UDT] elected not to accept [the] repudiation: they elected to treat the agreement as
binding and to sue him under it and not to sue him for damages for its breach.
Therefore, they cannot rely on repudiation.
Salmon LJ said this:66
The judge has found that the alleged wrongful repudiation was accepted by the
amendment of the writ nearly four years after it took place. That means that the
judge’s finding is to the effect that the agreement continued for a period of nearly
four years before being determined by the amendment of the writ, this he found
operated as an acceptance of the repudiation made four years previously. Whatever
doubt there may be about any of the issues that have been raised in this case, it seems
to me there can be no doubt at all but that that finding is wholly untenable. There is
no cross-notice setting up any other acceptance of the repudiation, and therefore,
even if what the hirer did, as I think, amounts to a repudiation, it was not accepted
and therefore is of no effect. Accordingly, the point which has been argued as to the
true basis for the assessment of the damages does not arise.
However, if it was correct to assume that the hirer repudiated the contract,
it seems obvious that the contract must have been terminated. There was no
other basis on which UDT could claim the agreed sum. As in our P2 example,
cl 11 dealt with the consequences of termination.67
UDT was, therefore, entitled to invoke the attribution principle and to
justify its termination on the basis of repudiation. The amendment to the writ
which UDT made was necessary only for the purpose of claiming damages.
And once that amendment was permitted, UDT had on foot an alternative
claim for loss of bargain damages.68 Those points aside, it is conceptually
impossible to say that UDT affirmed the contract. With respect, therefore, the
discussion of the issue in Ennis can only be supported on the basis that UDT
had elected between the two rights of termination which were available.
Applying the framework suggested in this article, because the contract was
terminated, UDT could claim under cl 11 or the common law. If cl 11 had not
been a penalty, UDT would have recovered liquidated damages. Such

65 [1968] 1 QB 54 at 68.
66 [1968] 1 QB 54 at 71.
67 The position would have been different if the claim had related solely to the amount due on
termination by the hirer. Under cl 11 the amount payable would have been in the nature of
an agreed fee for early termination.
68 Reigate v Union Manufacturing Co (Ramsbottom) Ltd [1918] 1 KB 592 at 607 per
Scrutton LJ (‘[t]here was therefore a repudiation of the contract by the company accepted by
the plaintiff by the issue of the writ claiming damages for the breach’). See also Heyman v
Darwins Ltd [1942] AC 356 at 362. There is no requirement of termination before the issue
of the writ: Tilcon Ltd v Land and Real Estate Investments Ltd [1987] 1 WLR 46.
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Concurrent and Independent Rights to Terminate 117

recovery would have been in place of UDT’s (common law) entitlement to

loss of bargain damages for repudiation by the hirer. Therefore, although UDT
enjoyed concurrent or independent rights of termination, they were not
coordinate. The inconsistency was between remedies. However, because cl 11
provided for a penalty, the parties’ attempt to deal expressly with the
consequences of termination failed. All that remained was UDT’s common
law right to terminate, on the exercise of which it was entitled to loss of
bargain damages. The only rational basis for the discussion of ‘affirmation’
was that by specifying the basis for termination UDT was by its conduct
precluded from setting up its common law right. However, that rationalisation
was not explored by the court.

Latco
In Stocznia Gdanska SA v Latvian Shipping Co [No 3]69 (Latco) buyers
ordered the construction of six reefer vessels from Stocznia Gdanska GA (the
builders). An initial five per cent instalment was paid under each contract but,
in the course of discussions between the parties, the buyers repudiated all six
contracts. Keel laying for two of the vessels later occurred, but the second
instalment payment of 20 per cent was not made. The builders then served
notices of termination (termed ‘rescission’) under cl 5.05 of the contracts
relating to these vessels based on non-payment.
Subsequently, the builders issued keel-laying notices for the remaining
hulls. None of the second instalments were paid, and the builders served
notices of termination under cl 5.05 in respect of these vessels as well. In fact,
the builders only constructed hulls 1 and 2. For the remaining hulls, the
builders had simply renamed hulls 1 and 2, first as hulls 3 and 4, and then as
hulls 5 and 6.
A series of earlier proceedings culminated in the decision of the House of
Lords in Stocznia Gdanska SA v Latvian Shipping Co70 that the buyers were
liable to pay the overdue instalments in respect of hulls 1 and 2, but not the
other hulls. Relevantly, the question before the court in Latco was whether the
builders were entitled to loss of bargain damages for repudiation. It was held
that the buyers were so liable notwithstanding the presence in the contract of
detailed provisions relating to termination.
Following termination, cl 5.05 gave the builders71 ‘the full right and power
either to complete or not to complete the Vessel and to sell the Vessel at a
public or private sale on such terms and conditions as the Seller deems
reasonable’. In relation to hulls 1 and 2, the builders had contracted to build
two reefer vessels for another purchaser. Rix LJ (with whom Tuckey and
Aldous LJJ agreed) held that the builders had sold the two vessels to the third
party purchaser and therefore cl 5.05 applied. Accordingly, the builders were
to be regarded as having proceeded under cl 5.05 and not by way of the
common law. This issue had been raised because the builders were concerned

69 [2002] 2 Lloyd’s Rep 436; [2002] EWCA Civ 889.

70 [1998] 1 WLR 574. See J Beatson and G Tolhurst [1998] CLJ 253; Gerard McMeel [1998]
LMCLQ 308; J W Carter, ‘Shipbuilding Contracts: Not Quite the Final Chapter’ (1998) 13
JCL 156.
71 [2002] 2 Lloyd’s Rep 436 at 446–7; [2002] EWCA Civ 889 at [58].
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that their ‘rights under cl 5.05 were more limited than they would be at
common law in damages for repudiation’.72
For the court the main issue was whether cl 5.05 was a self-contained code
which displaced the builders’ common law rights.73 It was held that it was not.
Rix LJ reasoned that although there was some departure from common law
remedies if a vessel was sold following termination, this was not itself
determinative of whether cl 5.05 was a self-contained code.74 The language
employed in cl 5.05 suggested that it was to be supplemented by the common
law regime. In particular, the clause referred to ‘the recovery of the Seller’s
loss and damage’, and stated that the seller was ‘always obliged to mitigate all
losses and damages due to any such Purchaser’s default’. Likewise, the
calculation of a ‘deficiency’ which the buyer was required to pay in the case
of a sale could, according to Rix LJ, be supplemented by common law
principles, without which the eventual sum would be difficult to arrive at.75
Similarly, in relation to a ‘net surplus’ on a sale, the calculation of that amount
also required the ‘underpinning of the common law’.76 Finally, since sale was
not mandatory, those aspects of cl 5.05 dealing with sale might not apply.77
Rix LJ therefore concluded that the contract did not state a self-contained code
displacing the builders’ common law remedies. It followed:
(1) in relation to vessels 1 and 2, the builders were entitled to claim
damages for repudiation ‘subject to the provisions of cl 5.05’ in so far
as they related to the proceeds of the sales;78 and
(2) in relation to vessels 3 to 6, the builders could claim loss of bargain
damages under the common law.
In arriving at these results, the court made some quite surprising conclusions
which are appropriately explained by applying the suggested framework in
this article.
The first question was whether the builders enjoyed concurrent rights.
Given the finding that the buyers repudiated all six contracts, it seems
self-evident that they did. However, finding a convincing explanation for the
conclusion that the builders accepted the buyers’ repudiation in respect of
vessels 3 to 6 is another matter. The keel-laying notices were clearly invalid,
as were the notices of termination issued for subsequent ‘non-payment’.
Although the court discussed79 in detail whether those notices amounted to an
‘affirmation’ of the contract, given their invalidity it is difficult to see how they
could be so characterised. The keel-laying notices and the notices which
followed were inconsistent acts sufficient to terminate the contracts.80 If that

72 [2002] 2 Lloyd’s Rep 436 at 447; [2002] EWCA Civ 889 at [59].
73 [2002] 2 Lloyd’s Rep 436 at 448; [2002] EWCA Civ 889 at [64].
74 [2002] 2 Lloyd’s Rep 436 at 448–9; [2002] EWCA Civ 889 at [66]–[69] (referring to certain
passages in Stocznia Gdanska SA v Latvian Shipping Co [1998] 1 WLR 574 which had been
relied on to support a contrary conclusion).
75 [2002] 2 Lloyd’s Rep 436 at 449; [2002] EWCA Civ 889 at [70].
76 [2002] 2 Lloyd’s Rep 436 at 449; [2002] EWCA Civ 889 at [71].
77 [2002] 2 Lloyd’s Rep 436 at 449; [2002] EWCA Civ 889 at [71].
78 See [2002] 2 Lloyd’s Rep 436 at 451; [2002] EWCA Civ 889 at [83].
79 See [2002] 2 Lloyd’s Rep 436 at 451–3; [2002] EWCA Civ 889 at [84]–[92].
80 Cf South Caribbean Trading Ltd v Trafigura Beheer BV [2005] 1 Lloyd’s Rep 128 at 152,
153; [2004] EWHC 2676 (Comm) at [130], [133].
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Concurrent and Independent Rights to Terminate 119

was not the position, it is difficult to see why the fact that the buyers continued
to repudiate their obligations should not have been characterised as an election
by them to terminate the contracts.
The second (and more important) issue was whether the builders’ rights
under their concurrent termination rights were coordinate. Any doubts on that
issue related to the consequences of termination. So far as vessels 1 and 2
were concerned, this issue ought not to have mattered since the court decided
that the builders had terminated under cl 5.05. However, as noted above, the
court regarded common law principles as relevant so that, it appears, the
reference to the ‘Seller’s loss and damage’ in cl 5.05 was to be regarded as a
reference to common law damages. It is, of course, a question of construction
what loss the parties to a contract intend to be recoverable on termination. But
the court appeared to treat that question as resolved by the fact that the clause
providing for the payment of the second instalment was a condition, in the
sense that the failure to pay within the 21 days of grace was a breach of
condition.81 That seems a very unorthodox conclusion,82 which may confuse
the limitation on termination by the builders under the express provision —
expiry of 21 days after breach — with the question whether the time of
payment was of the essence. Since time was not of the essence, the rights of
the builders under cl 5.05 did not include a right to recover loss of bargain
damages.83 Accordingly, the rights were not coordinate, and since the builders
were held to have proceeded under cl 5.05 they could not claim damages for
repudiation. In any event, in our view that was irrelevant. To the extent that
the builders were entitled to sell the partially completed vessels and to recover
the ‘deficiency’ from the buyers, the express right provided for an alternative
remedy to the recovery of loss of bargain damages. Thus, in accordance with
our analysis above, if the builders took the benefits under the clause their
cause of action would be satisfied, and loss of bargain damages for repudiation
would not be available.84 If that is correct, then it is impossible to see how the
builders could enjoy the benefit of the express provision as an ingredient of the
common law damages regime following termination for repudiation. In
electing to sell the vessels, the builders had chosen the remedial consequences
of termination. Since cl 5.05 was analogous to a power of sale, the builders
were entitled to recover the difference between the contract price and the
amount obtained on the resale.85 That was, in our view, the appropriate
construction to place on ‘Seller’s loss and damage’ in cl 5.05. However,
according to Rix LJ, the common law supplemented the express remedies

81 See [2002] 2 Lloyd’s Rep 436 at 451; [2002] EWCA Civ 889 at [80], where Rix LJ actually
suggested that the ‘express right to withdraw in the case of unpunctual payment . . . is a
condition of the contract, breach of which is in itself repudiatory’. Alternatively, the breach
was ‘consensually regarded as a repudiatory breach’ ([2002] 2 Lloyd’s Rep 436 at 451;
[2002] EWCA Civ 889 at [81]).
82 It is arguably inconsistent with the decision in Afovos Shipping Co SA v Pagnan [1983] 1
WLR 195, and certainly inconsistent with Shevill v Builders Licensing Board (1982) 149
CLR 620; 42 ALR 305.
83 See above, text at n 51. Cf above text at n 72.
84 In Stocznia Gdanska SA v Latvian Shipping Co [1998] 1 WLR 574 the House of Lords held
that termination of those contracts did not impact on the builders’ accrued right to recover
the overdue payments.
85 See below, text at n 113.
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under cl 5.05. This explains why Rix LJ’s reasons for deciding that cl 5.05 was
not a self-contained code related to both the right of termination and
explaining and giving effect to the builders’ rights under cl 5.05.
Therefore, in stressing the fact that common law rights were not entirely
displaced by the express clause — and speaking in terms of supplementation
by the common law regime — it is difficult to escape the conclusion that the
court actually thought the builders could ‘have their cake and eat it too’.86 In
other words, it seems that the builders were held to be entitled to a portion of
each.87 Yet, it seems clear that if in our P2 example P2 terminates the contract,
and requires the builder to sell the partially completed vessel and to account
under the clause, P2 would not be entitled to ‘top up’ the amount recoverable
under the express regime by reference to the amount of loss of bargain
damages.
The position was different in relation to vessels 3 to 6. The contract was
clearly severable, and the builders were entitled to pursue their express rights
in respect of the contracts for hulls 1 and 2 but to rely on their common law
rights for the other vessels in respect of which the express procedure for
termination was invalidly exercised. Referring to the builders’ (invalid) claim
for payment following the invalid keel-laying notices, and the buyers’ failure
to make the payments alleged to be due, Rix LJ stated:88
Where contractual and common law rights overlap, it would be too harsh a doctrine
to regard the use of a contractual mechanism of termination as unequivocally
ousting the common law mechanism . . .
Although that is clearly correct as a general proposition, it is necessarily
qualified by the steps taken by the promisee. To the extent that the
consequences of proceeding under the express term differed from the
consequences of termination under the common law, namely, the ability to
recover loss of bargain damages, it was clearly necessary for the builders to
choose between them. However, given the decision that the builders accepted
the buyers’ repudiation, the consequences of the builders’ election to terminate
in respect of hulls 3 to 6 were to be found on the common law.
Dalkia
Dalkia Utilities Services Plc v Celtech International Ltd89 (Dalkia) involved
the provision of power by the plaintiffs (Dalkia) to the defendants under a
series of agreements. The plaintiffs designed, constructed and operated energy
plants. Dalkia contracted with Celtech to provide energy services by means of
a heat and power plant for Celtech’s new paper mill. Six agreements were
signed. The principal agreement was for an initial period of 15 years. Payment
for the energy services was to be by way of annual charges, payable in
monthly instalments. These charges consisted of a finance and an operational
element.

86 Cf Stocznia Gdanska SA v Latvian Shipping Co [1998] 1 WLR 574 at 585–6.

87 But see below, text at n 113 (power of sale cases).
88 [2002] 2 Lloyd’s Rep 436 at 452; [2002] EWCA Civ 889 at [88]. The statement was made
in the context of discussing whether service of the invalid keel-laying notices was an
affirmation of the contracts. It was held that they were not.
89 [2006] 1 Lloyd’s Rep 599; [2006] EWHC 63 (Comm).
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Clause 14.4 of the principal agreement entitled Dalkia to terminate for

material breach by Celtech. If the agreement was terminated under that
provision, cl 15 required Celtech to pay Dalkia a ‘termination sum’, on the
payment of which Celtech was to keep the heat and power plant.90 Clause 15.7
stated:
The consequences of termination set out in this clause represent the full extent of the
parties’ respective rights and remedies arising out of any termination save for those
rights remedies and liabilities which arise prior to termination.
When Celtech failed to pay three monthly instalments in succession, Dalkia
terminated the agreements, relying expressly on cl 14.4. Dalkia also sought
the termination sum under cl 15. Alternatively, Dalkia argued that Celtech’s
failure to pay the three monthly instalments (and associated conduct)
amounted to a repudiation of the principal agreement.
Christopher Clarke J gave judgment for Dalkia. He held that Celtech’s
failure to pay the three monthly instalments constituted a material breach of
its obligations for the purposes of cl 14.4. However, he did not regard
Celtech’s conduct as a repudiation of the contract. Also, the termination sum
was held not to be a penalty. In reaching these conclusions, Christopher
Clarke J considered whether cl 15.7 applied to an accepted repudiation.
According to Christopher Clarke J, this involved the question:91
whether or not cl 15.7 should be interpreted to mean that cl 15 provides a complete
code as to the rights and remedies which either side shall enjoy in the event that there
is any form of termination or purported termination of the agreement, whether by a
notice given under any of the sub-clauses of cl 14, or by reason of the acceptance
by one party to the agreement of a repudiatory breach — committed by the other.
He concluded that cl 15.7 was not a complete code. Two reasons were
given, based on the presumption in favour of common law rights. First,
reading cl 15.7 in its proper context, it was clear that the rights and remedies
that would arise in respect of a termination on any of the bases provided for
by cl 14 were those specified in cl 15. Second, notwithstanding the reference
to ‘any termination’ in cl 15.7, it did not exclude any common law rights on
termination for repudiation. It followed that either party would be entitled to
terminate the contract for repudiation by the other.
With respect, Christopher Clarke J may have attributed too much weight to
the presumption in favour of common law rights. Whether an express right is
an exhaustive statement of the bases on which a contract may be terminated
is a question of construction. Although there may have been good reasons for
reaching the conclusion that the express clause was not exhaustive, as we have
sought to explain, that is not a complete answer to the issues which arise.
Therefore, Christopher Clarke J’s conclusion on that construction issue was
not determinative. There were two further issues, namely, whether any
common law right could be exercised concurrently with the express right, and
the precise relationship between cl 15 and the common law consequences of
termination. Recast in terms of our analysis, this is a question of whether the

90 The principal agreement was later amended to limit the termination sum to any interest
outstanding on the charges.
91 [2006] 1 Lloyd’s Rep 599 at 606; [2006] EWHC 63 (Comm) at [20].
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parties’ rights were coordinate and, if not, the extent of inconsistency.

There was no doubt that the contract conferred more extensive rights of
termination than the common law. Accordingly, the mere fact that an express
right was enlivened did not mean that Dalkia also enjoyed a common law
right. Thus, Christopher Clarke J said92 that the contract ‘may more aptly be
regarded as giving to Dalkia . . . rights which differ from, and are more
extensive than, its common law rights’. He also recognised93 that where the
same facts give rise to express and common law rights the prima facie rule is
that the promisee can rely on both. However, Christopher Clarke J concluded
that, even if a repudiation had been established, Dalkia’s notice of termination
could not, simultaneously, be an acceptance of the repudiation and an exercise
of the express right. This was because of inconsistency between the
consequences. Indeed, addressing whether the issue of a notice of termination
in respect of an express provision would in all cases amount to an acceptance
of a repudiation, he explained:94
. . . markedly different consequences would arise according to whether or not there
was a termination under cl 14.4 or an acceptance of a repudiation. In the former case
Celtech would be liable to pay a termination sum and entitled, on payment, to keep
the plant. In the latter Dalkia would be entitled to the plant, which either always
remained its property (if it was never a fixture) or was something that Dalkia would
be entitled to remove; and their claim would not (unless, perhaps, the value of the
plant was nil) be in the same amount as the termination sum . . . The same notice
cannot operate to produce two so diametrically opposing consequences.
He supported95 this explanation by reference to Ennis. However, with
respect, the explanation is not correct. It mischaracterises a case of
inconsistent remedies flowing from concurrent rights as a case of inconsistent
rights. As in our P2 example, any inconsistency was in relation to remedies,
not discharge. Given that any exercise of the express right clearly satisfied the
common law requirement of unequivocal conduct, even if the express right
had not been available, the ‘attribution’ principle and the ‘inconsistent act’
principle would have resulted in an effective election to terminate for any
repudiation by Celtech. Why should it matter that the express right was validly
exercised? The notice given by Dalkia would have operated as a valid exercise
of any common right to terminate for repudiation and the right to terminate
under cl 14.4.
Gearbulk
Gearbulk concerned three materially identical shipbuilding contracts between
Stocznia and Gearbulk for the construction and sale of three vessels.
Article 5.10(b) of each contract included a ‘refund guarantee’. It was provided
that Stocznia would refund all ‘instalments of the contract price’ paid, and that
the obligation was to be ‘secured under and pursuant to the refund guarantee
issued in favour of the purchaser’. Article 10.1(c) entitled Gearbulk to
terminate the contract if the vessel was not completed 150 days after the

92 [2006] 1 Lloyd’s Rep 599 at 629; [2006] EWHC 63 (Comm) at [130].

93 [2006] 1 Lloyd’s Rep 599 at 632; [2006] EWHC 63 (Comm) at [143].
94 [2006] 1 Lloyd’s Rep 599 at 633; [2006] EWHC 63 (Comm) at [144].
95 See [2006] 1 Lloyd’s Rep 599 at 632; [2006] EWHC 63 (Comm) at [144].
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Concurrent and Independent Rights to Terminate 123

delivery date. Finally, art 10.7 prescribed the effect of termination by Gearbulk
‘in accordance with the provisions of art 10 or any other provision of this
contract expressly entitling [Gearbulk] to terminate’ in terms that Stocznia
was obliged to repay to Gearbulk all sums previously paid under the contract,
together with interest.
Stocznia was unable to complete any of the vessels. Gearbulk elected to
terminate the contracts. It received payment under the refund guarantee. The
dispute which then arose was whether Gearbulk could recover loss of bargain
damages or, as Stocznia argued, Gearbulk was limited to the recovery of
money paid. The matter was referred to arbitration, in which Gearbulk
prevailed. Burton J allowed Stocznia’s appeal, and Gearbulk appealed to the
Court of Appeal. Burton J’s decision was reversed.
In the Court of Appeal, Moore-Bick LJ, with whom Ward and Smith LJJ
agreed, held that art 10 did not prevent termination by Gearbulk on a common
law basis. The parties’ intention underlying the express termination right was
essential in determining the importance of the ‘underlying obligation and the
nature of the breach’.96 As a matter of construction, there was nothing to
indicate that the parties intended to displace the common law right to
terminate for repudiation or fundamental breach. Indeed, Moore-Bick LJ went
as far as to say that:97
In my view it is wrong to treat the right to terminate in accordance with the terms
of the contract as different in substance from the right to treat the contract as
discharged by reason of repudiation at common law. In those cases where the
contract gives a right of termination they are in effect one and the same.
With respect, this is a difficult proposition to accept. The contract did not
state the events which would satisfy the common law requirements for
repudiation or fundamental breach. Nor did the contract include an agreement
that conduct which activated the express provision was a repudiation or
fundamental breach.98 Rather, the position, simply, was that the conduct which
activated the express right to terminate was found by the court to have
amounted to a repudiation of obligation. Given that the clause was activated
by 150 days’ delay in delivery, that is hardly surprising. Accordingly, in the
terminology adopted above, Gearbulk enjoyed concurrent termination rights.
In fact, the notice of termination in respect of one vessel (hull 26) was given
in respect of both the express right and any common law right. Therefore,
subject to the impact of enforcement of the refund guarantee, it was expressly
a simultaneous exercise of both rights. However, in relation to two of the
vessels (hulls 24 and 25) the notice of termination expressly related to the
express right. Nevertheless, each such notice satisfied the common law
requirement for valid termination. Each notice was therefore capable of being
characterised as acceptance of any repudiation or fundamental breach by
Stocznia.
Turning to Stocznia’s second argument relating to liability for loss of

96 [2010] QB 27 at 37–8; [2009] EWCA Civ 75 at [19].

97 [2010] QB 27 at 38; [2009] EWCA Civ 75 at [20].
98 Contrast Lombard North Central Plc v Butterworth [1987] QB 527; Gumland Property
Holdings Pty Ltd v Duffy Bros Fruit Market (Campbelltown) Pty Ltd (2008) 234 CLR 237;
244 ALR 1; [2008] HCA 10.
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124 (2010) 26 Journal of Contract Law

bargain damages, in terms of our analysis, the issue was whether the two
rights of termination were coordinate. However, since there was no mandatory
procedure applicable to the express right, any discordance between the rights
would relate to their consequences. Gearbulk’s entitlement at common law
was to recover loss of bargain damages. Since the contract was construed as
one for the sale of goods,99 because no part of the contract was performed
Gearbulk would also be entitled to restitution of the advance payments made
under the contract. Under the express provision, the only express right was to
enforce the refund guarantee. Since the refund guarantee did no more than
secure Gearbulk’s restitutionary right, it was not inconsistent with recovery of
loss of bargain damages. However, under art 10.7100 the entitlement to enforce
the guarantee was stated to apply on ‘termination of this contract by the
purchaser in accordance with’ art 10 ‘or any other provision of this contract
expressly entitling the purchaser to terminate this contract’. That created a
question of construction, namely, whether arts 5.10 and 10.7 were to be
applied literally. It seems inherently unlikely that the parties intended that the
guarantee would not be available to Gearbulk if Stocznia simply refused to
perform the contract. However, even if it was — so that the guarantee was not
available to Gearbulk if it terminated the contract on a common law basis —
that could have no impact on its ability to claim loss of bargain damages and
restitution of payments made.101
Moore-Bick LJ analysed the issue in a different way. He accepted102 that
there was ‘no reason’ why the parties could not have agreed that Gearbulk
should have no right to recover loss of bargain damages.103 However, he
thought the contract would have been imbalanced since Stocznia retained a
right to claim loss of bargain damages. Relying on the presumption in favour
of common law rights, Moore-Bick LJ stated that ‘[t]he more valuable the
right, the clearer the language will need to be’ in displacing this
presumption.104 On the facts, the presumption was not displaced since it was
impossible to construe art 10 as a complete statement of Gearbulk’s rights on
termination — whatever the basis.
In this regard, the impact of Moore-Bick LJ’s statement105 that the rights of
termination were ‘in effect one and the same’ was that Gearbulk’s express
right was to be equated with the implied right.106 It is not easy to see the logic
of that, or why, if it was correct, there was any need to consider whether the
conduct of Stocznia amounted to a repudiation and whether the express
regime displaced the common law. If there was only one right, the sole
question was what consequences flowed from exercise of that right. That was,

99 [2010] QB 27 at 35; [2009] EWCA Civ 75 at [12].

100 See also art 5.10.
101 But see [2010] QB 27 at 39; [2009] EWCA Civ 75 at [21].
102 [2010] QB 27 at 39; [2009] EWCA Civ 75 at [21].
103 However, in ascertaining the parties’ intention in relation to this matter, Moore-Bick LJ
placed considerable emphasis on the commercially disadvantageous consequences that
would result if the parties had indeed agreed that Gearbulk could not recover loss of bargain
damages.
104 [2010] QB 27 at 39; [2009] EWCA Civ 75 at [23].
105 [2010] QB 27 at 38; [2009] EWCA Civ 75 at [20].
106 Cf Edwin Peel, ‘Affirmation by Termination’ (2009) 125 LQR 378 at 380–1.
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Concurrent and Independent Rights to Terminate 125

of course, a question of construction.107 Moore-Bick LJ’s view that the

common law right and express rights were ‘one and the same’ can also be
contrasted with the view in Leslie Shipping Co v Welstead108 that express
rights exist together rather than overlap in substitution of one another.
Stocznia’s third argument was that by terminating the contracts under art 10
Gearbulk had elected to affirm the contracts and therefore could not
subsequently treat them as repudiated. Since art 10 was held to embody the
common law right of recovery for repudiation, it was held that Gearbulk was
entitled to recover loss of bargain damages.109 Since its notices of termination
were inconsistent with an election to affirm the contracts, there was no
affirmation by Gearbulk.110 Moreover, the ‘commercial context as well as the
terms of the contract make it clear that the obligation to repay instalments of
the price was intended to survive the termination of the contract’.111
Accordingly, Gearbulk’s enforcement of the refund guarantee was not
inconsistent with the recovery of loss of bargain damages.112
Although we reach the same conclusion, our analysis is again somewhat
different. In Gearbulk the event which activated the express right was held to
be a repudiation at common law. Since the requirements for termination were
the same, the notices served by Gearbulk were effective to terminate the
contracts on both bases unless the enforcement of the refund guarantee was
inconsistent with exercise of the common law right. As explained above, the
fact that the contract provided for enforcement of the refund guarantee could
not affect the validity of Gearbulk’s election to terminate. Even if Gearbulk
breached the contract by enforcing the refund guarantee, that conduct could
not be an affirmation of the contract because it occurred after termination.
In order to reach the result contended for by Stocznia, a further conclusion
would have to be drawn, namely, that Gearbulk’s cause of action on
termination under art 10 was satisfied by refund of the money paid. There was,
however, nothing to support that conclusion in the clause. There was no
express agreement to that effect. In addition, and in our view more
importantly, from the perspective of the common law right to restitution, the
refund guarantee did no more than secure the common law right. Accordingly,
and unlike the position of P2 in our shipbuilding example, the termination
rights were either coordinate or discordant in a way which made it irrelevant
which right was exercised.

Power of Sale Cases

An express power of resale is common in a sale of land contract. Typically, the
power of sale is an alternative right which may be exercised by the vendor
following default by the purchaser. It is also, usually, a right which becomes

107 See [2010] QB 27 at 36; [2009] EWCA Civ 75 at [16] where such an intention was deduced.
Cf [2010] QB 27 at 38; [2009] EWCA Civ 75 at [20] (‘usual consequences’).
108 [1921] 3 KB 420 at 426 per Greer J (not ‘cutting down the rights . . . in the absence of such
a clause’).
109 [2010] QB 27 at 44; [2009] EWCA Civ 75 at [36].
110 [2010] QB 27 at 44–5; [2009] EWCA Civ 75 at [37].
111 [2010] QB 27 at 45; [2009] EWCA Civ 75 at [37].
112 [2010] QB 27 at 45; [2009] EWCA Civ 75 at [40].
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126 (2010) 26 Journal of Contract Law

available to the vendor after termination, and is made available as an

alternative to common law damages.113
In Cooper v Ungar,114 cl 14 of a contract for the sale of land115 provided
that if the purchaser failed to comply with the terms of sale, the vendor could
resell the land and claim from the purchaser any deficiency arising from such
sale as liquidated damages. When the vendor sued the purchaser under cl 14
for such a deficiency, the purchaser claimed that the vendor had not exercised
his power to resell within a reasonable time. In relation to powers of sale,
Dixon CJ (for the court) said:116
. . . it has been pointed out that such a provision gives a contractual right to the
vendor. It is a right in the nature of a power and when he pursues it he is acting under
the contract and not in derogation of the contract or on the footing that it is
discharged completely.

And commenting on the vendor’s claim in this case, Dixon CJ

concluded:117
It is hardly necessary to point out . . . in so suing the plaintiff was suing upon the
contract, that is on a term of the contract and not for unliquidated damages as for a
wrongful repudiation of the contract or for a breach in failing to complete it.
Once the land has been resold under the power, the parties are discharged.
However, there remains the purchaser’s secondary obligation to pay liquidated
damages to the seller. Thus, although the contract is discharged, there remains
a contractual regime following termination. However, the vendor was ‘suing
upon the contract’ only in the sense that it was enforcing its right to liquidated
damages payable following termination. Whether such provisions should be
regarded as conferring a single right of termination with two different sets of
consequences or two concurrent rights of termination is hardly likely to
matter. The question is whether the vendor’s rights against the purchaser
following default have been satisfied. In claiming liquidated damages the
vendor is therefore electing between inconsistent remedies, not inconsistent
rights.118
In R V Ward Ltd v Bignall,119 Diplock LJ applied much the same analysis
to an express right to resell goods. Referring to s 48(4) of the Sale of Goods
Act 1893 (UK),120 relating to an express right of resale, Diplock LJ said:121

113 See cl 9 of the New South Wales Law Society’s Standard Contract for the Sale of Land, 2005
ed.
114 (1958) 100 CLR 510.
115 The clause is not reproduced in full in the report.
116 (1958) 100 CLR 510 at 513.
117 (1958) 100 CLR 510 at 514.
118 See also Taylor v Raglan Developments Pty Ltd [1981] 2 NSWLR 117; Zografakis v
McCarthy [2007] NSWSC 144.
119 [1967] 1 QB 534.
120 ‘Where the seller expressly reserves the right of re-sale in case the buyer should make
default, and on the buyer making default re-sells the goods, the original contract of sale is
rescinded but without prejudice to any claim the seller may have for damages.’ See now Sale
of Goods Act 1979 (UK), s 48(4). See also, eg Sale of Goods Act 1923 (NSW), s 50(4); Sale
of Goods Act (1993 rev ed) (c 393) (Sing), s 48(4).
121 [1967] 1 QB 534 at 550–1.
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Concurrent and Independent Rights to Terminate 127

Subsection (4) deals with the consequences of a resale by a seller, not necessarily an
‘unpaid seller’ as defined in section 38, made in the exercise of an express right of
resale reserved in the contract on the buyer making default. If such an express right
were exercisable after the property in the goods had passed to the buyer, its exercise
might, on one view, be regarded as an alternative mode of performance of the
seller’s primary obligations under the contract, and the resale as being made by the
seller as agent for the buyer. It was, therefore, necessary to provide expressly that the
exercise of an express power of resale should rescind the original contract of sale.
That is, in my view, the explanation of the express reference to rescission in
subsection (4).
It is, of course, always open to the parties to a contract for the sale of land
or goods to agree to a different result, that is, that the vendor or seller may
resell without a prior termination. But in the usual case — where termination
is required — although the rights are concurrent, the remedies are not.122

Alternative Rights Cases

What we termed the ‘attribution’ principle has frequently been applied in the
alternative rights cases. The key feature of those cases, however, is that on
analysis it is found that the promisee has only one right to terminate. For
example, in Maredelanto Compania Naviera SA v Bergbau-Handel GmbH
(The Mihalis Angelos)123 a charterparty was agreed for a voyage from
Haiphong to Hamburg with a cargo of apatite. There was no apatite available
at Haiphong, and the charterers thought this was due to the war in Vietnam.
The charterers terminated the contract on the basis of force majeure. However,
there was no force majeure, and the charterers’ termination was, so far as that
ground was concerned, a repudiation of the contract. However, the English
Court of Appeal held that the shipowners had breached a condition. Applying
the attribution principle it was held that the charterers’ ‘repudiation’ was — as
a matter of law — a valid termination.
Given that in the alternative rights cases there is typically only one valid
basis for the promisee’s termination, it is easy to understand why this line of
authority has not figured in the discussion in the illustrative cases considered
above. However, in our view they raise precisely the same issues. For
example, if a promisee enjoys an express right to terminate and a common law
right, but a notice given under the former is invalid, the cases illustrate that it
is sufficient that the promisee enjoys an independent or concurrent common
law right. Unless there is a basis for not applying the attribution principle, the
notice of termination under the express clause, although invalid, can be
attributed to the common law basis for termination.124 Where the courts have
struggled is in trying to explain — from a doctrinal perspective — the
situations in which the attribution principle has not been applied. Although in
our view the decision in Gearbulk sounds the death knell on the reasoning in
Ennis to the effect that termination of a contract may amount to an

122 Howe v Smith (1884) 27 Ch D 89 at 105. In each case, the action is for damages, not the
contract price: R V Ward Ltd v Bignall [1967] 1 QB 534 at 550.
123 [1971] 1 QB 164.
124 That was in our view the proper characterisation of the invalid notices in Latco. See above,
text at n 80.
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128 (2010) 26 Journal of Contract Law

affirmation,125 that reasoning seems to underlie at least some of the cases in

which promisees have been denied the benefit of the attribution principle.
There are three lines of authority. The first is typified by Panchaud Frères
SA v Etablissements General Grain Co.126 Very briefly, in that case sellers
agreed to sell 5500 tons of maize on CIF terms. Payment was to be made in
cash against documents. When the documents were presented to the buyers
they were accepted and the agreed price was paid. These documents included
a falsely dated bill of lading. Had the buyers examined the documents closely,
they would have seen a discrepancy between the bill of lading and the quality
certificate, suggesting a false shipment date. When the goods arrived at
Antwerp they were rejected by the buyers who relied on the quality and
description of the goods. However, those matters did not in fact justify
rejection. During arbitration proceedings the buyers discovered the true date
of shipment. They therefore sought to justify their election to terminate the
contract by reference to late shipment. The English Court of Appeal held127
that the buyers had not elected to affirm the contract. But it was nevertheless
held that the buyers were not entitled to put forward an alternative basis for
their election to terminate.
The case must be considered against the elementary law that under a CIF
contract a buyer enjoys two rights of termination.128 The contract may be
terminated if the documents are not in order. The goods may be rejected if the
seller breaches a condition. Accordingly, the buyers in Panchaud Frères had
two independent rights of termination. Putting issues of knowledge to one
side, since they accepted the documents they lost their first right of
termination. However, because they rejected the goods, the attribution
principle suggests that they had validly elected to terminate the contract. The
court’s decision to the contrary has been a source of considerable debate.
However, in Glencore Grain Rotterdam BV v Lebanese Organisation for
International Commerce129 the English Court of Appeal explained the
decision as based on estoppel.130 Whether the facts in Panchaud Frères
justified a conclusion of estoppel is another matter. However, for the purposes
of this article it is sufficient to say that the first line of authority illustrates no
more than that a promisee may be estopped from relying on the attribution
principle by words or conduct preceding the accrual of a second right to
terminate.131

125 Cf WISE Underwriting Agency Ltd v Grupo Nacional Provincial SA [2004] 2 Lloyd’s Rep
483 at 501; [2004] EWCA Civ 96 at [83] (cancellation by reinsurer an ‘affirmation’ where
right of avoidance exists).
126 [1970] 1 Lloyd’s Rep 53.
127 See [1970] 1 Lloyd’s Rep 53 at 57, 59. Lord Denning MR stated ([1970] 1 Lloyd’s Rep 53
at 57) that Roskill J had erred by treating the sellers as raising an argument of election. But
see [1969] 2 Lloyd’s Rep 109 at 124.
128 Kwei Tek Chao v British Traders and Shippers Ltd [1954] 2 QB 459 at 480.
129 [1997] 4 All ER 514 (see J W Carter, ‘Panchaud Frères Explained’ (1999) 14 JCL 239).
130 Adopting V Berg & Son Ltd v Vanden Avenne-Izegem PVBA [1977] 1 Lloyd’s Rep 499 at
504.
131 See Kwei Tek Chao v British Traders and Shippers Ltd [1954] 2 QB 459 at 481 per Devlin J,
buyer loses the ‘right to reject the goods . . . because he [has] waived in advance reliance on
the date of shipment’. Although Devlin J may have been using ‘waiver’ in the sense of
election, the true doctrinal basis must be estoppel.
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The second line of authority takes us into the ‘somewhat marshy ground’132
of Braithwaite v Foreign Hardwood Co.133 Much of the water was drained by
the House of Lords in Fercometal SARL v Mediterranean Shipping Co SA
(The Simona)134 and there is no need to go into the intricacies of the facts.
Suffice to say that a seller claimed damages for non-acceptance in
circumstances where the buyers had purported to terminate the contract for
breach of a collateral agreement by the seller. There was, however, no such
agreement. According to the trial judge (Kennedy J),135 had the buyers not
wrongfully repudiated the contract, but instead called for its performance, they
would have been entitled to reject the goods. Nevertheless, the English Court
of Appeal affirmed his decision that the buyers could not justify their
termination of the contract on the basis of the seller’s inability to perform. As
in the later case of Taylor v Oakes Roncoroni & Co,136 it was said that any
inability was irrelevant. Just why that was the position was not explained,
although it does seem clear that at the time of these decisions the ability to rely
on an alternative ground for termination was not fully established. Thus, when
British and Beningtons Ltd v North Western Cachar Tea Co Ltd137 was before
the Court of Appeal,138 Scrutton LJ, relying on Braithwaite, had restricted the
right to rely on alternative grounds to the wrongful dismissal of employees. In
the House of Lords, Lord Sumner would have none of that. He said:139
[A]s reported, that decision is not quite easy to understand. It was presented to your
Lordships by the respondents, fortified by the opinion of Scrutton LJ, as a decision
that, when there has been a repudiation by one party on a given ground, and an
acceptance of that repudiation by the other party, the former can no longer rely on
any other ground for refusing to perform his obligations, and particularly cannot
require the latter to prove his readiness and willingness to perform any of his
obligations under the contract, thus repudiated . . . [I]n my opinion, the case as
reported either does not lay down this proposition or, if it does so, is wrong . . . The
case was dealt with [by the majority in the Court of Appeal] as one in which the
buyers had explicitly waived all conditions precedent, while retaining a right to rely
on them as terms, the breach of which would sound in damages that could be given
in evidence in reduction of the claim, and the judgment of Kennedy J, who had thus
reduced the plaintiff’s damages, was consequently affirmed.
This idea, namely, that the statement of one ground for termination may
amount to the ‘waiver’ of any alternative ground, has been invoked in several
other cases.140 So far as Braithwaite is concerned, it must now be accepted
that there was, in fact, no alternative ground on which the buyers could have
relied. However, had there been the breach of one or more ‘conditions

132 Esmail v J Rosenthal & Sons Ltd [1964] 2 Lloyd’s Rep 447 at 463 per Davies LJ (affirmed
sub nom Rosenthal & Sons Ltd v Esmail [1965] 1 WLR 1117 without reference to the point).
133 [1905] 2 KB 543.
134 [1989] AC 788.
135 See (1905) 92 LT 637 at 639.
136 (1922) 27 Com Cas 261.
137 [1923] AC 48.
138 Sub nom North-Western Cachar Tea Co Ltd v British & Beningtons Ltd (1921) 10 Ll L Rep
381 at 387.
139 [1923] AC 48 at 70–1. Lords Buckmaster, Wrenbury and Carson agreed.
140 Sharp v Thomson (1914) 20 CLR 137 at 143; Cooper Ewing & Co Ltd v Hamel Horley Ltd
(1922) 13 Ll L Rep 590 at 592, 593; Bowes v Chaleyer (1923) 32 CLR 159 at 184, 191, 197.
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130 (2010) 26 Journal of Contract Law

precedent’ as he termed them, Lord Sumner’s statement that the buyers were
‘retaining a right to rely on them as terms, the breach of which would sound
in damages’ is very clearly a statement to the effect that the buyers had
affirmed the contract. But if there was an alternative ground in Braithwaite —
whether concurrent with or independent of the ground which was alleged to
exist — it seems quite impossible to say that the buyers both repudiated and
affirmed the contract.141 Since the conduct which was held to be a repudiation
was a wrongful termination, under the attribution principle it would have
amounted to a valid termination.
Of course, the word ‘waiver’ is a malleable one. On the facts in Braithwaite
it is possible that the seller could have procured conforming goods. Thus, Lord
Sumner added:142
Furthermore it does not anywhere appear that, even if the first cargo might rightly
have been rejected, the seller could not have found another exactly conforming with
the contract, which he might have duly tendered and so have put himself right.

As in relation to the first line of authority, that also suggests an estoppel

argument.
The third line of cases is based on the decision in Heisler v Anglo-Dal
Ltd.143 A contract for the sale of aluminium ingots required the plaintiff to
furnish a guarantee. The ‘guarantee’ was in fact an undertaking by the plaintiff
to pay. The objection made was that Treasury permission was necessary for
payment in United States dollars but never obtained. However, assuming
Treasury permission was required, the English Court of Appeal held that it
was too late for the defendants to take the point. On the facts, the plaintiff was
entitled to an opportunity to cure the defect. Although the decision has been
regarded as stating an exception to the ability to invoke an alternative ground
for termination,144 it is extremely doubtful whether that was the intention of
the court. The time for providing the guarantee had not arrived. There was,
therefore, no breach of condition. Moreover, on the basis of decisions such
Sweet & Maxwell Ltd v Universal News Services Ltd145 statements made by
the plaintiff in relation to the guarantee could not have amounted to a
repudiation. It follows that, in fact, the alternative ground for termination
never existed as such. On that basis, the defendants had no right to terminate
the contract at the time they purported to do so and the attribution principle
was of no assistance to them.

141 In addition, if the English Court of Appeal was correct in deciding in Peyman v Lanjani
[1985] Ch 457 that affirmation requires knowledge of the right to terminate, the buyers could
not be said to have made any election against termination on the ground of inability.
142 [1923] AC 48 at 71. Lords Buckmaster, Wrenbury and Carson agreed.
143 [1954] 1 WLR 1273. See also André et Cie v Cook Industries Inc [1987] 2 Lloyd’s Rep 463.
144 See also Alliance Concrete Singapore Pte Ltd v Comfort Resources Pte Ltd [2009] 4 SLR(R)
602 at 623; [2009] SGCA 24 at [67] which interpreted the case to stand for the proposition
that: ‘In other words, the innocent party will not be entitled to rely on a ground not raised
at the time of termination if the party in breach could have rectified the situation had it been
afforded the opportunity to do so’.
145 [1964] 2 QB 699.
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Conclusions
In this article we have argued for a two-stage approach in dealing with
situations in which a promisee has alternative rights of termination. Given the
complexities of the area, we have focused on the position of a promisee who
has the benefit of an express right and a common law right.
In the first stage, it is determined whether the rights are concurrent or
independent. The former relates to rights which arise in respect of the same
event — usually at the same time — whereas independent rights arise in
respect of the different events, usually at different points in time. Although that
distinction is useful in determining the impact of an alleged affirmation of the
contract, it does not provide a solution to the problems which typically arise
where a promisee enjoys a common law right of termination and an express
right of termination. It is therefore necessary to proceed to the second stage of
our analysis.
In the second stage, the content of the rights is considered. Although
termination inevitably involves a discharge of the parties, different
consequences may ensue depending on whether the promisee invokes the
express right or the common law right. Our approach requires a consideration
of whether the rights are coordinate, and if they are not in what respects they
are discordant. However, even if the consequences are dramatically different,
that does not prevent the promisee exercising both rights simultaneously.
Given the principles regulating election between rights and remedies, what
matters is whether the promisee’s cause of action against the promisor has
been satisfied. In our shipbuilding example, P2’s cause of action against the
builder is satisfied only by payment under the express provision or by the
recovery of common law damages. Therefore, notwithstanding the comments
in Dalkia,146 provided exercise of the express right brings about an immediate
termination, the promisee remains entitled to invoke its common law right
until satisfaction unless the promisee is estopped from relying on that right.
It follows that the mere exercise of an express right does not of itself
prevent reliance on the common law right. Indeed, given the inconsistent act
principle, exercise of the express right will in most cases also amount to
exercise of the common law right. It necessarily follows from this that the
conduct of the promisee cannot amount to affirmation of the contract. To the
extent that Ennis147 purported to decide to the contrary, it was wrongly
decided and cannot be supported as a matter of principle. Following the
decision in Gearbulk,148 it cannot be supported as a matter of authority either.
The thesis which we have presented is consistent with the power of sale
cases, and also explains some of the problems of the alternative rights cases.
In our view it also exposes certain difficulties in the reasoning in the other
illustrative cases, particularly in Latco.149 That decision shares with Gearbulk
and Dalkia features which are somewhat disquieting from two related
perspectives. The first perspective is contract doctrine. In each case, a great
deal of use is made of the presumption in favour of common law rights.

146 Above, text at n 89.

147 Above, text at n 58.
148 Above, text at n 96.
149 Above, text at n 69.
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132 (2010) 26 Journal of Contract Law

Particularly in Latco it is difficult to escape the conclusion that the promisee

was effectively held to be entitled to pick and choose between express and
common law incidents of termination.150 It is trite that a contract can be
terminated only once. But it follows that the use of common law principles to
‘supplement’ the consequences of termination must be done with precision. As
we have pointed out,151 in relation to our P2 example, it is simply not possible
for P2 to enjoy the benefit of the express provision and also claim damages for
loss of the bargain simply on the basis that the clause does not expressly deny
to P2 the right to recover such damages or on the basis that the express right
is activated by circumstances amounting to a repudiation. That is not to say
that the concern is that a promisee should not recover the same loss twice. The
fact that P2’s entitlements under the express clause might turn out to be less
advantageous than the alternative claim for loss of bargain damages does not
entitle P2 to supplement the former by reliance on the latter. By taking the
benefits under the express clause the cause of action is satisfied and there is
no ability to claim any additional loss damages.152
The second perspective is commercial. Particularly in Dalkia and Latco, the
parties had gone to some lengths in agreeing on the regime which would apply
if the contracts were terminated. Parties to commercial contracts do not agree
on such regimes to supplement common law rights. The commercial intention
is to replace those rights. If an event within the express clause occurs, and the
clause is exercised, there is no commercial justification for permitting parties
to second-guess their agreed regime. In other words, putting to one side the
obvious point that the parties are unlikely to intend the express regime to
apply if the promisor simply abandons the contract, or purports to terminate
it when there is no right to do so, the starting and finishing point in relation
to such clauses ought to be that the parties have spoken. To the extent that the
reasoning in the illustrative cases relies on the presumption in favour of
common law rights, and analyses express rights of termination as if they were
exclusion clauses,153 the cases seem on the verge of adopting a new form of
the fundamental breach doctrine.
Equally, to conceive (as in Gearbulk) of a right to terminate for repudiation
as being the same right as that conferred expressly by the contract or to
conceive (as in Latco) that the effect of express conferral of a right is the same
as an agreement that a term is a condition, invites confusion. Neither is
doctrinally accurate nor a sufficient explanation of why the promisees in those
cases were entitled to recover loss of bargain damages. Like Alice, whether
Gearbulk exercised its common law right or its express right, it arrived at the
same destination — the parties were discharged. And just as the contents of
Tweedledum’s House are the same as at Tweedledee’s, the ‘contents’ of
Gearbulk’s express right were the same as its common law right. Similarly,
just as Bill cannot garden at the White Rabbit’s House and at the same time
enjoy the delights of the Croquet Lawn, the builders in Latco could not

150 See also Celtech [2006] 1 Lloyd’s Rep 599 at 632; [2006] EWHC 63 (Comm) at [144] per
Christopher Clarke J (‘if the claim made under the notice of termination is inconsistent with,
and not simply less than, that which arises on acceptance of a repudiation’).
151 Above, text at n 54.
152 But see Gearbulk [2010] QB 27 at 46; [2009] EWCA Civ 75 at [44].
153 See, eg Gearbulk [2010] QB 27 at 40; [2009] EWCA Civ 75 at [25].
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augment their rights following resale of the vessels by reference to loss of

bargain damages. Therefore, having reached the Croquet Lawn, although Bill
might — regretting his ‘election’ — retrace his steps and journey to the White
Rabbit’s House,154 no such facility was available to the builders in Latco.

154 If Bill were to be told what Alice has in store for him at the White Rabbit’s House he might
be content to suffer the dangers which lurk on the Croquet Lawn.