INFERRING FUTURE BREACH: TOWARDS A UNIFYING TEST OF ANTICIPATORY BREACH OF CONTRACT

Extract

The doctrine of anticipatory breach was officially first established in a famous 1853 case, enabling a party to a contract to terminate it and sue for damages immediately after the other party refused to fulfil its part, despite the fact that the time stipulated for the latter's performance had not arrived. The doctrine has since been employed by counsel as a vehicle to justify a premature termination of contract in numerous legal battles. It was perhaps with the confidence in such vast general judicial experience that Lord Wilberforce once declared that the rules determining the existence of an anticipatory breach constituted “one of the more perspicuous branches of the law of contract”. With due respect, however, his Lordship seemed to be too optimistic on that occasion. When one takes a closer look at decided cases, it is hard to resist the conclusion that this area of law is still plagued with inconsistency, uncertainty and incoherence. Where the existence of an anticipatory breach of contract is in dispute, the courts have been applying two distinct approaches to fact patterns of the same nature. A major cause for this disparity is the courts' failure to realise in some cases that the cases they are dealing with are anticipatory breach cases and should be subjected to a uniform test. This cognitive failure is largely attributable to the fact that, although the term “anticipatory breach” itself was criticised on several occasions, little has been done to illuminate the very nature of an anticipatory breach of contract and what distinguishes it from what we normally conceive of as a breach of contract, namely an “actual breach” of contract. Another cause of the disparity of the courts' approaches is perhaps English law's case-to-case, piecemeal methodology. Pragmatic though this methodology may be, it is sometimes necessary to amass the fragmented pieces and fit them into a clear and stable conceptual structure, thereby bringing the law to a higher level of generalisation. It is the purpose of this article to propose a general legal test for all types of anticipatory breach on the basis of an exposition of its nature and hopefully to bring order, rationality and unity to this chaotic area of law.