Cancellation

Aerial Advertising Co v Batchelor Peas Ltd

Contract requirement that AA had to get approval to fly banner. Plane went up without approval on armistice day which had a serious impact on brand. Can cancel as term breached not serious but the effect of the breach was.

Underlying conflict

Must balance freedom of contract with sanctity of contract. If it is too easy for a party to exit then contracts will lose their certainty.

Steele v Serepisos

You can give notice if you do so within a reasonable time. However you cannot make a term essential until you give the other party time to perform.

Affirmation

s 7(5) - cannot cancel if with knowledge of breach they affirm. (still have right to damages.

MacIndoe v Mainzeal Group

Apartment buildings being made in Auckland. Payment by certain date not expressed in contract, however notice was given. Was date of payment essential? The date of payment was very important from the vendors POV. Also equity would be likely to hold up a term such as this. The notice given made the term essential and was not unreasonable (can be unreasonable). Serious Breach: Assess the matter objectively on the facts to see if the breach would substantially reduce the effect of the contract or increase burden. In this case it was found breach was significant - A lot of small payments not being paid can make builder not able to build. Reliance on other contracts was expressly incorporated into contract.

Narayan v Arranmore Developments and Rondova v When Routine Bites Hard Ltd

Approach in Mana does not only apply to building. Performance of any essential term by a certain time must be made essential. This is either by contract or by giving notice. Or there is no time possible because it could have never been performed anyway.

Oxborough v North Harbour Builders

Building standard too low. Oxborough's try to take action. Builders say that they will fix the problem before the house is built. As intention was to fix the problem before the contract was fully performed there was no repudiation. This was in fact repudiation by the other party. Substantial breach: (obiter) Fact-specific, need more than one breach if they are minor

Limits on relief

Courts can impose conditions on orders (3) Must be practicable (4) - Terms of contract. - Extent to which parties would have been able to perform. - Any loss. - Value of services - any benefit. - Other. No transfer of property if - Bona Fide purchaser for value without notice (5) If money is used, no unless traceable (6)

Mana Property Trustee v James Development

Cromwell land development - The land size was less than specified in the contract. Buyer wants to cancel because the seller failed to comply with essential term - 18.3 (stating how large the section must be) What does essential mean? Imagine you are asking the parties before contract - Would you cancel if there was a breach of this term. Express of implied agreement? Express: Words such as performance essential. Implied: The parties treated the term as essential. Look to previous cases and the type of contract - Mercantile is usually essential Finding: The term was essential as buyer had reliance on Council. However the court finds that the buyer repudiates because he does not give time to fix mistake - Buyer fixes (similar to Oxborough) Lost right to cancel as did not give time for fulfilment of essential terms.

Adequate notice

Examples: - "The cheque is being stopped" - Employee does not come to work - In response to employer repudiating. - Telling party in breach to stop work and send final account. - Repossession agent passed on news of cancellation. McLauchlan v Taylor - A threat to go and find another buyer is not itself enough to amount to notice to cancel.

Hochster v De La Tour

Express repudiation Defendant said to plaintiff that he is no longer needed. Saying that a party is no longer required is enough for repudiation even though it is before performance is due.

Gray v Thomson

Facts; Misrep as to size of land being sold. But purchaser kept paying installments after becoming aware of the misrep, he demanded compensation - found that this was implied affirmation --> keeping with payments equaled affirmation

White & Carter Councils v McGregor

Facts; contratct for advertising on bins. D wants to cancel. the plaintiffs who are the advertising company affirm the contract. Court; If one party repudiates then an option arises - may cancel and sue for the breach - or they may affirm the contract, if this is done then cannot decide to cancel

S 7(4)

If there is a breach under s 7(3), then a party may only cancel if: (a) Term essential (express or implied); or (b) There are substantial consequences.

Cameron v Warboys

Implied repudiation A delay of 10 years for valuer was found to be enough delay to show other party does not intend to perform.

Synge v Synge

Implied repudiation Vendor sold house to someone else before settlement with original party. Original party could sue.

S 7(3)

Misrepresentation Breach (a term has been broken) Anticipatory breach (a term will be broken)

Starlight Enterprises Ltd

Mistake in contractual rights. Bag sale company thought they could up the price. A mistake as to contractual rights is not repudiation. (Honest misunderstanding)

Attica Sea Carriers

Obligation on charterer to repair if necessary. Cost of repair =2m. ship worth 1 m. Charterer happy to pay damages. Owner wants to affirm contract and make them pay what ship is worth Court; - Limitation on affirmation - Cannot affirm to require party to pay more than damages would be

Oxborough (Affirmation)

Oxboroughs affirmed as were obviously trying to keep the contract alive, as they wanted builders to continue fixing house

S 9 - Relief

Relief is discretionary - Garratt v Ikeda - Denied because it was a deposit. Both parties can seek relief (7) Wide relief available (2) (a) Transfer of property. (b) Order to pay money. (c) Order to stop doing something.

Schmidt v Holland

Request to exit Purchaser had concerns that they would not be able to provide sufficient funds. They ASK to exit. Mere inquiry is not enough to amount to repudiation.

Repudiation

S 7(2) - When one party makes it clear that they do not intend to perform their obligations or complete performance.

Effect of cancellation

S 8(3) (a) Everything due to be performed is no longer due. Exceptions: Express provisions: No trade competition - Broadcasting Group v Neilson. Existing obligations: Garratt v Ikeda - Had to pay the rest of deposit due even after cancellation. (b) No automatic restitution of money paid or properly transferred.

Broadbank Corp v Martin

Seller of truck had not put truck in working order by the time of contract as they had promised. Promise to fix truck was an essential term therefore buyer entitled to cancel.

Bentham v Margetts

Term that is in threat of breach must be essential to the innocent party or portend consequences that would be serious.

Contracting out

Through s 5, if a party expressly provides a remedy in which sections 6 - 10 relate then s 5 should be followed. Oxborough - any dispute then go to arbitration. Garrett v Ikeda - Deposit forfeit if purchaser fails to settle or perform.