Where there is a breach or repudiation of a contract giving rise to a right to terminate, the innocent party has a choice to either terminate or proceed with the contract.
Repudiation occurs when one party is no longer willing, or able, to perform either the entire contract or a significant term of the contract.
Termination brings an end to the parties’ future obligations to perform the contract. If the innocent party continues to perform or affirm the contract, that party may be able to claim damages for loss caused by breach of the contract.
Effect of Failure to Perform
A contract ends automatically when the parties have carried out all their obligations. Failure to perform that gives rise to serious consequences allowing the innocent party to elect to terminate the contract. Otherwise, the contract will remain on foot and the innocent party will only have recourse in damages.
Termination by Agreement
A contract can be terminated by agreement either expressly in writing or where it is plain from the conduct of the parties that neither intends that the contract should be further performed. The parties are regarded as having so conducted themselves as to abandon the contract.
Termination for Delay and Time Stipulations
Delays in performance may give rise to a right to terminate a contract. Where a contract does not expressly specify the time at which an obligation is to be performed, a term will be implied requiring performance of the obligation within a reasonable time.
If you have further questions, please contact us at frank@franklaw.com.au.
This is not legal advice.