Repudiation: Difference between revisions
Amwelladmin (talk | contribs) No edit summary |
Amwelladmin (talk | contribs) No edit summary |
||
| Line 1: | Line 1: | ||
{{g}}To repudiate a [[contract]] is to indicate an inability or unwillingness to perform it in such a way as to deprive the aggrieved party of substantially the whole benefit of the bargain represented by the contract. | {{g}}To repudiate a [[contract]] is to indicate an inability or unwillingness to perform it in such a way as to deprive the aggrieved party of substantially the whole benefit of the bargain represented by the contract. | ||
A | A “[[Repudiatory breach|repudiatory]]” or “[[Fundamental breach|fundamental]]” [[breach of contract]] is a one which is sufficiently serious to indicate a party has repudiated the {{tag|contract}}, thereby entitling the innocent party to [[terminate]] the {{tag|contract}}. | ||
In this case the innocent party has two options: It can | In this case the innocent party has two options: It can | ||
| Line 9: | Line 9: | ||
The $64,000 question: What counts as “sufficiently serious”? | The $64,000 question: What counts as “sufficiently serious”? | ||
Does “failure to pay an amount due by the time specified in a contract” constitute a repudiatory breach? Usually failure to pay may be a specific [[event of default]] prescribing exactly what should happen — so this question is moot — but it may apply where you have a lender of a revolving credit facility, or a prime broker. | Does “failure to pay an amount due by the time specified in a contract” constitute a [[repudiatory breach]]? Usually failure to pay may be a specific [[event of default]] prescribing exactly what should happen — so this question is moot — but it may apply where you have a lender of a revolving credit facility, or a prime broker. | ||
If your contract stipulates that [[time is of the essence]], then yes. If not, then it will depend on the circumstances. If the failure was due to a [[force majeure]]-style external event, probably not. If the failure to pay was accompanied by an extended middle finger, more likely. | If your contract stipulates that [[time is of the essence]], then yes. If not, then it will depend on the circumstances. If the [[failure to pay]] was due to a [[force majeure]]-style external event, probably not. If the failure to pay was accompanied by an extended middle finger, more likely. | ||
{{sa}} | {{sa}} | ||
Revision as of 11:03, 20 June 2019
|
|
To repudiate a contract is to indicate an inability or unwillingness to perform it in such a way as to deprive the aggrieved party of substantially the whole benefit of the bargain represented by the contract.
A “repudiatory” or “fundamental” breach of contract is a one which is sufficiently serious to indicate a party has repudiated the contract, thereby entitling the innocent party to terminate the contract.
In this case the innocent party has two options: It can
- accept the repudiation and treat the contract as at an end; or
- affirm the contract and insist on performance by the repudiating party.
How serious is “serious”?
The $64,000 question: What counts as “sufficiently serious”?
Does “failure to pay an amount due by the time specified in a contract” constitute a repudiatory breach? Usually failure to pay may be a specific event of default prescribing exactly what should happen — so this question is moot — but it may apply where you have a lender of a revolving credit facility, or a prime broker.
If your contract stipulates that time is of the essence, then yes. If not, then it will depend on the circumstances. If the failure to pay was due to a force majeure-style external event, probably not. If the failure to pay was accompanied by an extended middle finger, more likely.