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Repudiation (view source)

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{{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.
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[[File:Givingthefinger.jpg|450px|thumb|center|This is what I think of your stupid contract]]
}}To [[repudiate]] a [[contract]] is to [[fundamental breach|fundamentally breach]] it: to indicate one’s 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 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}}.
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}}.
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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, in [[financing contract]]s,  [[failure to pay]] will be a designated “[[event of default]]” prescribing exactly what should happen — so this question is moot — but it may apply where there is no such term: if your counterparty is a bank, offering you a loan, a [[revolving credit facility]], or some such thing.  


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.
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.
 
{{Event of default vs fundamental breach}}


===In the [[Master trading agreement|Master Trading Agreements]]===
Both the {{2002ma}} and the {{gmsla}} have a repudiation as a specific {{isdaprov|Event of Default}}<ref>{{gmslaprov|Repudiation}} under the {{gmsla}} and {{isdaprov|Repudiation of Agreement}} under the {{2002ma}}.</ref>, though it doesn’t really need to be — if the other guy has indicated he doesn’t regard the {{t|contract}} as being binding on him, you can terminate and sue for [[damages]], and those damages are hardly likely to be lower (or, really, different) than you would get under the [[close-out]] procedure prescribed in the {{t|contract}}. But anyway, a some what arid debate all told; people don’t really argue about repudiation.
===Compare===
===Compare===
*[[Recission]] of contract
*[[Rescission]] of contract
{{sa}}
{{sa}}
*[[Time is of the essence]]
*[[Time is of the essence]]
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