#contract #discharge #law

The appellant company's business was the supply of litter bins to local authorities in urban areas. It was the company's practice to attach advertisement plates to the bins, for which the advertisers would pay according to the terms of a standard form of contract. The respondent, who carried on a garage business, entered into a contract through his sales manager by which the appellant company undertook to prepare and exhibit plates advertising McGregor's business for a period of three years. The contract form was headed by a notice that it was not to be cancelled by the advertiser and one of the express conditions provided to the same effect. Immediately after this contract was signed, a letter containing the following was sent to the appellant company: 'We regret that our Mr Ward signed an order today continuing the advertisements for a further period of three years. He was unaware that our proprietor Mr McGregor does not wish to continue this form of advertisement. Please therefore cancel the order.' The appellant company did not accept the attempted cancellation and displayed the advertisements during the ensuing three years. The respondents refused to pay and the appellant company sought to recover the sum due under the contract. It was held by the House of Lords that the contract remained unaffected by the unaccepted repudiation and the appellant company was entitled to recover the sums due under the contract. Lord Hodson stated:

It is settled as a fundamental rule of the law of contract, that repudiation by one of the parties to a contract does not itself discharge it ... It follows that, if, as here, there was no acceptance (of the breach), the contract remains alive for the benefit of both parties and the party who has repudiated can change his mind but it does not follow that the party at the receiving end of the proffered repudiation is bound to accept it before the time for performance and is left to his remedy in damages for breach.

White and Carter (Councils) Ltd v McGregor