Repudiatory breach

A fundamental breach of a contract, sometimes known as a repudiatory breach, is a breach so fundamental that it permits the distressed party to terminate performance of the contract, in addition to entitling that party to sue for damages.

The law of fundamental breach was historically treated as an extension of the doctrine of deviation. The development of this doctrine can be traced down to the first half of the 19th century, when Tindal C.J. stated in Davis v. Garrett that deviation made by the carrier from the agreed voyage route brings the latter outside of contract and therefore outside of exceptions or limitation clauses provided by such a contract. This harsh attitude to deviation cases originated from the earlier marine insurance practice when cargo insurance policy was lost in case of deviation. Thereby strict obligations imposed to the carrier were designed to afford protection to the cargo owner.

The doctrine of fundamental breach further developed in numerous cases and by the second half of the nineteenth century was extended far beyond of the deviation cases and cases related to the carriage of goods by sea. Lord Greene M.R. in Alderslade v. Hendon Laundry Ltd. labelled the fundamental term as ‘the hard core of the contract'. Lord Reid in Suisse Atlantique Societe d'Armement Maritime S.A. v. N.V. Rotterdamsche Kolen Centrale defined fundamental breach as a

‘well-known type of breach which entitles the innocent party to treat it as repudiatory and to rescind the contract’.

As a matter of law, under the doctrine of fundamental breach of contract, exclusion clauses were deemed not to be available to a party in fundamental breach of the contract. In particular, the common law approach that the carrier deviated from his contractual voyage has been deprived of the defence available under the Hague Rules, even if the bill of lading contract of carriage was governed by the Rules, was unchanged and unchallenged for many years when in Tate & Lyle, Ltd. v. Hain Steamship Company, Ltd. the ordinary law of contract was applied to the deviation case for the first time. In the second half of the 20th century, first in Maxine Footwear and Suisse Atlantique and then in several posterior cases, principally in Photo Production Ltd. v. Securicor Transport Ltd, the unavailability of exclusion clauses to the party in fault in cases of fundamental breach was doubted in favour of such cases as falling within authority of the ordinary law of contract .

...
Wikipedia