Landlord and tenant - can a landlord or tenant commit a repudiatory breach of a covenant in the lease?

[1] It is, of course, possible for the innocent party to a repudiatory breach, to elect, not to accept the repudiatory breach, but rather to elect to affirm the contract/lease. If the contract/lease affirmed, the contract/lease continues. 

[1a] 'Leases' and 'tenancies', as in the proprietary right, mean the same thing. Or at least, if there is any very marginal difference between the two, it is almost never relevant or important practically.

[2] sometimes this is called, wrongly in the author's view: to 'rescind' a contract or 'rescind' a lease. But this risks confusing 'repudiation' - the concept at play, with the concept of 'rescission' - which is not at play. Rescission of a contract or lease, arises where a party's consent to enter into the contract or lease (as the case may be), was defective in some way.

[2a] These latter words are adapted from the follow passage from Chitty on Contracts 35th Ed., paragraph 28-005:

'In so far as the expression “termination of the contract” is used in this chapter, it is to be understood not as a reference to the ending of the contract itself but to the termination of the obligation of the parties to perform their own unperformed primary obligations under the contract and to accept performance by the other party if made or tendered.'

[2b] In Advanced Multi-Technology for Medical Industry (trading as HITEX) v Uniserve Ltd [2025] EWCA Civ 1212, Hitex were the supplier of face masks; Uniserve was the buyer. Hitex agreed to supply the face masks in increasingly large tranches (1m on 31.5.20, growing to 8m by 20.7.20), a new tranche every 7 days, on set days (time 'of the essence'). Uniserve agreed to collect them (but time was not specified to be 'of the essence'). Uniserve committed a repudiatory breach (17.6.2020 repudiatory breach). Hitex had the right to elect to terminate the contract. 

Males LJ (with whom Phillips LJ and Snowden LJ agreed) said, at paragraph 67:

'In the present case it is apparent (and is common ground) that Hitex did not communicate any acceptance of the 17th June repudiation to Uniserve. Accordingly the contract remained alive and Hitex remained under an obligation to comply with the revised delivery schedule.'

Similarly, Males LJ said, at paragraph 90 

'If the contract was kept alive for performance, Hitex was obliged to fulfil its own obligations.'

Males LJ, at paragraph 67, continued:

'This meant that in addition to the 2 million masks which had been due for delivery on 14th June, it had to have 3 million masks available for delivery on 21st June, another 5 million on 28th June and another 5 million on 5th July 2020. These totals were cumulative because, while time was of the essence of Hitex's obligation to have the goods ready for delivery, that was not so in the case of Uniserve's obligation to collect the goods. Accordingly, unless and until Hitex served a notice making the time for collection of the essence, which it never did, it remained under an obligation to have the 14th June shipment available for delivery in addition to the 21st June shipment, and so on.'

Later, at paragraph 91, Males LJ, said:

'Hitex continued to be under an obligation to deliver each shipment notwithstanding that it was not collected on the date stated for delivery in the revised delivery schedule.'

In Howard v Pickford Tools Co Ltd [1950] 1 KB 417 ('Howard'), a claimant / employee / joint managing director alleged that the defendant company (though the acts of its chairman) had committed a repudiatory breach of the contract between them (claimant and defendant). But, unusually, the claimant: (a) claimed that the repudiatory breach had excused (released) him from his obligations (prospectively); (b) had not ceased to perform his obligations under the contract (Evershed MR 'the [claimant] is still performing (it is said) to the best of his ability, his contract; that is to say, at the moment he is still attending at his place of business' [420]; he had stayed on working for the defendant another 2 months and was still, at the relevant time, in the act of performing it [422])

The claim sought a declaration that there had been a repudiatory breach. But the court rejected this, as, effectively, valueless/academic, as the claimant had kept on performing his obligations under the contract. 

Evershed MR in Howard said, at 420-421:

'It is quite plain (and i refer, if it be necessary to quote authority, to the speech of Lord Simon LC, in Heyman v Darwins Ld [[1942] AC 356, 361], that if the conduct of one party to a contract amounts to a repudiation, and the other party does not accept it as such but goes on performing his part of the contract and affirms the contract, the alleged act of repudiation is wholly nugatory and ineffective in law.'

Asquith LJ in Howard said, at 421:

'An unaccepted repudiation is a thing writ in water and of no value to anybody: it confers no legal rights of any sort or kind.'

In the author's opinion, by 'unaccepted repudiation' - what is meant here is a repudiation that has not been, and cannot now be, accepted. It does not include a repudiation/right to terminate the contract, which remains live/exercisable (i.e the election (accepting vs rejecting) is still to be made, and can still effectively be made). Indeed, Asquith LJ in Howard noted that 'it was not accepted' [421]

[2c] Where the termination clauses:

(a) do not rely upon a breach by the landlord '(tenant's 'break clauses' - permitting early termination at certain dates during the currency of the contract/lease) - there seems no reason for one to influence the other;

(b) relies upon a breach by the landlord of the same clause (as it now relied upon as being breached so as to give a repudiatory breach), but conditions are imposed on the ability to terminate for breach of this clause, this may affect whether the breach will be repudiatory. In Stocznia Gdynia SA v Gearbulk Holdings Ltd [2009] EWCA Civ 75, Moore-Bick LJ (with whom Ward LJ and Smith LJ agreed), said, at paragraph 19:

'Whenever one party to a contract is given the right to terminate it in the event of a breach by the other it is necessary to examine carefully what the parties were intending to achieve and in particular what importance they intended to attach to the underlying obligation and the nature of the breach. The answer will turn on the language of the clause in question understood in the context of the contract as a whole and its commercial background. Sometimes, as in Lockland Builders v Rickwood, the parties will have intended to give a remedy of a limited nature for breaches of a certain kind; in other cases the terms of the contract may reflect an intention to treat the breach as going to the root of the contract with the usual consequences, however important or unimportant it might otherwise appear to be. Inevitably, therefore, there can be no hard and fast rule.'

In this complex area, see:

(a) Vinergy International (PVT) Ltd v Richmond Mercantile Limited FZC [2016] EWHC 525 (Comm), Teare J from paragraph 14. 

(b) Kulkarni v Gwent Holdings Ltd [2025] EWCA Civ 1206, Court of Appeal, Lord Justice Newey (with whom Asplin LJ and Lewis LJ agreed)

[3] The name/label 'innominate term' was first adopted for use, for this type of term, by Stephenson LJ in Wickman Machine Tool Sales Ltd v L Schuler AG [1972] WLR 840. The name/label had appeared prior, in Anson's, a contract textbook, and Stephenson LJ adopted it. 

[4] In Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd (The Hongkong Fir) [1962] 2 QB 26 [1962] 2 WLR 474 ('HongKong Fir'), Diplock LJ said, at 69 to 73:

'Once it is appreciated that it is the event and not the fact that the event is a result of a breach of contract which relieves the party not in default of further performance of his obligations, two consequences follow. (1) The test whether the event relied upon has this consequence is the same whether the event is the result of the other party's breach of contract or not, as Devlin J. pointed out in Universal Cargo Carriers Corporation v. Citati. 221 (2) The question whether an event which is the result of the other party's breach of contract has this consequence cannot be answered by treating all contractual undertakings as falling into one of two separate categories: "conditions" the breach of which gives rise to an event which relieves the party not in default of further performance of his obligations, and "warranties" the breach of which does not give rise to such an event.

Lawyers tend to speak of this classification as if it were comprehensive, partly for the historical reasons which I have already mentioned and partly because Parliament itself adopted it in the Sale of Goods Act, 1893, as respects a number of implied terms in contracts for the sale of goods and has in that Act used the expressions "condition" and "warranty" in that meaning. But it is by no means true of contractual undertakings in general at common law.

No doubt there are many simple contractual undertakings, sometimes express but more often because of their very simplicity ("It goes without saying") to be implied, of which it can be predicated that every breach of such an undertaking must give rise to an event which will deprive the party not in default of substantially the whole benefit which it was intended that he should obtain from the contract. and such a stipulation, unless the parties have agreed that breach of it shall not entitle the non-defaulting party to treat the contract as repudiated, is a "condition." So too there may be other simple contractual undertakings of which it can be predicated that no breach can give rise to an event which will deprive the party not in default of substantially the whole benefit which it was intended that he should obtain from the contract; and such a stipulation, unless the parties have agreed that breach of it shall entitle the non-defaulting party to treat the contract as repudiated, is a "warranty."

There are, however, many contractual undertakings of a more complex character which cannot be categorised as being "conditions" or "warranties," if the late nineteenth-century meaning adopted in the Sale of Goods Act, 1893, and used by Bowen L.J. in Bentsen v. Taylor, Sons & Co. 222 be given to those terms. Of such undertakings all that can be predicated is that some breaches will and others will not give rise to an event which will deprive the party not in default of substantially the whole benefit which it was intended that he should obtain from the contract; and the legal consequences of a breach of such an undertaking, unless provided for expressly in the contract, depend upon the nature of the event to which the breach gives rise and do not follow automatically from a prior classification of the undertaking as a "condition" or a "warranty." For instance, to take

Bramwell B.'s example in Jackson v. Union Marine Insurance Co. Ltd. 223 itself, breach of an undertaking by a shipowner to sail with all possible dispatch to a named port does not necessarily relieve the charterer of further performance of his obligation under the charterparty, but if the breach is so prolonged that the contemplated voyage is frustrated it does have this effect.

In 1874 when the doctrine of frustration was being foaled by "impossibility of performance" out of "condition precedent" it is not surprising that the explanation given by Bramwell B. should give full credit to the dam by suggesting that in addition to the express warranty to sail with all possible dispatch there was an implied condition precedent that the ship should arrive at the named port in time for the voyage contemplated. In Jackson v. Union Marine Insurance Co. Ltd. 224 there was no breach of the express warranty; but if there had been, to engraft the implied condition upon the express warranty would have been merely a more complicated way of saying that a breach of a shipowner's undertaking to sail with all possible dispatch may, but will not necessarily, give rise to an event which will deprive the charterer of substantially the whole benefit which it was intended that he should obtain from the charter. Now that the doctrine of frustration has matured and flourished for nearly a century and the old technicalities of pleading "conditions precedent" are more than a century out of date, it does not clarify, but on the contrary obscures, the modern principle of law where such an event has occurred as a result of a breach of an express stipulation in a contract, to continue to add the now unnecessary colophon "Therefore it was an implied condition of the contract that a particular kind of breach of an express warranty should not occur." The common law evolves not merely by breeding new principles but also, when they are fully grown, by burying their progenitors.

As my brethren have already pointed out, the shipowners' undertaking to tender a seaworthy ship has, as a result of numerous decisions as to what can amount to "unseaworthiness," become one of the most complex of contractual undertakings. It embraces obligations with respect to every part of the hull and machinery, stores and equipment and the crew itself. It can be broken by the presence of trivial defects easily and rapidly remediable as well as by defects which must inevitably result in a total loss of the vessel.

Consequently the problem in this case is, in my view, neither solved nor soluble by debating whether the shipowner's express or implied undertaking to tender a seaworthy ship is a "condition" or a "warranty." It is like so many other contractual terms an undertaking one breach of which may give rise to an event which relieves the charterer of further performance of his undertakings if he so elects and another breach of which may not give rise to such an event but entitle him only to monetary compensation in the form of damages. It is, with all deference to Mr. Ashton Roskill's skilful argument, by no means surprising that among the many hundreds of previous cases about the shipowner's undertaking to deliver a seaworthy ship there is none where it was found profitable to discuss in the judgments the question whether that undertaking is a "condition" or a "warranty"; for the true answer, as I have already indicated, is that it is neither, but one of that large class of contractual undertakings one breach of which may have the same effect as that ascribed to a breach of "condition" under the Sale of Goods Act, 1893, and a different breach of which may have only the same effect as that ascribed to a breach of "warranty" under that Act. The cases referred to by Sellers L.J. illustrate this and I would only add that in the dictum which he cites from Kish v. Taylor 225 it seems to me, from the sentence which immediately follows it as from the actual decision in the case and the whole tenor of Lord Atkinson's speech itself, that the word "will" was intended to be "may."

What the judge had to do in the present case, as in any other case where one party to a contract relies upon a breach by the other party as giving him a right to elect to rescind the contract, and the contract itself makes no express provision as to this, was to look at the events which had occurred as a result of the breach at the time at which the charterers purported to rescind the charterparty and to decide whether the occurrence of those events deprived the charterers of substantially the whole benefit which it was the intention of the parties as expressed in the charterparty that the charterers should obtain from the further performance of their own contractual undertakings.

One turns therefore to the contract, the Baltime 1939 charter, of which Sellers L.J. has already cited the relevant terms. Clause 13, the "due diligence" clause, which exempts the shipowners from responsibility for delay or loss or damage to goods on board due to unseaworthiness, unless such delay or loss or damage has been caused by want of due diligence of the owners in making the vessel seaworthy and fitted for the voyage, is in itself sufficient to show that the mere occurrence of the events that the vessel was in some respect unseaworthy when tendered or that such unseaworthiness had caused some delay in performance of the charterparty would not deprive the charterer of the whole benefit which it was the intention of the parties he should obtain from the performance of his obligations under the contract - for he undertakes to continue to perform his obligations notwithstanding the occurrence of such events if they fall short of frustration of the contract and even deprives himself of any remedy in damages unless such events are the consequence of want of due diligence on the part of the shipowner.

The question which the judge had to ask himself was, as he rightly decided, whether or not at the date when the charterers purported to rescind the contract, namely, June 6, 1957, or when the shipowners purported to accept such rescission, namely. August 8, 1957, the delay which had already occurred as a result of the incompetence of the engine-room staff, and the delay which was likely to occur in repairing the engines of the vessel and the conduct of the shipowners by that date in taking steps to remedy these two matters, were, when taken together, such as to deprive the charterers of substantially the whole benefit which it was the intention of the parties they should obtain from further use of the vessel under the charterparty.

In my view, in his judgment - on which I would not seek to improve - the judge took into account and gave due weight to all the relevant considerations and arrived at the right answer for the right reasons.'

[4a] In Wickman Machine Tool Sales Ltd v L Schuler AG [1972] WLR 840, Stephenson LJ at 860 said:

'Of course, the parties may have used the wrong label and the court must not automatically accept it as giving rise to consequences which the parties never intended.'

[4b] In Spar Shipping AS v Grand China Logistics Holding (Group) Co Ltd [2016] EWCA Civ 982 [2017] 4 All ER 124 ('Spar Shipping'), Hamblen LJ (with whom Etherton MR agreed) said, at paragraph 92:

'The modern English law approach to the classification of contractual terms is that a term is innominate unless it is clear that it is intended to be a condition or a warranty: see, for example, Cehave NV v Bremer Handelsgesellschaft GmbH [1976] QB 44, 70H–71B, per Roskill LJ; Bremer Handelsgesellschaft GmbH v Vanden-Avenne Izegem PV BA [1978] 2 Lloyd's Rep 109, 113, per Lord Wilberforce; Bunge Corpn, New York v Tradax Export SA, Panama [1981] 1 WLR 711, 715H–716A, per Lord Wilberforce, at p 717G–H, per Lord Scarman, and at p 727E, per Lord Roskill. As Lord Scarman stated, at p 717:

“Unless the contract makes it clear, either by express provision or by necessary implication arising from its nature, purpose, and circumstances … that a particular stipulation is a condition or only a warranty, it is an innominate term, the remedy for a breach of which depends upon the nature, consequences, and effect of the breach."'

This passage from Lord Scarman in Bunge Corp v Tradax Export SA [1981] 1 WLR 711, was part of some wider observations he made. Lord Scarman (with whom Lord Lowry agreed), said, at 717-718:

'I wish, however, to make a few observations upon the topic of “innominate” terms in our contract law. In Hongkong Fir Shipping Co. Ltd. v. Kawasaki Kisen Kaisha Ltd. [1962] 2 Q.B. 26, the Court of Appeal rediscovered and reaffirmed that English law recognises contractual terms which, upon a true construction of the contract of which they are part, are neither conditions nor warranties but are, to quote my noble and learned friend Lord Wilberforce's words in Bremer Handelsgesellschaft m.b.H. v. Vanden Avenne-Izegem P.V.B.A. [1978] 2 Lloyd's Rep. 109, 113, “intermediate.” A condition is a term, the failure to perform which entitles the other party to treat the contract as at an end. A warranty is a term, breach of which sounds in damages but does not terminate, or entitle the other party to terminate, the contract. An innominate or intermediate term is one, the effect of non-performance of which the parties expressly or (as is more usual) impliedly agree will depend upon the nature and the consequences of breach. In the Hongkong Fir case the term in question provided for the obligation of seaworthiness, breach of which it is well known may be trivial (e.g. one defective rivet) or very serious (e.g. a hole in the bottom of the ship). It is inconceivable that parties when including such a term in their contract could have contemplated or intended (unless they expressly say so) that one defective rivet would entitle the charterer to end the contract or that a hole in the bottom of the ship would not. I read the Hongkong Fir case as being concerned as much with the construction of the contract as with the consequences and effect of breach. The first question is always, therefore, whether, upon the true construction of a stipulation and the contract of which it is part, it is a condition, an innominate term, or only a warranty. If the stipulation is one, which upon the true construction of the contract the parties have not made a condition, and breach of which may be attended by trivial, minor or very grave consequences, it is innominate, and the court (or an arbitrator) will, in the event of dispute, have the task of deciding whether the breach that has arisen is such as the parties would have said, had they been asked at the time they made their contract: “it goes without saying that, if that happens, the contract is at an end.”

Where, therefore, as commonly happens, the parties do not identify a stipulation as a condition, innominate term, or warranty, the court will approach the problem of construction in the way outlined by Upjohn L.J. [1962] 2 Q.B. 26, 63, 64. As the Lord Justice put it:

“Where, however, upon the true construction of the contract, the parties have not made a particular stipulation a condition, it would in my judgment be unsound and misleading to conclude that, being a warranty damages is necessarily a sufficient remedy.”

Unless the contract makes it clear, either by express provision or by necessary implication arising from its nature, purpose, and circumstances (“the factual matrix” as spelt out, for example, by Lord Wilberforce in his speech in the Reardon Smith case [1976] 1 W.L.R. 989, 995–997), that a particular stipulation is a condition or only a warranty, it is an innominate term, the remedy for a breach of which depends upon the nature, consequences, and effect of the breach.

When the Court of Appeal had taken the logical step of declaring that theHongkong Fir analysis applied to contracts generally (Cehave N.V. v. Bremer Handlesgesellschaft m.b.H. [1976] Q.B. 44), the law was back where it had been left by Lord Mansfield in Boone v. Eyre (1777) 1 Hy.Bl. 273 n and the judgment of Bramwell B. in Jackson v. Union Marine Insurance Co. Ltd. (1874) L.R. 10 C.P. 125 . Section 11 (1) (b) of the Sale of Goods Act 1893 can now be seen to be no more than a statutory guide to the use of the terms “condition” and “warranty” in that Act. It is not to be treated as an indication that the law knows no terms other than conditions and warranties. This fallacy was exposed in the Hongkong Fir case [1962] 2 Q.B. 26. To read the subsection as a guide to a comprehensive classification of contractual terms is to convert it into a will-o'the-wisp leading the unwary away from the true path of the law.'

[5] As to what the covenant for quiet enjoyment is - in Kenny v Preen [1963] 1 QB 499 ('Kenny'), Pearson LJ (with whom Ormerod LJ and Donovan LJ agreed on this point) said, at 511:

'The implied covenant for quiet enjoyment is not an absolute covenant protecting a tenant against eviction or interference by anybody, but is a qualified covenant protecting the tenant against interference with the tenant's quiet and peaceful possession and enjoyment of the premises by the landlord or persons claiming through or under the landlord. The basis of it is that the landlord, by letting the premises, confers on the tenant the right of possession during the term and impliedly promises not to interfere with the tenant's exercise and use of the right of possession during the term. I think the word " enjoy " used in this connection is a translation of the Latin word " fruor " and refers to the exercise and use of the right and having the full benefit of it, rather than to deriving pleasure from it.'

Pearson LJ in Kenny continued, at 511

'The nature of the implied covenant was explained in BuddScott v. Daniell [[1902] 2 K.B. 351, 355-356; 18 T.L.B. 675, D.C.] in judgments of a Divisional Court. Lord Alverstone C.J. said:

"Apart from authority it would certainly seem, on principle and in common sense, that when one person agrees to give possession of his house for a time to another, that ought to carry with it an agreement that he, the landlord, and those claiming through him, will not dispossess the tenant during that time. Therefore, unless there is some special meaning attached to the word 'demise,' the good sense of the thing would seem to be that, upon an agreement to let, a covenant or contract was to be implied that the landlord and those claiming under him would not disturb the possession of the tenant. Unless driven to do so by authority, I should hesitate a long time before drawing any distinction in that respect between the words 'agree to let' and 'demise'.

The Lord Chief Justice said that, because reference had been made to a previous case - Baynes & Co. v. Lloyd & Sons [[1895] 2 Q.B. 610, 615] in which Kay L.J. had said that the implied covenant was only to be implied if the word "demised" was used, and could not be implied if some other word was used.

Also in the same case, Budd-Scott v. Daniell, Channell J. said [[1902] 2 K.B. 351, 361]:

"I must say that, speaking for myself, until I read this judgment of the Court of Appeal in Baynes & Co. v. Lloyd & Sons, [[1895] 2 Q.B. 61] I always had thought that from the mere fact of letting there was some agreement implied by the landlord that the tenant should not be disturbed, though there might be a question as to what that agreement was. As to this question also, however, I should have thought that it had been now settled that the agreement was only against disturbance by the lessor and those claiming under him, and was limited to the duration of the lessor's interest. If the undertaking is limited in that way, it would seem, as was pointed out by Cockburn C.J. in Hall v. City of London Brewery Co., [(1862) 2 B. & S. 737] to be nothing more than that which the act of letting into possession for a fixed period would itself in common sense import. If a man lets a house for a year, he most undoubtedly does undertake that he will not himself interfere with the possession of his tenant during that time, and it is only reasonable that his undertaking should be held to extend to those claiming under him."

Reference may also be made to Markham v. Paget [[1908] 1 Ch. 697; 24 T.L.E. 426. Swinfen Eady J. [[1908] 1 Ch. 697, 718] read an extract from Piatt on Covenants, and the concluding words of the extract are these: 'for, as against the party himself, the court will not consider the word lawful, nor drive the 'covenantee to an action of trespass, when, by the generally implied covenant in law, the vendor had engaged not to annul his own deed, either by a rightful or an illegal entry.'

That is surely the same principle emerging there, that the landlord is not allowed to annul his own deed by interfering with the possession which he himself has conferred on the tenant.'

[5a] As to what 'derogation from grant' is, as a concept - in Chartered Trust plc v Davies [1997] 2 EGLR 83, Henry LJ (with whom Staughton LJ agreed), at paragraphs 21 to 24:

'As long ago as 1894 in Aldin -v- Latimer Clarke, Muirhead & Co [1894] 2 Chancery 437, Sterling J summarised the authorities to that date:

“The result of these judgments appears to me to be that where a landlord demises part of his property for carrying on a particular business, he is bound to abstain from doing anything on the remaining portion which would render the demised premises unfit for carrying on such business in the way in which it is ordinarily carried on … ” (p 444)

From that broad principle, the courts have proceeded step by cautious step. But the principle itself has always been firmly founded on the bedrock of basic fair dealing, rather than a restrictive straitjacket of individual restrictions. Many of the initial cases dealt with the protection of continuous or apparent quasi-easements, but Parker J in Brown -v- Flower [1910] 1 Chancery 219 at 224–225 made clear that:

“But the implications usually explained by the maxim that no-one can derogate from his own grant do not stop short with easements. Under certain circumstances there will be implied on the part of the grantor, or lessor obligations which restrict the user of the land retained by him further than can be explained by the implication of any easement known to the law. Thus, if the grant or demise be made for a particular purpose, the grantor or lessor comes under an obligation not to use the land retained by him in such a way as to render the land granted or demised unfit or materially less fit for the particular purpose for which the grant or demise was made.”

He was speaking there of making the land physically less fit — that the principle also applied where the land was made legally less fit was clear from the decision of the Court in Harmer -v- Jumbil (Nigeria) Tin Areas Limited [1921] 1 Chancery 200 , where in the familiar passage, Younger LJ said, at 225:

“Now if these questions are to be answered in a sense favourable to the lessee, it must be on the principle that a grantor shall not derogate from his grant, a principle which merely embodies in a legal maxim a rule of common honesty. ‘A grantor having given such a thing with one hand,’ as Bowen LJ put it in Birmingham, Dudley and District Banking Co -v- Ross (1) , ‘is not to take away the means of enjoying it with the other.’ ‘If A lets a plot of land to B,’ as Lord Loreburn phrases it in Lyttleton Times Co -v- Warners (2) , ‘he may not act so as to frustrate the purpose for which in the contemplation of both parties the land was hired.’ The rule is clear, but the difficulty is, as always, in its application. For the obligation laid upon the grantor is not unqualified. If it were, that which was imposed in the interests of fair dealing might, in unscrupulous hands, become a justification for oppression, or an instrument of extortion. The obligation therefore must in every case be construed fairly, even strictly, if not narrowly. It must be such as, in view of the surrounding circumstances, was within the reasonable contemplation of the parties at the time when the transaction was entered into, and was at that time within the grantor's power to fulfil. But so limited an obligation imposed may, I think, be infinitely varied in kind, regard being had to the paramount purpose to service which it is imposed. If, for instance, the purpose of the grant would in a particular case be frustrated by some act of the lessor on his own land which, while involving no physical interference with the enjoyment of the demised property, would yet be completely effective to stop or render unlawful its continued user for the purpose for which alone it was let, I can see no reason at all in principle why ‘ut res magis valeat quam pereat’ that act should not be prohibited, just as clearly as an act which, though less completely effective in its result, achieved it by some physical interference.”

The modern statement of principle is to be found in the decision of Johnston & Sons Limited -v- Holland [1988] 1 EGLR 264 at 267J per Nicholls LJ:

“The expression ‘derogation from grant’ conjures up images of parchment and sealing wax, of copperplate handwriting and fusty title deeds. But the principle is not based on some ancient technicality of real property. As Younger LJ observed in Harmer -v- Jumbil (Nigeria) Tin Areas Limited [supra] it is a principle which merely embodies in a legal maxim a rule of common honesty. It was imposed in the interests of fair dealing. [and he then quoted Bowen LJ in the passage from Harmer quoted above] As one would expect, the principle applies to all forms of grants. … In Megarry and Wade on the Law of Real Property, 5th Edition, page 849, the view is expressed that in truth the doctrine is an independent rule of law. This approach was approved by Denning MR in Moulton Buildings Limited -v- City of Westminster [1975] 30 P&CR 182 at 186. He stated the broad principle thus:

“If one man agrees to confer particular benefit on another, he must not do anything which substantially deprives the other of the enjoyment of that benefit: because that would be to take away with one hand what is given with the other.”

That being the general principle, the next step must be to apply it to a particular factual situation. Such a cases is the present, that exercise involves identifying what obligations if any on the part of the grantor can fairly be regarded as necessarily implicit, having regard to the particular purpose of the transaction when considered in the light of the circumstances subsisting at the time the transaction was entered into.”'

[6] In a Westlaw Overview entitled 'Quiet enjoyment', the authors: (a) Kester Lees (Falcon Chambers); and (b) Imogen Dodds (Falcon Chambers) state, at paragraph 26:

'The covenant for quiet enjoyment and the covenant for non derogation from grant (See Non derogation from grant) are related covenants and often these claims against a landlord will be brought in the alternative. The non-derogation from grant obligation is usually only engaged where the tenant has been let the property with a particular usage in mind, whereas the covenant for quiet enjoyment will apply irrespective of any particular usage envisaged at grant. The distinction appears to be that the obligation in the covenant for non-derogation from grant is concerned with the user of any retained land of the landlord (which can include land acquired after the date of the grant) which interferes with the particular user envisaged at the grant of the demised premises. By contrast, the covenant for quiet enjoyment is concerned with the overall enjoyment of the demised premises and is less concerned with the user of the retained land. In practice there is little between them, and they usually appear in Particulars of Claim in the alternative.'

In Chartered Trust plc v Davies [1997] 2 EGLR 83 - quoted more fully in the footnote above - Henry LJ (with whom Staughton LJ agreed) recorded the first instance judge as having said:

'The principle of derogation of grant is, according to [Browne v Flower [1911] 1 Ch 219] that it make (SIC) the premises materially less fit for the particular purpose for which the grant was made.' (page 84, column 2, M)

[7] Initially, it was thought that, because the Court of Appeal in Leighton's Investment Trust Ltd v Cricklewood Property and Investment Trust Ltd [1943] KB 493 ('Cricklewood') had held that the contractual doctrine of frustration did not apply to leases, neither did the concept of repudiatory breach. In Ramsbury, Lord Burrows said 'It used to be thought that the principles applicable to termination of a contract for breach did not apply to leases.' (paragraph 1). 

There was also a case called Total Oil Great Britain Ltd v Thompson Garages (Biggin Hill) Ltd [1972] 1 QB 31, CA ('Total Oil')

However, serious doubt was introduced into this reasoning, when the House of Lords in National Carriers Ltd v Panalpina (Northern) Ltd [1981] AC 675 ('Panalpina), held, contrary to Cricklewood, that, in exceptional circumstances, a lease can be frustrated. Further, the concept that a lease of land is in its essence different from other contracts has been overset by a House of Lords decision called United Scientific Holdings Ltd v Burnley Borough Council [1978] AC 904 ('United Scientific').

There then followed:

(a) Hussein v Mehlman [1992] 2 EGLR 87, a decision which, though non-binding, recognised that the law on repudiatory breach, from contract law, did apply equally to leases; this case pointed out who the major and minor premises to the Total Oil decision (a Court of Appeal decision), had been destroyed subsequently by subsequent House of Lords' decisions: (i) Panalpina - on frustration applying; and (ii) United Scientific - on lease of land not being different from other forms of contract (though it creates a proprietary interest - the lease). It also pointed out it was relief that Total Oil as no longer good law, since it appeared to overrule a important line of authorites (which ultimately lead to Wilson v Finch-Hatton (1877) 2 Ex D 336)).

(b) Chartered Trust plc v Davies [1997] 2 EGLR 83;

(c) Nynehead;

(d) Grange v Quinn [2013] 2 EGLR 198.

At paragraphs 33 to 43, Lord Burrows in Ramsbury Properties Ltd v Ocean View Construction Ltd [2024] UKPC 40 [2025] 1 WLR 924 ('Ramsbury'), Lord Burrows explained this development of the law, as follows:

'33. ...it was at one time thought that the contractual law on repudiatory breach did not apply to leases (see, eg, Total Oil Great Britain Ltd v Thompson Garages (Biggin Hill) Ltd [1972] 1 QB 318, 324 (“Total Oil”)). It would appear that the principal reason for this was that a lease is not just a contract but also creates a proprietary interest in land (a legal estate) conferring the right to exclusive possession. That reasoning was linked to the decision of the Court of Appeal in Leighton's Investment Trust Ltd v Cricklewood Property and Investment Trust Ltd [1943] KB 493 that the contractual doctrine of frustration cannot apply to a lease. The House of Lords, on the further appeal in that case, was split 2-2 on that question (Lord Porter preferring to express no opinion): see [1945] AC 221. But in National Carriers Ltd v Panalpina (Northern) Ltd [1981] AC 675 (“Panalpina”), the House of Lords (Lord Russell of Killowen dissenting) departed from the Cricklewood case and held that, in exceptional circumstances, a lease can be frustrated albeit that there was no frustration on the facts. 

34. This paved the way for a reconsideration of whether repudiatory breach can apply to leases. The turning point was a masterly judgment given in the Wood Green County Court by Stephen Sedley QC in Hussein v Mehlman [1992] 2 EGLR 287 (SIC). In rejecting what had been said on the point in Total Oil, he referred not only to the importance of Panalpina but also to a line of 19th century authorities, which he set out in some detail, accepting that there could be a repudiatory breach of a lease. 

As a matter of principle, he forcefully reasoned that the proprietary aspect of a lease did not mean that the normal contractual principles on repudiatory breach were inapplicable. He recognised that care must be taken not to contradict express or statutory remedies conferred under the lease, in particular a landlord's right of forfeiture and the established limits on that right. But that was not a good reason for denying that, in principle, the contractual doctrine of termination following repudiatory breach is applicable to a lease. He went on to decide that, on the facts of the case before him, the tenant had been entitled to terminate the lease for the landlord's repudiatory breach comprising very serious failures to carry out its repairing obligations.

35. Subsequently the Court of Appeal in Chartered Trust plc v Davies [1997] 2 EGLR 83 assumed, without any discussion of the point, that the law on repudiatory breach applied to a lease. It upheld the decision at first instance that, in the circumstances, the breach of the landlord's implied covenant not to derogate from grant, by failing to restrain a nuisance by another tenant in a shopping mall, entitled the tenant to terminate the lease.

36. In Nynehead Developments Ltd v RH Fibreboard Containers Ltd [1999] 1 EGLR 7, 12, Judge Weeks QC, sitting in the High Court, expressed himself as being content to follow Hussein v Mehlman. But on the facts he held that, applying Hongkong Fir Shipping, the breach (allowing others to park on a forecourt in an industrial estate in such a way as to interfere with the tenant's parking rights) had not been sufficiently serious to entitle the tenant to terminate the lease.

37. In Grange v Quinn [2013] 2 EGLR 198, at para 70, Jackson LJ, in obiter dicta, said that, “Although there were earlier indications to the contrary, it is now clear that a lease may be brought to an end by repudiation and acceptance”.' [the citation for Hussein v Mehlman ought to read [1992] 2 EGLR 87]

Lord Burrows in Ramsbury then noted the position in Canada and Australia. At paragraph 38 of Ramsbury, he said:

38. That there can be repudiatory breach of a lease is also supported by judgments of the highest courts in Canada and Australia: see Highway Properties Ltd v Kelly, Douglas & Co Ltd (1971) 17 DLR (3d) 710 and Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17 . In her written submissions, our attention was also drawn by Leonora Walwyn SC, counsel for the respondent, to the apparent acceptance in the British Virgin Islands that there can be repudiatory breach of a lease: see the judgment of Ellis J in Emperor International Holdings Ltd v James Young Harbour View Marine Centre Ltd (unreported) 29 September 2022, paras 155–175.'

Lord Burrows in Ramsbury then noted, at paragraph 40, the views expressed in some leading text books ('See also Susan Bright, “Repudiating a Lease—Contract Rules” [1993] Conv 71; Charles Harpum, “Leases as Contracts” [1993] CLJ 212; Mark Pawlowski, “Acceptance of Repudiatory Breach in Leases” [1995] Conv 379.'). 

Lord Burrows in Ramsbury continued, at paragraph 39 to 43:

'39. The development of the law in this area is summarised in Woodfall, Landlord and Tenant at para 17.314 (footnotes omitted):

“In England it has been held that a lease is not capable of determination by repudiation and acceptance. Part of the reasoning which led the court to this conclusion was that a lease is not capable of determination by frustration, and that consequently contractual remedies available in other cases do not apply. But it is now clear that, in principle, a lease is capable of being frustrated. Thus the foundation of the reasoning has been eroded.

“Further, in other Commonwealth jurisdictions, it has been held that a lease may be terminated by repudiation and acceptance. This is the law in Canada, and Australia. It is considered that there is no reason in principle why the law should be any different in England.

“In any event, it may be that the law of England has always been that a lease is capable of determination by repudiation and acceptance. And it has been so held in at least two recent cases [ Hussein v Mehlman and Chartered Trust plc v Davies], the latter in the Court of Appeal.”

40. To similar effect, and with additional helpful insights, is Megarry & Wade, The Law of Real Property, 10th ed (2024), para 17-106 (footnotes omitted):

“One result of the emphasis on the contractual nature of a lease is the recognition, both in this country and in other jurisdictions in the Commonwealth, that in appropriate circumstances, a party to a lease may terminate it following breach of its terms by the other party. Although there was authority against this view, it was based on the now discredited assumption that a lease could not be frustrated; and 

there was in any event an earlier body of authority in which it had been accepted that a lease could be terminated for breach … To have this result, the breach must probably be one which [applying the words of Stephen Sedley QC in Hussein v Mehlman, at p 91] vitiates ‘the central purpose of the contract of letting’. Clearly both the length and the terms of the lease will be relevant to whether there has been a breach that will justify treating it as terminated. The longer the lease, the more artificial it is to regard it other than as an estate in land. It is therefore only in relation to shorter lettings that an allegation that a breach justifies termination is normally likely to be successful.”'

...

41. At para 17-108 Megarry & Wade goes on to make clear, as Stephen Sedley QC had stressed in Hussein v Mehlman, that particular care must be taken not to allow termination by a landlord, for repudiatory breach by a tenant, to undermine the protections that the tenant has in respect of the landlord's right of forfeiture.

42. In the light of these developments, the Board accepts that there can be a repudiatory breach entitling the innocent party (here the tenant) to terminate a lease. In principle, there is no good reason why that should not be possible.

43. Nevertheless, in determining whether there has been a repudiatory breach of a lease, it is of importance that one is concerned with a lease that confers a proprietary interest in the land. The right to exclusive possession under a lease, especially where the lease is long term, means that it may be rare for there to be a repudiatory breach of a lease entitling the tenant to terminate. In any event, a tenant is likely to have a right to give notice under the lease so that it will often be unnecessary to terminate for breach.'

[8] In Ramsbury Properties Ltd v Ocean View Construction Ltd [2024] UKPC 40 [2025] 1 WLR 924 ('Ramsbury'), the lease contained (as was found by the first appeal court, Baptiste JA):

(a) express covenant for quiet enjoyment; and

(b) implied terms, allowing the workers to eat meals and to their laundry on the premises. Terms which were implied in 'because they satisfy the standard business efficacy and/or obviousness tests.' (paragraph 18).

Lord Burrows said in Ramsbury, at paragraph 28:

'The Board's view is that nothing turns on whether one treats the breach as a breach of the express covenant of quiet enjoyment or as a breach of the terms implied by fact. Nevertheless, we consider that Baptiste JA's implied term analysis has the marginal advantage of focusing on specific aspects of what was covered by the lease, including what the Board considers was included within the covenant of quiet enjoyment. Therefore, in going on to consider repudiatory breach, we shall focus, as did Baptiste JA, on a breach of the implied terms that the workers should be permitted to eat meals and to do their laundry at the premises.'

[8a] See Chartered Trust plc v Davies [1997] 2 EGLR 83, paragraph 29 onwards, for analysis of the law on when a landlord might be in breach to one tenant, because of the actions of another tenant.

[9] In Advanced Multi-Technology for Medical Industry (trading as HITEX) v Uniserve Ltd [2025] EWCA Civ 1212, Males LJ (with whom Phillips LJ and Snowden LJ agreed) continued, at paragraph 66:

'The importance of the decision in The Simona was the rejection of any theory, said to be derived from the decision of this court in Braithwaite v Foreign Hardwood Co [1905] 2 KB 543, whereby the innocent party faced with a repudiation is absolved from continuing to perform the contract unless and until the repudiating party gives notice that it is once again able and willing to perform:

'I therefore conclude that the decision in Braithwaite [1905] 2 KB 543 is not an authority for the proposition advanced by the appellants, alternatively if it is, then it is wrong. When A wrongfully repudiates his contractual obligations in anticipation of the time for their performance, he presents the innocent party B with two choices. He may either affirm the contract by treating it as still in force or he may treat it as finally and conclusively discharged. There is no third choice, as a sort of via media, to affirm the contract and yet to be absolved from tendering further performance unless and until A gives reasonable notice that he is once again able and willing to perform. Such a choice would negate the contract being kept alive for the benefit of both parties and would deny the party who unsuccessfully sought to rescind, the right to take advantage of any supervening circumstances which would justify him in declining to complete.''

Later, Males LJ said, at paragraph 90:

'If the contract was kept alive for performance, Hitex was obliged to fulfil its own obligations....Hitex's obligations, therefore, were to have available for supply to Uniserve the cumulative total set out in the revised delivery schedule. The submission that Hitex was somehow discharged from its obligation in respect of any particular shipment is a variant of the submission firmly rejected by the House of Lords in The Simona in the passage cited above. I would reject it here.'

[9a] The first sub-sentence contains a reference to Fercometal S.A.R.L. v. Mediterranean Shipping Co. S.A. [1989] AC 788, which is the The Simona case. Lord Ackner (with whom Lord Bridge, Lord Templeman, Lord Oliver and Lord Jauncey agreed) in The Simona went through some of the legal history. 

Under the heading 'The innocent party's option', Lord Ackner in The Simona said, at 799C:

'When one party wrongly refuses to perform obligations, this will not automatically bring the contract to an end. The innocent party has an option. He may either accept the wrongful repudiation as determining the contract and sue for damages, or he may ignore or reject the attempt to determine the contract and affirm its continued existence. Cockburn C.J. in Frost v. Knight, L.R. 7 Ex. 111, 112-113, put the matter thus:

"The law with reference to a contract to be performed at a future time, where the party bound to performance announces prior to the time his intention not to perform it, as established by the cases of Hochster v. De La Tour, 2 E. & B. 678 and The Danube and Black Sea Co. v. Xenos (1863) 13 C.B.N.S. 825 on the one hand, and Avery v. Bowden (1855) 5 E. & B. 714, Reid v. Hoskins (1856) 6 E.& B. 953, and Barwick v. Buba (1857) 2 C.B.N.S. 563 on the other, may be thus stated. The promisee, if he pleases, may treat the notice of intention as inoperative, and await the time when the contract is to be executed, and then hold the other party responsible for all the consequences of non-performance: but in that case he keeps the contract alive for the benefit of the other party as well as his own; he remains subject to all his own obligations and liabilities under it, and enables the other party not only to complete the contract, if so advised, notwithstanding his previous repudiation of it, but also to take advantage of any supervening circumstance which would justify him in declining to complete it. On the other hand, the promisee may, if he thinks proper, treat the repudiation of the other party as a wrongful putting an end to the contract, and may at once bring his action as on a breach of it; and in such action he will be entitled to such damages as would have arisen from the non-performance of the contract at the appointed time, subject, however, to abatement in respect of any circumstances which may have afforded him the means of mitigating his loss. 

This passage was adopted by Cotton L.J. in Johnstone v. Milling (1886) 16 Q.B.D. 460, 470. In that case Lord Esher M.R. described the situation thus, at p. 467:

"a renunciation of a contract, or, in other words, a total refusal to A perform it by one party before the time for performance arrives, does not, by itself, amount to a breach of contract but may be so acted upon and adopted by the other party as a rescission of the contract as to give an immediate right of action. When one party assumes to renounce the contract, that is, by anticipation refuses to perform it, he thereby, so far as he is concerned, declares his intention then and there to rescind the contract. ... The other party may adopt such renunciation ot the contract by so acting upon it as in effect to declare that he too treats the contract as at an end, except for the purpose of bringing an action upon it for the damages sustained by him in consequence of such renunciation."

The way in which a "supervening circumstance" may turn out to be to the advantage of the party in default, thus relieving him from liability is illustrated by Avery v. Bowden, 5 E. & B. 714, where the outbreak of the Crimean War between England and Russia made performance of the charterparty no longer legally possible. The defendant, who prior to the outbreak of the war had in breach of contract refused to load, was provided with a good defence to an action for breach of contract, since his repudiation had been ignored. As pointed out by Parker L.J. in his judgment, the law as stated in Frost v. Knight, L.R. 7 Ex. 111 and Johnstone v. Milling, 16 Q.B.D. 460 has been reasserted in many cases since, and in particular in Heyman v. Darwins Ltd. [1942] A.C. 356 where Viscount Simon L.C. said, at p. 361:

The first head of claim in the writ appears to be advanced on the view that an agreement is automatically terminated if one party 'repudiates' it. That is not so. 'I have never been able to understand', said Scrutton L.J. in Golding v. London & Edinburgh Insurance Co. Lid. (1932) 43 LI.L. Rep. 487, 488, 'what effect the repudiation of one party has unless the other party accepts the repudiation.' If one party so acts or so expresses himself, as to show that he does not mean to accept and discharge the obligations of a contract any further, the other party has an option to the attitude he may take up. He may, notwithstanding the so-called repudiation, insist on holding his co-contractor to the bargain and continue to tender due performance on his part. In that event, the co-contractor has the opportunity of withdrawing from his false position, and even if he does not, may escape ultimate liability because of some supervening event not due to his own fault which excuses or puts an end to further performance." (Emphasis added.)

If an unaccepted repudiation has no legal effect (a thing writ in water and of no value to anybody" - per Asquith L.J. in Howard v. Pickford Tool Co. Ltd. [1951] 1 K.B. 417, 421) how can the unaccepted acts of repudiation by the charterers in this case provide the owners with any cause of action? It was accepted in the Court of Appeal by counsel then appearing for the owners, that it was an inevitable inference from the findings made by the arbitrators that the Simona was not ready to load the charterers' steel at any time prior to the charterers' notice of cancellation on 12 July. Mr. Boyd, who has appeared before your Lordships for the owners, has not been able to depart from this concession. Applying the well established principles set out above, the anticipatory breaches by the charterers not having been accepted by the owners as terminating the contract, the charterparty survived intact with the right of cancellation unaffected. The vessel was not ready to load by close of business on the cancelling date viz. 9 July and the charterers were therefore entitled to and did give what on the face of it was an effective notice of cancellation.' [words underlined are in italics in original Lord Ackner speech]

[9b] In Force India Formula One Team Ltd v Etihad Airways PJSC [2010] EWCA Civ 1051 ('Force India'), Rix LJ (with whom Patten LJ and Sir Mark Waller agreed), under the heading 'Affirmation', said, at paragraphs 111 to 122:

'It is of course possible to affirm a contract which the other party has repudiated. A repudiatory breach, whether actual or anticipatory, gives to the innocent party a right to elect whether or not to accept the repudiation as bringing the contract to an end. The judge cited The Kanchenjunga [1990] 1 Lloyd's Rep 391 (HL) at 397-399, as summarised in Tele2 International Card Company SA v. Post Office Limited [2009] EWCA Civ 9 at para 53, as explaining the principles of election. He accepted that an election requires knowledge of the relevant facts and a communication of the election, in words or conduct, in clear and unequivocal terms. Moreover, a party may be taken to have elected to affirm where it acts in a manner which is consistent only with a decision to affirm or where it allows too much time to pass by without indicating any decision.

However, it has to be remembered that a situation of repudiation may well be more or less complex and call for more or less urgency. The Kanchenjunga itself concerned a decision whether or not to accept the nomination of a port. The shipowners accepted it by giving notice of readiness to load, a relatively straightforward situation where prompt reactions are required. In other situations, however, it may take some time to understand what is happening. A further complication may arise where, in the meantime, the innocent party operates a term of the contract which may itself lead on to termination. I spoke of these problems in Stocznia Gdanska SA v. Latvian Shipping Co [2002] 2 Lloyd's Ref 436, where the innocent shipyard, faced by the repudiatory conduct of its purchaser of vessels under construction, issued to its purchaser a notice, designed to set up a right to terminate under their contract for non-payment of an instalment of the purchase price, but invalidly so. I said:

"86…Thus Latreefers [the purchaser] is anxious to present the keel laying notices not only as acts of affirmation for the past, but also for the future; whereas the yard is keen for the notices to be seen in their overall context as a means by which the yard put a recalcitrant contractor to proof in anticipation of continuing obduracy.

87. In my judgment, there is of course a middle ground between acceptance of a repudiation and affirmation of the contract, and that is the period when the innocent party is making up his mind what to do. If he does nothing for too long, there may come a time when the law will treat him as having affirmed. If he maintains the contract in being for the moment, while reserving his right to treat it as repudiated if his contract partner persists in his repudiation, then he has not yet elected. As long as the contract remains alive, the innocent party runs the risk that a merely anticipatory repudiatory breach, a thing "writ in water" until acceptance can be overtaken by another event which prejudices the innocent party's rights under the contract – such as frustration or even his own breach. He also runs the risk, if that is the right word, that the party in repudiation will resume performance of the contract and thus end any continuing right in the innocent party to accept the former repudiation as terminating the contract.

88. It is clear therefore that during the period when the yard was serving its notices up to the time of purporting to exercise its contractual rights of rescission the respective contracts remained alive. The question is whether the keel laying notices were an unequivocal affirmation of them…I do not think that the use of a contractual mechanism for terminating the contracts is inconsistent with reliance on repudiatory conduct for effecting a common law acceptance of an anticipatory breach. Where contractual and common law rights overlap, it would be too harsh a doctrine to regard the use of a contractual mechanism of termination as unequivocally ousting the common law mechanism, at any rate against the background of an express reservation of rights."

In a later dispute involving the same shipyard but a different purchaser, Stocznia Gdynia SA v. Gearbulk Holdings Ltd [2009] EWCA Civ 75, [2009] 3 WLR 677, this court had to deal with an argument that the purchaser, who had sought to use contractual machinery to recover its initial payment to the yard in the face of the yard's repudiatory non-delivery, had affirmed its contract and was therefore limited to the return of its money but excluded from repudiatory damages for loss of its bargain. This court rejected that submission. It was also submitted that the clause which the purchaser had invoked, clause 10, excluded common law rights which arose on a repudiation. This court rejected that argument as well. The contractual rights of termination might overlap with the common law of repudiation, but the latter was not excluded.

Moore-Bick LJ there said this (at para 20):

"In Stocznia Gdanska SA v Latvian Shipping Co [2002] 2 Lloyd's Rep 436, para 88 Rix LJ expressed the view that where contractual and common law rights overlap it would be too harsh to regard the use of a contractual mechanism of termination as ousting the common law mechanism, at any rate against a background of an express reservation of rights. In this case I would go further. In my view it is wrong to treat the right to terminate in accordance with the terms of the contract as different in substance from the right to treat the contract as discharged by reason of repudiation at common law."

There, as in the earlier Stocznia case and here, the innocent party had sought to use a contractual form of termination. In the earlier Stocznia case and here the attempt was unsuccessful. In the later Stocznia case it was not inconsistent with common law acceptance of repudiation. The question was whether the invocation of a contractual mechanism prevented reliance on common law doctrine. In both cases this court rejected the submission that it was. In the earlier case I said (at para 32):

"It is established law that, where one party to a contract has repudiated it, the other may validly accept that repudiation by bringing the contract to an end, even if he gives the wrong reason for doing so or no reason at all."

In the later case, Moore-Bick LJ said (at paras 44/45):

"In such cases it is sufficient for the injured party simply to make it clear that he is treating the contract as discharged: see the Dalkia case [2006] 1 Lloyd's Rep 599, para 153, per Clarke J. If he gives a bad reason for doing so, his action is nonetheless effective if the circumstances support it. That, as I understand it, is what Rix LJ was saying in Stocznia Gdanska SA v Latvian Shipping Co [2002] 2 Lloyd's Rep 436, para 32 with which I respectfully agree…I accept Mr Dunning's submission that in its letters…Gearbulk purported to terminate the contract pursuant to article 10.1(b) and (c) and not under the general law, but each of the letters made it clear that it was treating the contract as discharged and in those circumstances each was sufficient to amount to an acceptance of the yard's repudiation."

In the present case, the sponsors sought to operate clause 5's option C and clause 21.3.1(a) in the alternative as giving them the right to terminate the contract. Both these mechanisms however were ineffective on their own terms: the sponsors abandoned reliance on clause 5 and it seems to me that clause 21 is dealing with remediable material breaches and not with irremediable repudiation. However, what the sponsors' letter of 27 January 2008 made unequivocably clear was that what the sponsors relied on was a deeply serious ("There can be no more blatant breach of our rights under the Sponsorship Agreement") and irremediable breach of the contract which entitled them to terminate it. Moreover the reliance on clause 5's option C was expressed as "subject to the other terms of this letter".

If therefore the right to accept Force India's repudiation survived to 27 January 2008, the terms of the sponsors' letter of termination of that date did not prevent them from accepting it. If the judge intended to decide otherwise, and I am not sure about that, in my respectful opinion he erred. For the same reason I reject Mr Tregear's submission to any like effect. Mr Tregear also repeatedly submitted that the contract was still alive on 13 December 2007. So it was, and immediately before the sponsors' letter of termination. That, however, was not the point. If it was alive but repudiated, and there had been no unequivocal election to affirm the contract despite its repudiation, the sponsors were entitled to terminate it at common law.

The question remains whether Force India's repudiation survived for acceptance on 27 January 2008.'