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Jonathan Cohen in Important Court of Appeal Decision on Contract Law

Jonathan Cohen representing a Respondent, has successfully resisted an appeal in the Court of Appeal on the important issue of what constitutes a repudiatory breach of contract. The Court this morning handed down a judgment on the question of when non-payment of amounts due under a commercial contract is a repudiatory breach so that the innocent party can terminate the contract. The parties to the contract were dentists engaged in practice together; one did not pay sums due as his advance contribution to the running expenses of the practice, on the basis that he was worried that he might be summarily ejected from the practice and would therefore find himself in a position where he had overpaid. The judge below found that the payee should reasonably have believed that he would receive payment in the end, even if late. All three LJs gave their own judgments, Arden LJ and Floyd LJ agreeing that where a payee subjectively knows or should reasonably have appreciated that he is not ultimately likely to be deprived of substantially the whole of the benefit of a contract, there is no repudiatory breach which would allow the payee to terminate. In a dissenting judgment, Underhill LJ found that it was “heterodox” to deem any deliberate refusal to perform a fundamental contractual obligation as non-repudiatory in nature. The Appellant has sought permission to appeal to the Supreme Court.

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