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A clear refusal to perform, given before performance falls due, is an anticipatory breach

A worked RES examination question on terms breach and discharge, from our Paper 1 bank — with the rule it turns on, and why each of the four options is right or wrong.

Paper 1Lesson 6Terms breach and dischargeFree — no sign-up

The question

A contract for the sale of a house is due to complete on 30 September, the option having been exercised in July. On 12 September the buyer writes to the seller saying plainly that he will not be completing, having spent a weekend in the area and changed his mind about it. He makes no reference to financing and offers no qualification. The seller, who has committed to a purchase of his own and has a second interested party who viewed in August, wishes to know whether he must wait until the end of the month and see whether the buyer turns up before he may do anything at all about it.

Which statement is correct?

  1. A. The seller may treat the contract as breached at once, the buyer having renounced it.
  2. B. There is no breach until 30 September passes without completion having taken place.
  3. C. There is no breach, an intention announced in advance being merely a present intention.
  4. D. There is a breach, but the seller must hold himself ready to complete before he acts.

The answer, and why

Answer: A

The rule. A clear refusal to perform, given before performance falls due, is an anticipatory breach. The innocent party may treat the contract as breached immediately.

Why A is correct. He may act on 12 September.

The other options.

  • B requires the date to pass.
  • C treats the announcement as a mere statement of present intention.
  • D requires the seller to stand ready to the end, which is the most plausible of the three because it sounds prudent.

Exam note. He need not wait to be let down twice.

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