Anticipatory breach – party accepting repudiation absolved form performance
A large quantity of tea was shipped in several vessels from India to be delivered at a bonded warehouse in London, with an option to the buyers to take delivery ex ship at an allowance of 34d.per lb. on due notice being given.
Because of congestion in early 1920, the vessels were diverted by the Shipping Controller away from London.
After a considerable delay, an oral agreement was reached between the parties that the buyers would take delivery at Greenock, Leith and Glasgow instead of London at a discount of 34d per pound.
Some months later, buyers cancelled the contract.
Each party accused the other of repudiation.
The arbitrator (an expert in the tea trade) held that the buyers had wrongly repudiated the contracts and awarded damages and costs to the sellers.
The arbitrator’s award was set aside by McCardie J.
The Court of Appeal (Bankes, Scrutton and Younger LJJ) restored the arbitrator’s award.
The House of Lords (Lords Buckmaster, Atkinson, Sumner, Wrenbury and Carson) dismissed a further appeal.
Lord Atkinson found that the sellers were not bound to prove that they were ready and willing to perform in the light of buyers’ repudiation.
Lord Sumner agreed, but he did say that it would be open to the buyers to prove that the sellers would not have been able to perform when required to do so.
Lords Atkinson and Sumner dealt at length with the effect of the oral agreement varying the place of delivery.
Both applied Morris v Baron, to the effect that the parties may orally put an end to a written contract but not vary it. The oral agreement was therefore unenforceable.
The content of the oral agreement was taken into account by Lord Sumner to determine the intention of sellers, which he found was not to repudiate the contract.
Lord Atkinson quoted Lord Mansfield in Jones v Barkley as follows:-
“Take it on the reason of the thing; the party must show that he was ready: but if the other stops him on the ground of an intention not to perform his part, it is not necessary for the first to go further and do a nugatory act”.
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