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HR has become very much involved in contractual negotiation with third parties.  So what happens when the contractual counterparty commits a repudiatory breach of contract?  The obvious answer is the injured party is entitled to choose between affirming the contract (it continues) and terminating the contract. In either case you may bring a claim for damages.

Difficulties arise, however, where it is not clear whether or not a court would consider a particular breach to be repudiatory. If a court subsequently decides that the original breach was not repudiatory, terminating the contract will itself be a repudiatory breach, which may give rise to a substantial damages claim against you.

This situation arose in the recent case of Valilas v Januzaj, where the Court of Appeal held that a refusal to pay sums due under a contract on time did not give rise to a right to terminate.

The key issue was whether X had renounced the contract (by saying that they would no longer honour the key term) or was in repudiatory breach of the contract  (by actually stopping those payments).

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