Breach of contract

• Date: 23 August 2021
• Published date: 23 August 2021
• Author: Clive, E.
• DOI: https://doi.org/10.47348/ACTA/2021/a2
• Citation: 2021 Acta Juridica 37
• Pages: 37-56

37

https://doi.org/10.47348/ACTA/2021/a2

Breach of contract

ERIC CLIVE*

This contr ibution uses J & H Ritchie Ltd v Ll oyd Ltd 2 007 SC (HL) 89

as a peg on which to ha ng a number of f undament al questions about

contract: W hat is a contract? Does the word ‘contract’ sometimes

refer to a legal relationsh ip rather than a jurid ical act? If so, does this

matter? Is the law on implied terms sat isfactor y? Might a dut y of

good faith a nd fair de aling in contract law be a better way of dealing

with cert ain problems than resort to the impl ication of terms? When

is a breach of contract serious enoug h to justify cancel lation or

rescission? Shou ld a supplier of defective goods have a right to cu re

the defect? Is there a r isk of forgetting the d ierence between a right

to withhold per forma nce and a rig ht to rescind or cancel? These

questions are prompted by the fact that thi s was a stra ightfor ward

case and simila r situation s must occur regula rly. Yet, dierent

judges reasoned dierent ly and came to dierent conclusions in

the course of the case being appe aled al l the way to the House of

Lords. The que stion, therefore, is: how might a s imple case have been

better, or in a more st raight forward way, approached through l aw?

The contribut ion argues that the Dr aft Common Frame of Refere nce

(the DCFR) provides bot h concepts and r ules that would have

reached the ultimate conclusion in Ritchie much more quickly and

perhaps the ca se would not have needed to be litigated at all.

I IN T RODUCTION

It was an enormous pleasure to work with Dale Hutchison on

a joint chapter on ‘Breach of contract’ in Mixed Legal Systems in

Comparative Perspective: Proper ty and Obligations in Scotland and South

Africa.1 The book aimed to compare South African and Scottish

solutions to various pr ivate law questions and to check them ag ainst

an important European instru ment, the Principles of European

Cont rac t L aw. 2 In this tribute to Dale, I would like to consider

* C BE FRSE; Honorary Prof essor at the Un iversity of Edinbu rgh.

1 R Z immerm ann, D Visse r & K Reid (eds) Mixed Legal System s in Comparative

Perspective: P roperty and Obligations in S cotland and South Africa ( 200 4) 176 –7.

2 O L ando & H Bea le (eds) Princ iples of Europ ean Contract L aw Part s I and

II (2000); O La ndo, A Prü m, E Clive & R Zi mmerm ann (eds) Pr inciples of

European Cont ract Law Pa rt III (20 03).

2021 Acta Juridica 37

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38 THE FUT URE OF THE LAW OF CONTR ACT

https://doi.org/10.47348/ACTA/2021/a2

a few topical contract law questions in the light of a Scottish

House of Lords case and two more recent European instruments.3

The case is J & H Ritchie Ltd v Lloyd Ltd4 a nd the two instruments

are the Draft Common Frame of Reference (the DCFR)5 and the

EU Directive 2019/771 on certain aspects concerning contracts

for the sale of goods.6 The latter is of only indirect relevance to the

case under discussion because it applies only to consumer sales and

the case was concerned with a business sale.

Sadly, the South African element is lacking this time, but

South African readers will be able to supply their own answers to

the general questions raised. What is a contract? Does the word

‘contract’ sometimes refer to a legal relationship rather than a

juridical act? If so, does this matter? Is the law on implied terms

satisfac tory? Might a duty of good faith and fair dealin g in contract

law be a better way of dealing with certain problems than resort

to the implication of terms? When is a breach of contract serious

enough to justify cancellation or rescission? Should a supplier of

defective goods have a right to cure the defect? Is there a risk of

forgetting the dierence bet ween a right to withhold performance

and a right to rescind or cancel?

In our chapter, we noted that var ious terms had been used

for the process whereby a party to a contract who was faced by a

serious breach by the other pa rty could bring t he whole contractual

relationship more or less to an end. In South Africa, ‘cancellation’

had emerged as the usual term, whereas in Scotland ‘rescission’

had become standard. To avoid having to keep using both terms

3 I a m grate ful to Pr ofessor Hect or MacQueen for u seful com ments on a

draft o f this chap ter.

4 2 007 SC (HL) 89.

5 C von B ar & E Clive (eds) Principl es, Denitions and Model Ru les of European

Private L aw (Draft C ommon Frame of Re ference) (20 09). This is a s ort of model

European c ivil cod e. It was produced by g roups of em inent juri sts from a ll the

member stat es of the Europ ean Union, a nd some other Eur opean count ries,

who worked on the projec t over a period of 11 years f rom 1998 to 20 09. It

built on, a nd considera bly expand ed, the Pr inciples of E uropean Contra ct Law.

In addit ion to the ful l six-volume ed ition, wh ich includes Co mments a nd

National No tes, there i s a more porta ble one-volume Out line Ed ition which

consists e ssentially of the a rticles plus some int roductor y material.

6 T his di rective is ve ry li mited in sc ope compared to t he comprehens ive

proposal pr esented by the European C ommission on 11 October 2011: Proposa l

for a Regula tion on a Common European Sa les Law COM (2011) 635 nal.

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