Unintended Acceptance of Repudiatory Breach and Loss of Bargain Damages

This article critically examines the proposition that an exercise of a contractual right of termination without reference to a repudiatory breach is, as a matter of legal principle, incapable of constituting an ‘acceptance’ of that breach. Following a close analysis of Phones 4U Ltd (in administration) v EE Ltd and related cases, it advocates a broader and more natural understanding of the concept of ‘acceptance’, the Boston Deep Sea principle and the requisite causal linkage between a repudiatory breach and the loss of the bargain. It is submitted that a purely contractual termination is capable of being characterised as an ‘acceptance’ of a repudiatory breach and giving rise to a claim for loss of bargain damages, provided that proper construction of the termination notice does not preclude such a result and that the terminating party would not have disregarded the repudiatory breach had it been known at the time of the termination.