Consideration of the precise effects of a repudiatory breach of contract (i.e. a breach of condition or a “serious” breach of an innominate term) has been especially active over the last few years. The effect of the cases has been to confirm the traditional orthodox approach1. The contract itself, as an act of private legislation governing the rights of the parties, is never terminated. It remains the formal source of the parties’ rights and obligations in circumstances covered by it on its true construction; if a party could be freed of contractual terms by his own breach, he might even cease to be bound by an arbitration clause, specifically included to deal with the effects of breach. Contracts have been described as the source of primary obligations, to perform in fact, and secondary obligations, to perform alternatively by satisfying the remedies available to the innocent party for the guilty party’s non-performance. Thus, damages are always available for breach, though their measure will vary with the circumstances. In addition, a repudiatory breach will give the innocent party an election. He can “accept” the breach, thus releasing himself from his obligation to continue actual performance and denying the guilty party the opportunity of continuing such performance, or he can affirm contractual performance, so that both parties can and must continue actual performance.

Thus, even where there has been a repudiatory breach, the innocent party can in principle maintain actual performance. In practice, however, this is subject to certain restrictions which, where applicable, will limit him to claiming damages. First, a “total” or “entire” breach may bring an end to the circumstances enabling performance: e.g. a charter-party cannot be performed if the ship has been irretrievably sunk. Secondly, apart from situations where equity will, exceptionally, grant specific performance or an injunction, the innocent party cannot perform if performance is dependent on the guilty party’s co-operation and it is refused: a charterer cannot load if the shipowner will not make his ship available. Does it therefore follow that the innocent party can obtain the benefit of all his original rights under the contract if he can perform without the co-operation of the guilty party ?

The question was recently considered in The Alaskan Trader (No. 2)2. The Alaskan Trader, an old and small tanker built in 1954, was chartered for 24 months plus or minus 15 days on 19th October 1979 and delivered on 20th December 1979. On 19th October 1980 she suffered a serious engine breakdown, necessitating several months’ repairs. The market had turned against the charterers and they indicated that they had no further use for the vessel. Nevertheless, the owners spent $800,000 on repairs, which were completed on 7th April 1981. They then informed the charterers that the vessel was again at their disposal but the latter refused to give the master any orders. The owners declined to accept this repudiatory breach and anchored the vessel off Piraeus, where she remained with a full crew on board, ready to sail but idle, until the