Abstract

Consumer legislation impacts upon suppliers’ freedom to draft cancellation clauses. The view that it is not necessary in the case of repudiation to follow a procedure for cancellation prescribed in an agreed cancellation clause should apply where the breaching party repudiated the entire agreement or all outstanding obligations. By contrast, it should not generally apply where the breaching party repudiated only a part of the agreement, because the argument that the breaching party repudiated the whole of the agreement, including the cancellation clause, does not apply to partial repudiation. An exception would be where the breaching party persists in the partial repudiation despite repeated demands to retract the repudiation. A cancellation clause that allows the aggrieved party to cancel the contract immediately, without requiring the breaching party to issue an ultimatum, should not apply to an insignificant breach. Whether a breach is insignificant should depend on whether it is non-culpable and has little impact on the aggrieved party. If this rule is not regarded as acceptable for contracts generally, it should at least apply in the case of lease, as the tenant’s possessory rights are affected, with serious consequences for the tenant. There is support for these rules in foreign law.