Repudiation can occur in a variety of ways. Here are some of the examples of behaviour which may indicate the other party is in repudiatory breach and how you should react.
1.The party employing you has brought on other sub-contractors to carry out part or all of your Works.
The legal authority on this form of repudiation is the case of "Sweatfield v Hathaway Roofing".
This case found that employing another roofing contractor to carry out part of the roofing sub-contractor's works (whilst the original roofing sub-contractor was still employed) was a repudiation.
This repudiation is most likely to affect sub-contractors. You will need to be aware of the employing contractor having discussions with other sub-contractors (probably behind your back) and, ultimately, the employment of other sub-contractors to work on your Works. So, you will need evidence of that, the extent to which it is happening and clear evidence that they are carrying out "your" works.
2. The Employer, without lawful excuse, removes the Contractor from the Site
This may occur where the Contractor does not reach the stipulated Completion Date and the Employer ejects the Contractor without taking any prior contractual steps to remove them.
Any suggestion by an Employer that they are dissatisfied with a contractor's performance coupled with a threat to eject the Contractor from the Site (without taking any steps under the Contract) is a huge red flag for a Contractor.
Our advice is records, records, records.
3. Refusal to complete the Works or abandonment of the Works by the Contractor
Warning signs that a Contractor may do this include the Contractor complaining of the Work they have agreed to carry out.
A Contractor, who may be difficult to get along with, may even threaten to walk off the Site (even if they have no lawful excuse to do so).
You should immediately seek legal advice. Any repudiatory behaviour is likely to result in a dispute and you need to make sure you are taking the necessary steps in respect of the repudiation now. The way you handle a situation during the repudiatory behaviour will dictate how a judge (or adjudicator, etc.) will view your position.
1. Make it clear with the other party that they have acted in a way which the Contract does not allow and or provide for.
This can include informing the Employer that you were contracted to carry out all the Works and they have brought on someone else to carry out those Works; saying to the Employer that they have not provided a valid reason under the Contract to eject the Contractor; or saying to the Contractor that they are not entitled to leave the Site (and the reasons why).
You must ensure all of this is recorded in emails, documents, or voice recordings because, if a dispute occurs, then the evidence will help make or break your case.
That places pressure on you to ensure you have proper records from the outset. Drawings, proper scope of work, contract programme, site plans, etc.
2. Review your Contract.
A repudiatory breach can allow a party to terminate the Contract, by clearly accepting that breach and yourself terminating the Contract. However, the repudiatory breach on which you seek to rely may actually be a clear breach of one of the contract terms and thus serious enough to terminate the Contract, but by the giving and reliance upon the required notices under the Contract.
Claiming repudiation and trying to terminate the Contract in this way is complicated and whether or not your contract has been repudiated may be open to interpretation. If you can, you will want to terminate your Contract through the express terms in the Contract. This may lower the likelihood of a dispute arising. If a dispute does arise, then the facts are more likely to be in your favour if you ensure you validly terminate the Contract.
3. (If you decide to accept the repudiation and end the Contract) Provide written notice to the other side that you have accepted the repudiation and that you are ending the Contract.
There is no template as to what a letter accepting a repudiation should look like. However, you want to ensure:
- You set out what has happened (the repudiatory breach)
- You make clear how and when the other side acted in a way which
renders it impossible for you to work under the Contract
- You state that a repudiatory breach of Contract has
- You clearly accept the repudiation and end the Contract with immediate effect.
Repudiation is a complex legal area, and you should ensure you are fully aware of how to proceed if your Contract is repudiated.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.