Contract Law

Ceasing the Contract

Termination for Delay

If time is not of the essence you can still sue if there is some sort of loss involved, but you cannot not terminate. A party wishing to terminate anyhow can do so by giving notice of their intention. If you give notice to the counter-party after an unreasonable delay, specifying reasonable time for completion, then time becomes of the essence. Failure to meet the notice period creates the right to terminate.

 

An example of termination after notice is found in Luarinda v Capalaba Park Shopping Centre.[1] Laurinda, a commercial tenant, took occupancy in a shopping centre in Brisbane, but the centre management failed to register the lease. That meant there was nothing but an equitable lease. (Meaning they had rights from having paid, but not a full leasehold estate). The tenant eventually engaged solicitors who gave notice to complete the registration in 14 days. But registration would take longer than that.

 

The court ruled that there is a difference between a party intending to carry out a contract only ‘if and when it suits him,’ and a party being willing to carry out a contract ’as it suits him to do it and when its suits him to do it.’

 

In the former case it is easy to say there is no intention to be bound. But that is not so clear in the second as the party seems to be seeking flexibility with time.

Capalaba’s behaviour evinced an intention only to perform in a manner substantially inconsistent with its obligations. The delay was accompanied by an intention not to complete their obligations until it suited them to do that. This allowed Laurinda to treat them as having repudiated the contract.

The notice period given was unreasonable as it gave only 14 days for registration when more time than that was needed to complete a registration. But due to the great length of the total delay by Capalaba, the brevity of notice time did not matter. In all the circumstances the notice was valid.

 

 

[1] Luarinda Pty Limited v Capalaba Park Shopping Centre Pty Limited [1989] 166 CLR 623.