Glossary

Repudiatory breach

A repudiatory breach is a failure that goes to the root of the contract, entitling the innocent party to treat the deal as at an end and claim damages. In England and Wales the Hong Kong Fir [1962] 2 QB 26 test is whether the breach deprives the innocent party of substantially the whole benefit of the contract.

Last updated 28 October 2026

Renouncing the deal (“we will not pay”; “we will not deliver”) is the cleanest repudiation. A condition broken, or an innominate term broken badly enough, is the other route. Photo Production Ltd v Securicor Transport Ltd [1980] AC 827 is why you still look at the liability cap after a repudiation: termination does not wipe the agreed limits unless the clause says so.

Use the contractual material breach machinery where you have it. Rely on repudiation when the other side has thrown the deal over and you need the common-law right as well. On Contracts.io the signed termination clause is the script. We would rather you follow it on the shared paper than argue about Hong Kong Fir in a long email.

When is a breach repudiatory?

When it is a breach of a condition, a renunciation of the contract, or a breach of an innominate term so serious that it strips the innocent party of substantially the whole benefit. A missed polish round is not. A client using the unpaid work as if they owned it, while refusing to pay, can be.

What did Hong Kong Fir decide?

That not every term is a condition or a warranty. Many are innominate. The right to terminate depends on the effect of the breach, not on a label. Delay in making a ship seaworthy did not, on those facts, deprive the charterer of the whole benefit.

Do we have to accept a repudiation?

Yes, if you want the contract to end. An unelected repudiation leaves the deal alive. Affirming — carrying on, invoicing the next milestone, sending more files — can lose the right to treat it as at an end. Accept in writing, keep a copy, and stop performing.

Should the contract define material breach as well?

Yes. A defined material breach with a cure period is easier to operate than a common-law argument. Keep the common-law right in reserve (“without prejudice to any other rights”). Do not write that a trivial miss is repudiatory. Courts look at substance.

A worked example

A client emails “we’re not paying the final invoice and we’ll finish the site with another shop,” then pushes the unpaid build live. The freelancer writes that they accept that repudiation, terminate, and invoice for work done plus the contractual interest. They do not keep working. The liability cap in the signed agreement still applies to any claim either way.

How it shows up in a contract

Sample wording · our own drafting

The rights in this clause are in addition to any common-law right to terminate for repudiatory breach. If a party accepts a repudiation, it will do so by written notice. Termination does not affect the liability cap or any right that has already accrued, including the right to be paid for work performed.

In Plain English

This termination clause does not replace the common-law right to end the deal when the other side has destroyed it. If you use that right, say so in writing. The cap still applies, and money already earned is still owed.

Common mistakes

  • Calling a small delay a repudiation and walking off, which can itself be a repudiation.
  • Carrying on with the work after a clear refusal to pay, so the election to accept is lost.
  • Assuming termination wipes the liability cap. Photo Production says look at the clause.
  • Putting the acceptance of repudiation in a without prejudice email, so the election is muddy.

Frequently asked questions

What is a repudiatory breach?

A failure that goes to the root of the contract, entitling the innocent party to treat the deal as at an end and claim damages. Hong Kong Fir [1962] 2 QB 26 is the leading case on innominate terms.

Do I have to accept a repudiation?

Yes, if you want the contract to end. Carrying on can affirm the deal and lose the right. Accept in writing and stop performing.

Does termination wipe the liability cap?

Not unless the clause says so. Photo Production v Securicor [1980] AC 827 is why you still read the cap after a repudiation.

Should the contract also define material breach?

Yes. A defined material breach with a cure period is easier to operate. Keep the common-law right in reserve.

Related

The legal wording governsLast reviewed 28 October 2026Pending lawyer review