Corporate and Business Law — ACCA Practice Question 06

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Recognize the scenario as an anticipatory breach of contract and identify the remedies available to the innocent party.

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B.The NGO can treat the contract as discharged immediately and sue for damages, or wait until 1 September to see if EcoBuild performs.✓ Correct

This is an anticipatory repudiatory breach. Under the rule in Hochster v De La Tour, the innocent party (the NGO) has a choice: accept the repudiation immediately, terminate the contract, and sue for damages; OR affirm the contract, wait until the date of performance (1 September), and sue if performance does not occur.

Common mistakes

Believing that a breach cannot occur until the actual date of performance has passed.

EcoBuild Ltd contracts to construct a sustainable community center for a local NGO, with work to commence on 1 September. On 15 August, EcoBuild informs the NGO that they have taken on a more lucrative project and will definitely not be building the center. What is the legal position of the NGO?

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Practice the full ACCA LW — Corporate and Business Law Practice Exam 4

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