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?

Answer options:

The NGO must wait until 1 September before taking any legal action for breach of contract.

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

The contract is frustrated due to EcoBuild's inability to perform.

The NGO can only claim an injunction to force EcoBuild to perform the work.

How to approach this question

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

Full Answer

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.

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