Johnson v Agnew [1980] AC 367

Facts

• The case involved a contract for the sale of land between Mr. and Mrs. Agnew (vendors) and Mr. and Mrs. Johnson (purchasers).
• The purchasers failed to complete the purchase on the agreed date, constituting a breach of contract.
• The vendors initially sought specific performance to compel the purchasers to complete the sale.
• When specific performance was unsuccessful, the vendors sought to terminate the contract and claim damages.
• The key issue arose as to whether the vendors’ attempt to enforce the contract by seeking specific performance precluded them from later terminating the contract.

Issues

1. Whether an attempt to obtain specific performance after breach amounts to an affirmation of the contract, thereby preventing subsequent termination.
2. Whether an unequivocal election by the innocent party is required when choosing between termination and affirmation following a breach.
3. Whether actions taken by the innocent party must amount to clear communication of election to the breaching party.

Decision

• The House of Lords held that election to terminate or affirm the contract must be unequivocal.
• Mere attempts to obtain a specific remedy, such as specific performance, do not necessarily constitute affirmation of the contract.
• An ineffective attempt to terminate does not automatically amount to affirmation; the right to terminate remains unless an unequivocal affirmation has occurred.
• Termination must be clearly and unambiguously communicated to the breaching party.
• The unsuccessful pursuit of specific performance does not prevent the innocent party from subsequently terminating the contract and seeking damages.

Legal Principles

• Election following breach requires a clear, unequivocal choice communicated to the breaching party.
• Seeking a specific remedy, like specific performance, does not inherently equate to affirming the contract.
• There is a distinction between acts that constitute affirmation and those that merely enforce contractual rights.
• The principle of unequivocal election ensures fairness and consistency in remedies for breach of contract.
• Broad applicability of these principles has been demonstrated in subsequent case law involving contractual disputes.

Conclusion

Johnson v Agnew established that an unequivocal election is necessary when deciding to affirm or terminate a contract post-breach; pursuing specific performance does not preclude later termination if such election has not been clearly and unambiguously made. The case remains a foundational authority on contractual remedies and the doctrine of election.