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
- Whether an attempt to obtain specific performance after breach amounts to an affirmation of the contract, thereby preventing subsequent termination.
- Whether an unequivocal election by the innocent party is required when choosing between termination and affirmation following a breach.
- 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.
