White and Carter (Councils) Ltd v McGregor [1962] AC 413 (HL...

Facts

• White and Carter (Councils) Ltd, advertising contractors, entered into a three-year agreement with McGregor, a garage owner, to display advertisements for the garage on litterbins.
• On the same day the contract was concluded, McGregor sought to cancel the agreement, citing a misunderstanding by his representative.
• White and Carter refused to accept the cancellation, proceeded to perform the contract, and displayed the advertisements as agreed.
• McGregor refused to pay for the advertisements, leading White and Carter to sue for the contract price as a debt rather than damages.
• The case addressed whether the innocent party, having affirmed the contract and performed its obligations despite repudiation, could recover the agreed contractual sum.

Issues

1. Whether the innocent party is entitled to affirm a contract and insist on performance (and the contract price) after anticipatory repudiation by the other party, rather than accepting the repudiation and suing for damages.
2. Whether affirmation is permissible when performance can be completed without the cooperation of the breaching party.
3. Whether affirmation should be limited by the lack of a legitimate interest or where such conduct would be unreasonable or wasteful.

Decision

• The House of Lords (majority 3–2) allowed the appeal in favour of White and Carter.
• Held that upon anticipatory repudiation, the innocent party may elect either to accept repudiation and claim damages, or affirm the contract and carry out performance.
• Affirmation is permissible where performance does not require the breaching party’s cooperation.
• The appellants were not obliged to accept McGregor’s attempted cancellation and could proceed to perform and claim the contract price as a debt.
• The majority found no requirement to mitigate losses where the action is for the contract price as a debt.
• Dissents expressed concern that the majority approach might circumvent the duty to mitigate and result in wastefulness.
• The concept of “legitimate interest” was recognized as a limitation: an innocent party cannot affirm if there is no legitimate interest in performance beyond penalizing the breaching party.

Legal Principles

• Upon repudiatory breach, the innocent party has the option to affirm the contract or accept repudiation and sue for damages.
• Affirmation enables the innocent party to complete performance and sue for the contract price as a debt, provided no cooperation from the breaching party is required.
• Courts will not revise contract terms based solely on perceived unfairness; the freedom of parties to contract is preserved.
• The right to affirm and claim the price is subject to the existence of a legitimate interest; affirmation will be refused if unreasonable or solely punitive.
• Dissenting opinions highlighted the importance of the duty to mitigate and the risk of wasted resources.

Conclusion

White and Carter (Councils) Ltd v McGregor established that, following anticipatory breach, an innocent party may affirm and perform the contract—claiming the full contract price—if performance does not require the defaulting party’s cooperation and a legitimate interest exists; however, the doctrine is subject to limitations to prevent unreasonable or punitive outcomes, as outlined by both the majority and dissenting judgments.