The concept of “being ready willing and able” is one which ought to be easily understood. Undoubtedly to non-lawyers the meaning, when used in everyday language, is clear. In the legal context however, there have been a number of cases where it is fair to say the concept has been blurred and at times, confusing. [1] For example, when does it apply? Is there a different requirement if there is an anticipatory breach, as opposed to an actual breach? Is the requirement different if a party is seeking specific performance and not termination? What if neither party is ready willing and able, but wishes to terminate the contract, is termination available?
It is helpful to examine the principle in Foran v Wight [2] .
“If an executory contract creates obligations which are mutually dependent and concurrent and, before the time for performance of the obligations arrives, one party, A, gives the other party, B, an intimation that it will be useless for B to tender performance and B abstains from performing this obligation in reliance on A’s intimation, B is dispensed from performing his obligation and A’s obligation is absolute provided that B had not repudiated the contract and he was ready and willing to perform his obligation up to the time when the intimation was given [3] .”
“The position is, however, different if one party has unambiguously informed the other party that he will not perform his obligations within the time made of the essence of the contract. In such a case, the refusal to perform constitutes an intimation to the other party that the tender of performance of his concurrent obligations will be nugatory and futile [4] .”
“I have said that there is a qualification to the proposition that a party who elects not to accept the repudiation of a contract remains bound by the terms of the contract to perform the obligations which it imposes upon him. Whilst the contract remains on foot for both parties, if the repudiation by one party makes it futile or pointless for the other party to attempt to perform an obligation, the law does not require him to do so. The obligation remains â it does not disappear from the contract â but the other party is treated as if he had performed it in the limited sense that he is absolved from the consequences which would otherwise flow from his non-performance [5] .”
Specific Performance
The Queensland Court of Appeal last year examined the concept of specific performance and the application of the principle in Foran v Wight [6] .
In Grieves v Enge [7] case the contract was conditional upon the purchaser notifying the vendor, by a particular date and time, whether or not finance had been approved. No notice was given by the purchaser by the specified time. Prior to the time specified for notice to be given, infact on the day that the vendor became bound by the contract, the vendor attempted to repudiate the contract. The purchaser sought specific performance.
It was held that the purchaser was entitled to specific performance even though no notice of finance had been given by them as the vendor had repudiated the contract. Such repudiation involved an intimation that it would be pointless for the purchaser to take any further steps to obtain finance.
It was further held that the vendor had prevented the purchaser from complying with the clause by not allowing the purchaser’s valuer access to the property to carry out a valuation to support their finance application.
As de Jersey CJ reasoned in that case:-
“What his Honour has held amounts to this. The manner of Mr Enge’s repudiation of the contract relieved the respondents of the obligation to comply with the finance provision in accordance with its prescribed time-frame. For them to have done so would have had no practical utility. That is because by his repudiation, which the respondents did not accept, Mr Enge established a position which could only, absent compromise, be resolved by litigation. Mr Enge’s repudiation was unlawful, and the contract therefore remained on foot. To secure a decree for specific performance, the respondents must prove their readiness, willingness and ability at all material times to complete. That they did not comply with the finance provision did not in these circumstances mean they were not, at any relevant time, ready, willing and able to complete. Their obligation to take all reasonable steps to obtain finance, and otherwise comply with cl 3, was effectively suspended, by reason of the repudiation effected by Mr Enge, until a determination whether or not that repudiation was lawful. It will remain for the court, as necessary, to designate a new time-frame in relation to the finance provision .” [8]
In their reasoning the Court of Appeal distinguished Kelly v Desnoe [9] on the basis that, in that case, the purchaser was unaware of the repudiation by the vendor and therefore there could be no intimation by the vendor that it would be pointless for the purchaser to comply with the finance provision.
As was stated by Dixon CJ [10] in dealing with a similar issue:-
“… a plaintiff may be dispensed from performing a condition by the defendant expressly or impliedly intimating that it is useless for him to perform it and requesting him not to do so. If the plaintiff acts upon the intimation it is just as effectual as actual prevention.”
Anticipatory/Actual Breach:
The differing judicial treatment of anticipatory and actual breaches was discussed by Dawson J in Foran v Wight. [11]
“But what if the breach is anticipatory rather than actual? The authorities have given conflicting answers to this question, but it is now clear that in cases of repudiation as well as actual breach, readiness and willingness on the part of the plaintiff is part of his cause of action. The position was clearly stated in DTR Nominees Pty Ltd v Mona Homes Pty Ltd ((1978) 138 CLR at p 433):
A party in order to be entitled to rescind for anticipatory breach must at the time of rescission himself be willing to perform the contract on its proper interpretation. Otherwise he is not an innocent party, the common description of a party entitled to rescind for anticipatory breach …
Nevertheless there are those who have held a contrary view. In Bowes v Chaleyer ((1923) 32 CLR at p 198), Starke J said: ‘No doubt, if a party repudiates a contract and the repudiation is accepted and acted upon by the other party, then the latter is relieved from proving readiness and willingness on his part to perform the contract.’ See also per Higgins J ((1923) 32 CLR at p 192). A similar view was expressed in Taylor v Oakes, Roncoroni and Co ((1922) 127 LT 267), and by Lord Atkinson in British and Beningtons Ltd v NW Cachar Tea Co ([1923] AC 48 at p 66). And support for the proposition is to be found in the judgment of Collins MR in Braithwaite v Foreign Hardwood Co ([1905] 2 KB at pp 551-552) and in YP Barley Producers Ltd v EC Robertson Pty Ltd ([1927] VLR 194 at p 209).
The error in these cases lay, I think, in attempting to carry too far the principle that the repudiation by one party of a contract may absolve the other party from the obligation of tendering useless performance. No doubt that principle, when it applies, may reduce the extent, or alter the nature, of the readiness and willingness which a plaintiff is required to show, but there is no reason why it should eliminate the requirement entirely. A party should not be able to sue for breach if he is unable or unwilling to carry out his part of the bargain; where, in other words, he is not the innocent party. Even where a party has been absolved by the repudiating party from performing his future obligations under the contract he must show that at the time of the repudiation he was ready and willing to complete the contract had it not been repudiated. But in proving his readiness and willingness where he has been absolved from tendering performance he may not have to prove a great deal.”
Where neither party is ready, willing and able
If neither party is ready, willing and able but both parties regard the contract as not on foot, because one has repudiated and the other accepts the repudiation but is not ready, willing and able to complete, termination can still occur.
This position was discussed by Keane JA in Highmist Pty Ltd v Tricare Ltd [12] :-
“It may be that statements in the authorities which appear to lend support to the proposition accepted by the appellant, viz that only a party who is ready, willing and able to perform its contractual obligations is entitled to rescind when the other side has repudiated the contract, should be understood as operating only to confine the availability of damages for the loss of bargain to the case of rescission by an innocent party, rather than denying a party who is not ready willing and able to perform its contract the ability to bring the contract to an end where the other party has manifested an intention not to perform the contact.
It makes commercial sense to allow a party to recover damages for loss of bargain only where that party was itself in a position to perform its side of the bargain. If it were otherwise, it could not sensibly be said that it was the other side’s conduct which caused the loss of the profit involved in the bargain. That advantage could not have been obtained even if the other side had fulfilled its obligations. On the other hand, it does not make much sense to say that, where both parties to a contract declare to each other their fixed resolve not to perform their contract, the contract continues in existence in some legal limbo for the reason that neither party is ready, willing and able to perform the contract. Such a proposition may be intelligible to metaphysicians, but it is of little use in terms of the regulation of commerce according to the reasonable expectations of honest people .”
The following points emerge from the cases:-
- For specific performance, the only requirement is that whilst the contract is still on foot, the party seeking specific performance is ready, willing and able to complete the contract.
- If in the past a party has not been ready, willing and able to perform contractual obligations but the other party has elected to keep the contract on foot, a party may put himself right, even at trial, and obtain specific performance. [13]
- Where there is anticipatory breach, as opposed to actual breach, a party in order to terminate, must still establish being ready, willing and able to settle, but the evidence required to meet this test may not be as stringent as where there is an actual breach.
- Where neither party is ready, willing and able to complete, the contract can still be terminated, but this would not entitle either party to claim damages. [14]
Keith Howe
[1] See reference to this conflict in Foran v Wight (1989) 168 CLR 385 at 451-453
[2] (1989) 168 CLR 385
[3] p 427, per Brennan J
[4] p 433, per Deane J
[5] p 442, per Dawson J
[6] Grieve v Enge [2006] QCA 213;
[7] [2006] QCA 213
[8] [2006] QCA 213 at para 20
[9] [1985] 2 Qd R 477
[10] Peter Turnbull & Co. Pty Ltd v Mundus Trading Co (Australasia)
Pty Ltd (1954) 90 CLR 235 at 246
[11] (1989) 168 CLR 385 at 451
[12] [2005] QCA 357 at paras 60 and 61
[13] Segacious Pty Ltd v Fabrellas [1991] 1 Qd R 471; Mehmet v Benson (1965) 113 CLR 295
[14] Highmist Pty Ltd v Tricare Ltd [2005] QCA 357 at paras 60 and 61
