Contract-Repudiation-Breach by other party must go to the root of the con-
tract

The parties were owners of ice factories in Wad Medani, Plaintiff
agreed with the others to close down his factory in exchange for a monthly
payment of £E.13 and a personal ice allotment. Plantiff furthur agreed
to keep his factory in working order for the others to use when their
factories were shut down. After several months the defendants stopped
making the monthly payments, and later refused the daily allotment of
ice, claiming that plaintiff had breached the contract by failing to keep his
factory in good working order and by selling his personal allotment of ice
to customers. The defendants alleged that the breaches by plaintiff dis-
charged them from aU liability under the contract.

Held: The plaintiff was entitled to the arrears in payments abd the
value of ice not delivered. The breaches by the plaintiff were not so vital
to the contract as to terminate the defendants' obligations. The contract
was primarily "for the purpose of stopping competition," and in spite of the
breaches by plaintiff the defendants were "still substantially enjoying the
advantage for which they had contracted." For a breach by one party to a
contract to discharge the other from his liabilities, the breach must either
amount to a repudiation by the defaulting party or it must go so far to
the root of the contract as to destroy the primary benefit for which the
other party contracted.

Appeal

June 15, 1937. Creed CiL: The facts of this case are set out by
the province judge of the Blue Nile Province in the following manner
in his judgement:

"The parties to this suit are the owners of the three ice factories in
Wad Medani, On November 1, 1935, 'for the purpose of stopping
competition' they entered into a written agreement under which the
plaintiff promised to close his factory in consideration of the defendants
paying him a monthly sum of £E.13 and making him a free issue of
50 kg of ice per day for his cold storage chest. In addition the plain-
tiff agreed not to dispose of his plant to a third party, nor to use any
of the free allowance of ice for sale to his customers. He undertook to
maintain the factory in good condition and working order, available for

* Court: Creed C.J., Bennett A.G. and Flaxman J.

use by the defendants on occasions when their own plant was under re-
pair. The agreement was to cover a period of two years from the date
of signature, but was to be regarded as terminated in the event of a
third party entering the market. In November 1935, immediately after
the signature of the agreement, the defendants took over the plaintiff's
plant for 5 days in exercise of their power under clause 4. Later in
January and February 1936 they again used the plaintiff's factory for a
period of nearly seven weeks while their own was undergoing a more
extensive overhaul. As a result of their experience on these two occa-
sions, they complained that the plaintiff's plant was not in good state of
repair and called upon him to remedy the defects. A long correspond-
ence ensued, but the plaintiff took no action. At last in May 1936
the defendants wrote refusing to make the monthly payment of £E.13
until their demands in regard to the condition of the plant had been
satisfied. They continued the daily supply of 50 kg 'of ice until August
16 when,. on the breakdown of their own plant with the plaintiff's still
unrepaired, they finally repudiated the agreement."

The only point which is open to criticism in this otherwise admir-
able summary is the last sentence, in which it is stated that on August
16, 1936, the defendants finally repudiated the agreement. In fact it
is found on reference to the correspondence that on August 28 the de-
fendants wrote to the plaintiff in the following terms:

"In view of the above you are not entitled to manufacture ice
before the expiration of the term of the said contract, and if you
will do so my clients will apply to the court for an urgent injunc-
tion to restrain you from committing this breach of contract, and
they will also-claim all damages to which they may be entitled."

From this and from the rest of the correspondence it is clear the

defendants treated the contract as still subsisting and still binding the
plaintiff.

By his letter dated September 1, 1936, the plaintiff answered as
follows:

"I therefore beg to inform you that unless I receive a pay-
ment in part settlement of our account at least of the amount due
for four months (being a liquidated sum by our contract, in con-
sideration of which I agreed not to manufacture ice) within ten
days from today; I reserve the full right to restart manufacturing
ice."

Again on November 2, 1936, the plaintiff wrote:

"As I asked you in previous letters, please reply to me deter-
minately, yes or no, if from your point of view from your side an
agreement exists between us."

The defendants refused to answer this explicit question.

It is clear that the defendants have not finally repudiated the
contract, and that in their view it is still subsisting. The plaintiff also
has refrained from manufacturing ice up to the presrnt day.

The plaintiff claimed in the Province Court the payment of the
monthly sum stipulated under the contract from May 1, 1936, together
with the cash value of the free issue of ice from August 17, 1936, up
to the end of the contract period of the agreement, namely October 31,
1937.- He also joined in the claim certain other items arising out of the
agreement, for which the defendants denied liability. The defendants.
denied the claim on the ground that the plaintiff had broken clauses 4
and 6 of the agreement, the one by failing to maintain his factory. to
proper repair, and the other by selling part of his free allowance of ice
to customers. They contended "that both these clauses were vital to the
contract, and that breach of either or both of them discharged them
from any further obligations. to the plaintiff.

The two clauses 4 and 6 read as follows:

"4. The second party shall keep his ice factory in good condition
and working order ready to manufacture its full capacity of
ice whenever the first party requires it, in case their factories
are in need of repair or any other unforeseen cause."

"6. The first party shall give to the second party 50 (fifty) kilos
of ice per day gratis for his own use but not for sale. This
quantity will be delivered at the factory of the first party."

The learned judge has found as a, fact that there was a breach of
these two clauses of the contract on the part of the plaintiff. Were
these breaches of the contract of such a vital nature as to discharge the
defendants from their liabilities under the contract?

The law on this matter is plain. It is stated as follows in Anson's
Law of Contract, page 353, "The question to be answered in all these
cases is one of fact: the answer must depend on the terms of the con-
tract and the circumstances of each case. The question assumes one
of two forms-does the failure of performance amount in effect to a
renunciation on his part who makes default? Does it go so far to the
root of the contract as to entitle the other to say: 'I have lost all that