First Principles of Business Law

4. Termination of performance

4.1. What 'termination of performance' involves

When a breach of contract occurs, apart from any possible claim for damages, the non-defaulting party may wish to put a stop to performance of the contract. Terminating performance on grounds of breach of contract is a remedy that originated in the common law courts.  In outline, the remedy involves the following:

• rejecting flawed performance already made (for example, by refusing to accept goods that have been delivered, or rejecting services that have been provided) and / or
• putting a stop to further performance of the contract (for example, by refusing to allow any outstanding contractual obligations to be discharged by performance).

A decision to terminate performance must be made within a reasonable period of time after the non-defaulting party becomes aware of the facts giving rise to the breach, regardless of whether they are also aware of their legal entitlement to terminate performance at this time. Whether or not this remedy is available in particular cases depends on a number of factors.  These are explained in the following pages.