Contract Law & Repudiation Analysis

The assignment delves into a contract law case concerning Southern Cross Autoglass Pty Limited (SCA) and Protector Glass Industries Pty Limited (PGI). It examines whether PGI's actions constituted repudiation of the agreement based on letters, termination deeds, and conduct. The analysis considers relevant legal principles from cases like *Laurinda Pty Limited v Capalaba Park Shopping Centre Pty Limited*, *Foran v Wight*, and *Sargent v AFL Developments Pty Limited*. Finally, it assesses SCA's right to claim damages due to the alleged repudiation.

Case 2
Southern Cross Autoglass Pty v Ltd Protector Glass Industries Pty Ltd1
Background
Protector Glass Industries herein referred to as PGI and Southern Cross Autoglass, herein
referred to as SCA were the family businesses where the car windscreens were sold along with
the related products. An Asset Sale Agreement was entered into by the parties where the assets
of SCA were to be purchased by PGI and had to employ two of the SCA’s operators. Though,
issues were raised with regards to the liquidation of the predecessor companies of the SCA. After
a lot of consideration, a letter was written by PGI to SCA where the SCA was required to solve
the issue within a thirty day period. Where this matter was not solved in this time period, it was
stated in the letter that the Asset Sale Agreement would have to be terminated by PGI. However,
the Asset Sale Agreement did not cover the right to make this demand to SCA or even to
terminate this agreement were these demands had not been met. A draft deed of termination was
prepared by PGI which remained unsigned. After a few months, the assets were started to be sold
off by SCA to third parties2.
When the matter was presented before the NSW Supreme Court, it was claimed by the SCA that
they were entitled to damages owing to breach of the drawn contract. The main issue here was
whether there had been a repudiation of the Asset Sale Agreement by PGI by sending the
proffering or letter the termination deed; and that whether there had been an acceptance of the
repudiatory conduct of PGI by SCA for termination of the Asset Sale Agreement. It was held by
1 [2014] NSWSC 261
2 King & Wood Mallesons, Southern Cross Autoglass Pty v Ltd Protector Glass Industries Pty Ltd [2014] NSWSC
261 (25 September 2014) <http://www.kwm.com/en/au/knowledge/insights/contract-law-update-southern-cross-
autoglass-v-protector-glass-industries-20140925>

Kunc J in this case that the party would be deemed to have repudiated the contract where the
intention to be no longer bound was manifested by it, or for fulfilling it in such a way which had
been inconsistent in a substantial manner, regarding the obligations of the party and not in any
other manner. As would be looked at by the reasonable person, the court looked at this case, with
regards to the innocent party’s position for viewing the alleged repudiatory conduct3.
It was stated by PGI that the agreement had not been repudiation and instead was a simple
statement of present intention, which signalled a possible course of action. Though, the court did
not agree with this and stated that a reasonable recipient of letter would have known that this did
not give PGI the choice of making demands. Also, the letter provided in an unequivocal manner
that PGI would only be completing the agreement where the demand made in the contract had
been fulfilled in the notice period. This was not consistent with the obligations under the contract
with PGI. Only when a contract had been repudiated, could the innocent party get the right of
terminating the contract and applying for damages, when the repudiation was accepted. Since the
repudiation had not been accepted by SCA, it had not stated in a clear manner that the agreement
had to be terminated4.
Though, the judge stated that instead of this test, there was a need to apply objective inquiry
regarding the actions of innocent party, where the treated as the same had ended. It was clear in
this case that repudiation had taken place as the operators of SCA operated for PGI on different
terms than the agreement. And so, SCA no longer was bound by the agreement, which meant the
acceptance of the termination of PGI. So, the threatening of PCA allowed SCA to treat the threat
as repudiation, resulting in a termination of contract and recovery of damages5.
3 Ibid
4 Ibid
5 Ibid

Question 1
When can a party apply for repudiation of contract?
Answer 1
Repudiation of contract takes place when the contractual obligation is renounced by one of the
contracting parties. So, where the conduct or the words of parties depict that the other party is
unable to perform the contract, or where such party does not have the intent of performing the
contractual obligations, a contract can be repudiated6.
Question 2
Could the letter sent in this case, be deemed as a repudiation of the agreement?
Answer 2
As per Laurinda Pty Limited v Capalaba Park Shopping Centre Pty Limited7; Foran v Wight8,
the contract is taken to be repudiated only when it manifests the intent that the parties are no
longer bound by it or could fulfil the same only in a substantially inconsistent manner. And there
was a need to view this as would be done by a reasonable person. Based on this, the letter does
fall in the category of anticipatory breach9.
Question 3
Whether the proffering of termination deed, a repudiation of the agreement?
6 Linda Mulcahy, Contract Law in Perspective (Routledge, 5th ed, 2008)
7 [1989] HCA 23; (1989) 166 CLR 623 at 634, 643, 658 and 664-7
8 [1989] HCA 51; (1989) 168 CLR 385 at 441
9 Austlii, Southern Cross Autoglass Pty Limited v Protector Glass Industries Pty Ltd [2014] NSWSC 261 (13 March
2014) (18 March 2014) <http://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/nsw/NSWSC/2014/261.html>

Answer 3
For this also, the conduct of PGI had to be considered, on which the plaintiff relied. The request
submitted by PGI to execute the termination deed, which showed that PGI was not bound by the
agreement would show that the termination deed was repudiation10.
Question 4
Was the repudiatory conduct accepted by the plaintiff to terminate the agreement?
Answer 4
As per Sargent v AFL Developments Pty Limited11, it was no mandatory to communicate the
acceptance of repudiation. The conduct and words communicate the acceptance only when they
are aligned with the election of termination of contract and on the basis of Wood Factory Pty
Limited v Kiritos Pty Limited12 it was enough to make election manifest to the relevant party. The
plaintiff here not only accepted the repudiation but also communicated the same to the
defendant.
Question 5
Whether SCA should be allowed to apply for damages?
Answer 5
The presence of repudiation proves the claims of SCA as the right one and as a remedy to the act
of PGI the plaintiff needs to be allowed to recover the damages.
10 Ibid
11 [1974] HCA 40; (1974) 131 CLR 634 at 646)
12 (1985) 2 NSWLR 105

Bibliography
Articles/ Books/ Journals
Mulcahy L, Contract Law in Perspective (Routledge, 5th ed, 2008)
Cases
Foran v Wight [1989] HCA 51; (1989) 168 CLR 385
Laurinda Pty Limited v Capalaba Park Shopping Centre Pty Limited [1989] HCA 23; (1989)
166 CLR 623
Sargent v AFL Developments Pty Limited [1974] HCA 40; (1974) 131 CLR 634
Southern Cross Autoglass Pty v Ltd Protector Glass Industries Pty Ltd [2014] NSWSC 261
Wood Factory Pty Limited v Kiritos Pty Limited (1985) 2 NSWLR 105
Legislations
Contract Law
Others
Austlii, Southern Cross Autoglass Pty Limited v Protector Glass Industries Pty Ltd [2014]
NSWSC 261 (13 March 2014) (18 March 2014)
<http://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/nsw/NSWSC/2014/261.html>
King & Wood Mallesons, Southern Cross Autoglass Pty v Ltd Protector Glass Industries Pty Ltd
[2014] NSWSC 261 (25 September 2014)

<http://www.kwm.com/en/au/knowledge/insights/contract-law-update-southern-cross-autoglass-
v-protector-glass-industries-20140925>