Fundamental breach

Fundamental breach of contract,^[1] is a controversial concept within the common law of contract. The doctrine was, in particular, nurtured by Lord Denning, Master of the Rolls from 1962 to 1982, but it did not find favour with the House of Lords.

Whereas breach of condition is a serious breach that "denies the plaintiff the main benefit of the contract",^[2] fundamental breach was supposed to be even worse, with the result that any exclusion clause limiting the defendant's liability would automatically become void and ineffective. Also, whereas breach of condition gives the plaintiff the option to repudiate, fundamental breach automatically discharges the entire contract.^[3]

Although the concept caused some excitement in the 1950s and 1960s, the concept was regarded as flawed by the Law Lords, whose decision in the Suisse Atlantique case^[4] substantially curtailed the doctrine, which has now been effectively "laid to rest" in England and Canada.^[5] The relevant concept in English Law, where a fundamental aspect of a contract is breached, is repudiatory breach.^[6]