Termination and the agreed sum

Where a party repudiating a contract refuses to cooperate with further performance by the innocent party, is the contract automatically terminated, or is the innocent party merely prevented from earning the agreed sum? The recent decision in Société Générale v Geys has renewed this old controversy.1 In a forceful dissenting judgment, Lord Sumption argued in favour of automatic termination, relying on Lord Reid’s comments in the famous case of White & Carter v McGregor.2 The majority of the Supreme Court instead treated cooperation as a practical limit on recovery of the agreed sum. This essay sides against Lord Sumption’s automatic termination approach, but acknowledges that the majority’s view leaves one difficult problem unresolved. The first section of this essay describes the cooperation limitation in outline, starting with the dictum of Lord Reid in White & Carter and considering its application in Geys. The second section assesses and rejects the arguments for regarding cooperation as a limitation on the innocent party’s right to affirm the contract. The third section puts forward the argument that cooperation instead provides a practical limitation on the capacity of the innocent party to earn the agreed sum, and shows why this means that the limitation is not universally applicable. The final section acknowledges that the approach of the majority in Geys leaves a difficult problem concerning the content of the wage-work bargain in contracts of employment.