Repudiation Affirmation Trap
How "Wait and See" Can Wipe Out Your Damages Claim

If the innocent party elects to affirm a contract following repudiation, they must remain ready to perform. The burden of proof is high: emphasised by Teare J in Flame v Glory Wealth Shipping [2013] EWHC 3153 (Comm), the innocent party must show that, “but for” the repudiation, they would have been able to perform. A failure to strategise correctly can be fatal to a claim in damages. In Olam v Holbud [2025] EWHC 3187 (Comm), a buyer lost its award of €4.8 million in damages for repudiation by the seller because the buyer redeployed its vessel while affirming and prolonging contract after the seller’s repudiation.

Delivery Obligation and Repudiation

In a commodity sale and purchase contract, where time is frequently of the essence, the seller must be ready to deliver and the buyer ready to take delivery of the cargo within the agreed time or delivery window.

If one party tells the other, in clear and unequivocal terms, that it will not deliver the cargo on the agreed date, ahead of the delivery date, that amounts to an anticipatory repudiatory breach. Similarly, if the party fails to deliver on the agreed date, that is an actual repudiatory breach.

In either situation, the innocent party has two options. One is to accept the repudiatory breach, thereby bringing the contract to an end at that time, and immediately claim damages. Another is to affirm the contract, thereby keeping the contract alive, and insist on performance.

If the innocent party makes the second election, it may terminate the contract by giving notice to that effect at a later stage—in the case of anticipatory repudiatory breach affirmed by the innocent party, it may wait and terminate for actual breach once the contractual delivery date has passed without performance. Any claim for damages will be subject to the innocent party’s duty to mitigate the loss.

Burden on Innocent Party to Prove Readiness to Perform

If the innocent party elects to affirm the contract, it must be ready to take delivery on the agreed time or delivery window. If it is not, it may itself be in breach; more importantly, it will be unable to claim substantial compensation for the breach of the other.

The burden of proof on the innocent party claiming substantial damages is high. The innocent party must prove that, “but for” the repudiation, it would have been able to perform their contractual obligations, as emphasised by Teare J in Flame SA v Glory Wealth Shipping Pte Ltd [2013] EWHC 3153 (Comm).

It is a strategic decision for an innocent party whether it will accept a repudiatory breach or affirm the contract. A failure to correctly strategise the exercise of the option may deprive the innocent party of the right to claim substantial damages. This is starkly illustrated by the decision in Olam Global Agri Pte Ltd v Holbud Ltd [2025] EWHC 3187 (Comm).

Olam v Holbud [2025] EWHC 3187 (Comm)

Facts: The parties entered into a FOB contract in November 2021 for the sale and purchase of yellow corn under GAFTA Contract No. 49, with a delivery period of 1-15 March 2022. The buyer had to nominate the vessel and provide the ETA at least 8 days before arrival at the load port. Upon nomination by the buyer, the seller had the option of nominating a Black Sea port for loading either in Ukraine or Romania.

On 24 February 2022, Ukraine announced the commencement of a full-scale invasion by Russia, and the closure of all Black Sea ports. On the same day, the buyer nominated the vessel, The Finder, with an ETA of 6/7 March 2022. Strangely, two days later on 26 February 2022, the seller nominated a Ukraine port for loading.

That was followed by a wrongful force majeure notice from the seller on 2 March 2022. Immediately, the buyer rejected the force majeure notice and insisted on performance by nominating a Romanian load port. The seller refused, and the buyer maintained its objection, thereby keeping the contract alive.

On 9 March 2022, the buyer wrote to the seller that the buyer would “refrain from holding Sellers in repudiatory breach until 21 days after the end of the delivery period, and potentially 14 days thereafter” to give a chance to the seller to deliver from Ukraine.

Before the 21-day period expired (on 4 April 2022), the buyer redeployed The Finder and sent her off from the holding position on 16 March 2022. Thereafter, on 26 April 2022, the buyer elected to terminate the contract for the repudiatory breach by the seller.

Arbitration and Appeal: The buyer claimed compensation in arbitration and was awarded €4.8 million damages. The seller appealed under s 69 of the Arbitration Act 1996.

It was agreed that the date of default was 26 April 2022. As the buyer was not in a position to take delivery on 26 April 2022, having redeployed the vessel on other work by then, even if the seller was ready to deliver on that day, the buyer was entitled to no more than nominal damages, following Flame v Glory Wealth Shipping. The Court held so, and the buyer lost the €4.8 million award.

Had the buyer accepted the repudiatory breach on 2 March or 9 March 2022, when The Finder was ready to load within the agreed delivery window, they would have been entitled to substantial damages.

Alternatively, when affirming the contract on 9 March 2022, if they did not extend the life of the contract, the buyer would have had the option of terminating the contract on 16 March 2022 before sending off The Finder. This would have saved the buyer’s entitlement to substantial damages as the vessel would have been ready to load until the termination of the contract.

But, because the buyer adopted the wrong strategy of keeping the contract alive for a longer period while sending off the vessel, they lost the entitlement to substantial damages.

The buyer argued that the seller “waived” the right to call for the buyer’s performance by their representation that they would not perform the contract. But the argument failed as it was not raised before the arbitral tribunal in the first place, nor was a finding made by the tribunal on this point.

The buyer argued that they could have substituted a vessel on the default date but for the seller’s unwillingness to perform. Again, this failed as the contractual deadline for substitution was 5 March 2022, which was not extended.

By extending the life of the contract and sending off the vessel after the substitution deadline had passed, the buyer walked onto a bridge that was collapsing behind them.

Takeaway for Practitioners

Olam v Holbud serves as a stark warning against the “wait and see” approach often adopted by innocent parties in the face of anticipatory repudiation.

1. Preserve the Ability to Perform: If you choose to keep a contract alive after a counterparty’s repudiation, you must maintain your own readiness to perform. If you redeploy your vessel or sell your cargo elsewhere before accepting the repudiation, you risk reducing your damages claim to zero.
2. Estoppel Must be Pleaded: If you are redeploying assets because the other side told you they wouldn’t perform, you must ensure this reliance is explicitly communicated and, if necessary, pleaded and proved as waiver.
3. Substitution Deadlines Matter: A counterparty’s breach does not automatically suspend your own procedural deadlines for vessel nomination or substitution – the time for substitution is of the essence. Missing a deadline by a day can destroy your ability to perform.

The judgment reinforces that in English law, there are no “free passes” on damages. Even against a “bad actor,” the innocent party must prove their loss.