Allied Asphalt Company Pty Ltd v Citra Constructions Ltd

Allied Asphalt Company Pty Ltd (the appellant) appealed to the New South Wales Court of Appeal against a decision of the Supreme Court of New South Wales. The dispute concerned a contract for the supply and laying of asphalt for a road construction project. The appellant alleged that the respondent, Citra Constructions Ltd, had breached the contract by failing to pay for the asphalt supplied and laid, and by wrongfully terminating the contract.

The Court of Appeal was required to determine whether the respondent had validly terminated the contract. This involved considering whether the appellant had committed a repudiatory breach of the contract, and if so, whether the respondent had accepted that repudiation by its conduct. The court also had to consider the proper measure of damages, if any, to which the appellant was entitled.

The Court of Appeal found that the appellant had failed to supply asphalt of the required quality and had not rectified defects within a reasonable time, constituting a repudiatory breach of the contract. The respondent's actions in continuing to request the appellant to rectify the defects, rather than immediately terminating the contract, were held not to constitute an acceptance of the repudiation. Instead, the respondent's conduct demonstrated an intention to continue with the contract and to seek performance in accordance with its terms. The court applied the principles of contract law relating to repudiation and acceptance of repudiation, emphasizing that a party is entitled to affirm a contract and seek performance even in the face of a breach.

Consequently, the Court of Appeal dismissed the appellant's appeal and affirmed the decision of the Supreme Court, which had found in favour of the respondent.