Contract Law

Remedies for Breach Cases

Geys v Société Générale [2012] UKSC 63

Key Point

• A repudiatory breach of a contract of employment did not terminate the contract unless the other party elected to accept the repudiation

Facts

• Geys (C) was employed by the bank Société Générale (D)
• Under the terms of the employment contract, D could terminate the contract either by providing C with three months written notice, or terminate immediately by making a payment in lieu of notice
• D summarily dismissed C on 29 November 2007 but did not give C payment in lieu of notice until 18 December 2007, and only informed C of the payment in lieu on 4 January 2008
• It was in C’s favour to claim that the contract was terminated in 2008 rather than 2007, as it would entitle him to a higher severance payment: [6]
• C brought proceedings for:
  • severance payment due to him under the contract based on a termination date of 6 January 2008, when C is deemed to have received D’s notice of the payment in lieu of notice under the contract; and
  • damages for breach of contract

Issue

• The main doctrinal argument was whether the automatic theory or elective theory of termination is correct
• The automatic theory states that a contract is terminated automatically upon a repudiatory breach, this favours D as the contract would have been terminated on 29 November 2007
• The elective theory states that a contract is terminated only when the innocent party elects to the terminate the contract after a repudiatory breach by the defaulting party