The Court of Appeal considered this question in Force India Formula One Team Ltd v Etihad Airways PJSC  EWCA Civ 1051. The Respondent, a Formula One team, fell out with its primary sponsors, the Appellant. The team changed its name to exclude the Appellant’s name and began to promote a rival business. These changes were neither discussed with nor communicated clearly to the Appellant, who was left to pick up pieces of information as and when it could. However by 13 November 2007, the Appellant knew about all of the matters which it would later rely on as amounting to a repudiatory breach of contract by the Respondent. A meeting between the parties took place in mid-December 2007, at which the Respondent promised that it would follow up with some proposals. These proposals did not reach the Appellant until mid-January 2008. The Appellant eventually wrote to the Respondent terminating the contract on 27 January 2008.
The Respondent denied that its conduct amounted to a repudiatory breach, and also asserted that the Appellant had waited too long to communicate its acceptance of any repudiation. The contract had, the Respondent argued, been affirmed by the Appellant’s delay and inactivity. The judge at first instance agreed with the Respondent. The Court of Appeal found in favour of the Appellant: its conduct did not amount to an affirmation of the contract. Two main categories of case were identified by the Court where any delay could well amount to an affirmation:
- where the timing of the transaction is of the essence, for example in a sale of goods or a share transaction; and
- where silence is misleading. To save the party in breach from being misled, immediate, firm protest may be required.
In this case, the Appellant had gradually learned of the Respondent’s breaches over time, and had required time to consider its position. The Respondent must have known that this was what the Appellant was doing. Further, the delay took place during the break between racing seasons and so there was no urgency to the matter. The three months’ delay did not therefore, in this case, amount to affirmation of the contract.