The dangers of delay in exercising a right to terminate

AUTOMATIVE LATCH SYSTEMS v HONEYWELL [2008] and

TELE2 INTERNATIONAL v THE POST OFFICE [2008] (CA)

Most contracts contain the standard ‘boiler plate’ provision that no delay in exercising a right under the contract will constitute a waiver. These two cases demonstrated that, in the context of termination, any delay could be fatal and the Courts are perfectly willing, in appropriate cases, to find that the delay does amount to just such a waiver of the right to terminate.

decision - Automotive Latch Systems:

facts - Tele2 International:

This case concerned an agreement to supply phonecards and dealt with precisely the same point as the Honeywell case. The PO gave written notice to terminate the agreement on the ground that T had failed in due time to provide parent company guarantees as required by the agreement. This notice was served almost a year after the breach. The contract provided:

"In no event shall any delay, neglect or forbearance on the part of any party in enforcing... any provision of this Agreement be or be deemed to be a waiver thereof or... in any way prejudice any right of that party under this Agreement".

On the face of it this provision meant that the delay was irrelevant.

decision - Tele2 International:

point to note:

Whilst these are fairly extreme cases, make sure that if you do delay, and perhaps get involved in negotiations aimed at securing improved performance, that you document your complaints promptly, make it very clear that you are reserving your rights and do not allow too much time to elapse. Otherwise you may find your right to terminate has been lost.

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