Summary

• The Court of Appeal in Kulkarni v Gwent Holdings Ltd [2025] EWCA Civ 1206 held that a repudiatory breach of contract is not automatically incapable of remedy. Whether a breach can be remedied depends on a practical, rather than purely technical, assessment.
• G and K, who controlled a company signed a Shareholders’ Agreement. It contained a clause stating that a shareholder was deemed to have served a notice to transfer its shares if it committed a material or persistent breach which, if capable of remedy, was not remedied within ten business days of being notified to do so.
• K committed several breaches, including an illegal transfer of shares. G argued that this was a repudiatory breach and could not be remedied.
• The Court of Appeal rejected the argument that a repudiatory breach can never be remedied, instead relying on earlier authority suggesting that such breaches can, in some cases, be rectified.
• Lord Justice Newey emphasised that if parties intend a repudiatory breach to be irremediable, this must be clearly stated in the contract. In this case, the unlawful transfer of shares was capable of being remedied by reversing the transfer.
• The ruling underscores the importance of clear contractual drafting. Businesses should specify whether certain breaches are to be treated as irremediable to prevent uncertainty and disputes over contractual remedies.

For business owners, quick remedies can make a big difference when it comes to time and money, two things most of us who are not Jeff Bezos are typically short of. Therefore, if one party commits a repudiatory breach of contract, i.e. one that strikes at the heart of the agreement and indicates they are unwilling or unable to perform their obligations, the innocent party often wants to terminate the agreement, obtain damages, and move on. And in some cases, this may be possible. However, in a recent Court of Appeal case, Kulkarni v Gwent Holdings Ltd [2025] EWCA Civ 1206 it was held that a repudiatory breach of a contract clause is not automatically incapable of remedy. The Court also ruled that whether a breach can be remedied should be approached in a practical rather than a technical way.

Background to the decision

Two shareholders, G and K, who controlled a company, signed a Shareholders’ Agreement. It contained a clause stating that a shareholder was deemed to have served a notice to transfer its shares if it committed a material or persistent breach which, if capable of remedy, was not remedied within ten business days of being notified to do so.

 G committed several breaches, including unlawfully transferring shares and professing to end the SHA. It admitted that these breaches were material and repudiatory.

 The Shareholders’ Agreement contained a clause (referred to as the ‘transfer clause’) which stated:

 “a material or persistent breach of [the SHA] which, if capable of remedy, has not been so remedied within 10 Business Days of notice to remedy the breach being served.”

 K, relying on Bournemouth University v Buckland [2010] EWCA Civ 121, argued that a repudiatory breach can never be remedied and it is up to the innocent party whether they wish to terminate or continue with the contract.

The law relating to breach of contract

If one party is in breach of contract, the innocent party can rely on the following remedies:

• Common law remedies – unless such a right has been excluded by the agreement, if one party commits a repudiatory breach that deprives the other party of any benefits, they would gain by entering into the contract, the innocent party can affirm or terminate the contract.
• Contractual remedies – The contract may allow for an innocent party to affirm or terminate an agreement for reasons that fall short of a repudiatory breach at common law.

What was the Court’s decision in Kulkarni v Gwent Holdings Ltd?

The High Court Judge rejected K’s argument based on the decision in Bournemouth University, stating that in Crane Co v Wittenborg (AS) (unreported 21 December 1999) and Force India Formula One Team Ltd v Etihad Airways PJSC [2010] EWCA Civ 1051, the Court of Appeal had assumed that a repudiatory breach of contract could be remedied for the purposes of a contractual provision, for example the ‘transfer clause’ in the Shareholders’ Agreement.

In delivering the judgment, Lord Justice Newey stated that if the parties wanted a repudiatory breach to be irredeemable, then they could have made this clear in the contract. This was not done. The ‘transfer clause’ referred to whether a breach was capable of being remedied but made no distinction between a repudiatory breach and any other type of breach.

The Court of Appeal agreed with the High Court that the breaches concerning the unlawful transfer of shares could be reversed by returning the shares to the Company. Adopting the “practical rather than technical” approach ensured that “matters [were] put right for the future” and removed the “mischief” caused by the breaches.

What does the decision in Kulkarni v Gwent Holdings Ltd mean for business owners?

Like most situations concerning contract disputes, the key to avoiding confusion and disagreements is watertight, unambiguous drafting. Following on from the Court of Appeal’s decision in Kulkarni v Gwent Holdings Ltd, if parties wish to make a repudiatory breach of contract irremediable, they need to ensure the agreement is written to reflect this. It is also important to note that if the question of whether a remedial breach can be remedied is not answered clearly in the contract, the Court will take a practical approach as to whether a remedy can be achieved, and look at whether the mischief caused by the breach can be corrected for the future.

Our Virtual In-House Legal Counsel service can draft and/or check your commercial contracts to ensure they reflect the decision in Kulkarni v Gwent Holdings Ltd and any other relevant case law decisions that, if not considered, could result in a contract dispute.

To learn more about how our team can assist you, please email us at info@43legal.com or phone 0121 249 2400.

The content of this article is for general information only.  It is not, and should not be taken as, legal advice.  If you require any further information in relation to this article, please contact 43Legal.

FAQs

What is a repudiatory breach of contract?

A repudiatory breach is a serious breach that goes to the root of a contract, showing that one party is unwilling or unable to perform their obligations. It gives the innocent party the right to terminate the agreement and claim damages.

Can a repudiatory breach ever be remedied?

Yes. According to Kulkarni v Gwent Holdings Ltd, a repudiatory breach may, in some cases, be capable of remedy if the breach can be practically corrected and the mischief caused can be put right for the future.

What does “capable of remedy” mean in contract law?

A breach is capable of remedy if the offending party can take steps to correct the wrongdoing and restore the situation to one that reflects the contract’s original intent or purpose.

How should contracts address repudiatory breaches?

Parties should expressly state in their agreements whether certain breaches are irremediable. Without clear wording, the Court will assess whether the breach can be fixed using a practical approach.

What lesson does this case offer business owners?

The case highlights the importance of precise drafting in commercial agreements. To avoid disputes, businesses should ensure contractual clauses dealing with breach and remedy are specific, leaving no ambiguity about what constitutes an irremediable breach.

Melissa Danks is the founder of 43Legal. She has over 20 years’ experience as a solicitor working within the legal sector dealing with issues relating to risk management, dispute resolution, and advising in-house counsel in SMEs and large companies. Melissa has extensive expertise in providing practical, valuable, modern legal advice on large commercial projects, joint ventures, data protection and GDPR compliance, franchises, and commercial contracts. She has worked with stakeholders in multiple market sectors, including IT, legal, manufacturing, retail, hospitality, logistics and construction. When not providing legal advice and growing her law firm, Melissa spends her time running, walking in the countryside, reading and enjoying downtime with close friends and family.