Key Takeaway

It is often assumed that a repudiatory breach of contract is incapable of remedy and automatically triggers the termination of the contract or other irreversible consequences. The Court of Appeal’s decision in Kulkarni v Gwent Holdings Ltd [2025] reinforces an important point for those advising on contracts; repudiatory breaches are not irremediable.

What is a repudiatory breach of contract?

At common law, a repudiatory breach is one that goes to the root of the contract and substantially deprives the innocent party of the contract’s benefits.

Repudiatory breaches can arise where:

• There is a breach of a condition of the contract;
• There is a sufficiently serious breach of an innominate term; or
• Conduct by one party amounts to a refusal or inability to perform essential contractual obligations.

What happens when a repudiatory breach of contract occurs?

Where a repudiatory breach occurs, there are two options for the innocent party. On the one hand, they may accept the breach which means treating the contract as terminated and claim damages. The decision to accept a repudiatory breach must be taken with care. If a party wrongly treats a contract as terminated, that conduct may itself amount to a repudiatory breach, as illustrated by One Fish v Iceland Foods Limited [2017]. On the other hand, the innocent party may affirm the contract which means to continue to perform their obligations under it and possibly claim damages. Read more on how to resolve contractual business disputes.

Many commercial contracts also include provisions requiring the innocent party to give the defaulting party an opportunity to remedy the breach. Accordingly, unless the contract makes clear that a repudiatory breach is incapable of remedy, practitioners should not assume that “repudiatory” automatically means “irremediable”. This issue was highlighted in Kulkarni v Gwent Holdings Ltd [2025].

Kulkarni v Gwent Holdings Ltd [2025]: can a repudiatory breach be remedied?

The key facts were asfollows:

• Mr Rohit Kulkarni and Gwent Holdings Ltd (“Gwent”) were the two initial shareholders in the operation of St Joseph’s Independent Hospital Limited.
• Clause 7.1(d) of the shareholders’ agreement (“SHA”) provided for a compulsory transfer of shares in the event of a material or persistent breach of the SHA which, if capable of remedy, was not remedied within 10 Business Days of service of a notice to remedy.
• Under clause 6.7 of the SHA, any such transfer notice was irrevocable and could not be withdrawn.
• Mr Kulkarni alleged that Gwent had committed a series of material and persistent breaches with the result that Gwent was deemed to have served an irrevocable transfer notice.
• However, by the time of the trial, the central issue was whether the alleged breaches were capable of remedy within the meaning of the SHA.

How did the High Court assess whether the repudiatory breach was capable of remedy?

Taking a practical view, the High Court found that although the breaches were repudiatory in nature, that did not necessarily mean they could not be remedied within the meaning of the SHA.

What did the Court of Appeal decide about repudiatory breaches capable of remedy?

Mr Kulkarni appealed on two principle grounds.  

Firstly, he argued that, by definition, repudiatory breaches were not capable of remedy.  However, the Court rejected this and held that the breaches were capable of remedy in the following ways:

• the improper share allotments by Gwent could be undone by paying for and returning the shares to Mr Kulkarni;
• Gwent’s purported termination of the SHA had no legal effect and could be remedied by acknowledging the SHA’s ineffectiveness; and
• Gwent’s failure to appoint Mr Kulkarni’s nominated director caused no lasting prejudice and could be corrected once the appointment was made.

The Court emphasised that whethera breach is capable of remedy depended on whether the substance of the breachand its consequences could be addressed rather than the breach itself on atechnical analysis.

Does a repudiatory breach have to be remedied within the contractual cure period?

Secondly, Mr Kulkarni argued that a breach could only be regarded as “capable of remedy” if the remedy could in fact be achieved within the 10 Business Day period specified in the SHA. As the relevant share transfers were not completed within that period, he contended that the breaches were irremediable.

However, the Court of Appeal was not persuaded. It held that the relevant question was whether the breaches were capable of being remedied within the period of 10 business days, not whether they were in fact remedied in that time. In these circumstances, no notice to remedy had been served by Mr Kulkarni which rendered the 10 business day period immaterial.

As a result, Gwent was not deemed to have served a transfer notice, and Mr Kulkarni was not entitled to compel a transfer of Gwent’s shares. Mr Kulkarni’s appeal was dismissed.

What are the contract drafting lessons from repudiatory breaches capable of remedy?

In conclusion, this case gives legal practitioners a clear reminder that careful drafting of contracts remains essential as repudiatory breaches are not automatically irremediable. If parties intend that certain breaches should trigger immediate and irreversible consequences, this should be said in unequivocal terms in the drafting. It also serves to highlight why an exit strategy is a crucial component of business contracts.

Please contact the Commercial Law team at Barnes Law for advice on contract disputes.

Written by Barnes Law Managing Partner Yulia Barnes.

‍