'Waiving’ Goodbye to Termination Rights

ABSTRACT

In the recent decision of Evans v Jan [2025] QSC 31, the Queensland Supreme Court clarified what constitutes sufficiently unequivocal conduct to amount to affirmation in a contractual context, while indirectly reaffirming the irrevocable nature of an election under the doctrine of election.

RELEVANT LEGAL FRAMEWORK

A party’s right to terminate a contract arises in the following circumstances:

• any breach of an essential term;
• a fundamental breach of an intermediate term; or
• repudiation by the other party.

Once this right to terminate arises, the non-breaching party must elect whether to terminate or affirm the contract; if the party affirms the contract, they effectively lose, or ‘waive’, their right to terminate.

Affirmation may be express or implied by conduct; however, it is rarely inferred from mere silence or inaction unless such inaction clearly amounts to conduct consistent only with the continued existence of the contract, rather than with mere performance.[1]

The affirming party must at least be aware of the circumstances giving rise to the right to terminate.[2] However, the law remains unsettled on whether the party must also recognise that those facts confer a legal right to terminate.

Although there is no strict requirement for an immediate election, the party with the right to terminate must make their intentions clear. Further, prompt and unequivocal action is preferable to minimise uncertainty and/or the risk of a dispute arising.

Courts have interpreted this doctrine as requiring an unequivocal election made by a party with actual or ostensible authority. As demonstrated in the case below, even otherwise clear conduct will not amount to a valid election if the party making it lacks the necessary authority.[3]

Disputes frequently arise over whether a party, by their conduct subsequent to a breach by the other party, affirmed the contract and thereby lost their right to terminate.

COMMON CONFUSION AND CRITIQUE

Although the doctrine of election has occasionally attracted some criticism, it was upheld in Allianz Australia Insurance v Delor Vue Apartments (2022).[4]

There is a growing tendency to conflate the doctrine of election with the doctrine of waiver but case law has consistently distinguished between the two.[5] Further, although there are multiple different uses of the term ‘waiver’, it is most commonly used ‘to describe an unequivocal decision by a party, communicated to the other party, not to insist upon a right or not to exercise a power’.[6] The doctrine of election on the other hand operates where, as aforementioned, the party elects between two inconsistent sets of rights. That is, the party must choose either to affirm the contract or to terminate it.

Unlike an election, waivers are generally revocable. This distinction is critical yet frequently overlooked. Misinterpretations frequently arise when statements about the revocability of waivers are misapplied to the doctrine of election. This confusion could also be attributed to some older cases describing an election by affirmation as a waiver; however, it is more accurately understood as an example of election.[7]

Evans v Jan [2025] QSC 31

Facts

This case involved a dispute arising from a contract of sale for a residential property between the defendant (seller) and the plaintiff (buyer).

The contract stipulated that payment of the deposit was an essential term and that time was of the essence, unless otherwise agreed between the parties on a time of day for settlement. Under Clause 9.1, a breach of the deposit payment terms entitled the seller to terminate the contract, with Clause 9.4 permitting forfeiture of the deposit and any interest earned. The deposit was due on 23 January 2025, but the plaintiff failed to pay on time, instead transferring the funds over two days: 24 and 25 January. Prior to this, the buyer had informed the realtor via text that the delay was due to the need to increase their bank transfer limit to accommodate the large sum.

The realtor responded to the buyer, saying the following:[8]

Ok

As long as I let seller know

Two deposits today and tmr

The plaintiff thereby relied on this text message and the absence of any further messages to the contrary, believing that the realtor possessed authority to affirm the contract notwithstanding the delayed deposit payment.

Relying on this message, the plaintiff sought an order of specific performance on two bases; the first was that the defendant made the irrevocable election to affirm the contract, and the second basis was that the defendant is estopped (i.e. prevented) from exercising her right to terminate the contract due to the realtor’s representation.

Issue

Did the realtor’s message amount to affirmation of the contract?

Decision

The Court held that only an unequivocal representation by a party (or their agent) with actual or ostensible authority can amount to an affirmation.[9] In the present case, not only was the text message vague and ambiguous, but the agent sending it also possessed no actual or ostensible authority to make an election.

Accordingly, the claim for specific performance was dismissed. The agent’s lack of authority also undermined any claim based on estoppel, as the elements would not be made out without establishing actual or ostensible authority in relation to the agent.

PRACTICAL TAKEAWAYS

For parties seeking to enforce contractual rights (e.g., sellers or providers of services/goods):

• Act promptly and clearly. Delay or vague communication may be interpreted as affirmation of the contract, leading to loss of the right to terminate.
• Use authorised agents wisely. Ensure that anyone acting on your behalf (e.g., agents, employees) has clear instructions and appropriate authority to bind you.
• Reinforce essential terms. Where ‘time is of the essence’, reinforce deadlines in writing and clarify the consequences of non-compliance.

For parties at risk of breach (e.g., buyers or recipients of services/goods):

• Don’t assume acceptance of late or non-compliant performance. Vague or informal responses (e.g., a casual ‘OK’) may not protect you.
• Clarify authority. Before relying on assurances from an agent (e.g., a realtor), confirm that they have the authority to bind the contracting party.
• Seek legal advice early. When in doubt about whether a breach has occurred or whether the other side has accepted it, get advice before taking further steps.

For all parties:

• Understand the distinction between waiver and election. Waivers may be revocable; elections (such as affirmation) are not. Misunderstanding this could result in unintended consequences.
• Document everything. Clear records can help clarify the parties’ positions and avoid ambiguity in the event of a dispute.

For more specific information on any of the material contained in this article please contact Vas Marinos on +61 8 8210 1283 or vmarinos@normans.com.au, or Sahar Al-Dulaimi on +60 8 8217 1374 or SAl-Dulaimi@normans.com.au

[1] Carr v J A Berriman Pty Ltd (1953) 89 CLR 348.

[2] Khoury v Government Insurance Office (NSW) (1984) 165 CLR 622; (1984) 54 ALR 639; (1984) 58 ALJR 502; (1984) 3 ANZ Ins Cas 60-581; [1984] HCA 55.

[3] Evans v Jan [2025] QSC 31, [27]–[46] (‘Evans’).

[4] Allianz Australia Insurance v Delor Vue Apartments (2022) 406 ALR 632 (‘Allianz’).

[5] Ibid [39].

[6] Ibid [28], citing Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd (2013) 250 CLR 303; 303 ALR 199; 50 Fam LR 353; [2013] HCA 46, [30].

[7] Allianz (n 4) [39], citing Elder’s Trustee and Executor Co Ltd v Commonwealth Homes and Investment Co Ltd (1941) 65 CLR 603, 616–18; [1941] ALR 302; Sargent v ASL Developments Ltd (1974) 131 CLR 634 at 644, 647–9; 4 ALR 257, 264, 267–9.

[8] Evans (n 3) [21].

[9] Ibid [60].