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37
Fine-TuningAffirmation of a
Contract by Election:
Part 1
RICK BIGWOOD*
The common law election doctrine is well known to judges and

lawyers but it is not always well understood. This article considers
that doctrine as it applies to the choice, which occasionally
confronts a contractingparty,between asserting a right to hold the
other party to the existing contractual relationship inter se (that
is, "affirming" the contract), and exercising an inconsistent legal
power allowing that contractualrelationshipto be put to an end (that
is, "disaffirming" the contract). The right-holder's communicated
decision not to disaffirm the contract alone results in "affirmation"
ofthe contractand, by operationoflaw,permanent loss ofthe power
that was not exercised, thereby destroying the inconsistency between
the two juralalternatives that necessitateda choice in thefirstplace.
The election to affirm the contract, as opposed to disaffirming it,
is the focus of this article, which will be published in two parts.
This part considers miscellaneous troubling or unsettled features
of the election doctrine's scope, rationale,criteria, relationshipto
otherlegal preclusionarycategories,and operation as they relate to
affirmatory decisions or conduct in particularPart 2 will examine
the difficult and controversial question of the necessary mental
componentry of an effective affirmatory election, in the light of the
well-recognised contemporary distinction between "actual" and
"imputed" election.
*Faculty of Law, The University of Auckland; Adjunct Professor, Bond University. I would
like to thank David McLauchlan for his helpful comments on the final draft of this article.
The usual caveats apply.
38 [2010] New ZealandLaw Review
I Prologue
The principle of the common law is well settled. When a man faced with
two alternative and mutually exclusive courses of action, chooses one and
has communicated his choice to the person concerned in such a way as
to lead him to believe that he has made his choice, he has completed his
election.'
Few areas of modern contract law can be as perplexing, if not at times

intellectually chaotic, as the criteria and principles relating to affirmation of a
contract by election. Although one occasionally encounters curial assertions
of stability and simplicity in connection with the common law 2 election
doctrine,3 whether as a general doctrine or in its specific applications to
contractual relations or disputes, such assertions in reality belie experience
1 ChinaNational Foreign Trade TransportationCorporationv Evlogia Shipping Co SA of

Panama [1979] 1 WLR 1018 [The MihaliosXilas] at 1034-1035 per Lord Scarman.
2 In Crump v Wala [1994] 2 NZLR 331 (HC) at 336, Hammond J strangely refers to
affirmation as "an equitable doctrine" (see also ibid, at 337-338), but the equitable
doctrine of election (relating to a party claiming a benefit under an instrument, for
example a will, while at the same time purporting to disclaim a burden imposed under
that instrument) is generally distinguished from the common law doctrine of election
between inconsistent rights applicable here. See Lissenden v CAVBosch Ltd [1940] AC
412 at 417-419; Agricultural and Rural FinancePty Ltd v Gardiner[2008] HCA 57,
(2008) 238 CLR 570 at [57]. Compare also P Feltham, D Hochberg and T Leech (eds)
Spencer Bower The Law Relating to Estoppel by Representation (4th ed, LexisNexis,
London, 2004) (Spencer Bower] at 358: "The doctrine of election ... was a product of the
common law. But courts of equity developed a separate principle in the context of wills
and trusts which is, somewhat confusingly, also called election." The equitable doctrine
has also been extended to apply in the litigation context (generally see ibid, at 362-366),
but still it "should not be regarded as the same as common law election" (ibid, at 365).
3 See, for example, Nectar Ltd v SPHC Operations (NZ) Ltd HC Auckland CL20/02,
7 May 2003 at [116] per Harrison J ("In my respectful view the many authorities on
the various branches of the law of election appear reconcilable on a straightforward
basis. Election is not an inherently difficult concept"); Johnson vAgnew [1980] AC 367
(HIL) at 398 per Lord Wilberforce ("Election, though the subject of much learning and
refinement, is in the end a doctrine based on simple considerations of common sense
and equity"). Earlier courts, however, have described election as a "doctrine of some
arbitrariness": Craine v ColonialMutual Fire Insurance Co Ltd (1920) 28 CLR 305
(HCA) at 326 per Isaacs J for the Court (although the term "waiver" is used therein,
"election" is meant); Sargent vASL Developments Ltd (1974) 131 CLR 634 (HCA) at
641 per Stephen J (McTiernan ACJ agreeing): "certain of its features are not without
their obscurities". In Commonwealth v Verwayen (1990) 170 CLR 394 (HCA) at 407,
Mason CJ said that "[t]he broad principles of election are not in doubt", citing Craine
v ColonialMutual Fire Insurance Co Ltd, above in this n, and O'Connorv SP Bray Ltd
(1937) 56 CLR 464 (HCA).
Fine-TuningAffirmation ofa Contract by Election: Part1 39
of past and present expositions of the doctrine that many, if not most, judges
and commentators continue to regard as authoritative in the field. For the
sad fact is that the law in this area cannot be noted for its high degree of
coherence or consistency. Many courts and authors, including those of New
Zealand, remain imprecise, incomplete, confused, contradictory or non-
committal when it comes to expounding - convincingly - the rationale,
policies, principles and criteria that inform and hence govern this facet of
our law of contract.4 The same courts and writers, though admittedly with
some relatively recent exceptions, have tended to compound the problem
by failing adequately to explain the relationship of the election concept
and doctrine to other legal categories, such as "waiver" and "estoppel".
Those legal categories, while often producing the same result as an election
to affirm a contract,' in identical triggering circumstances,' nevertheless
exist for reasons, and involve mental states and operational mechanics, that
stand entirely apart from the principle (and processes) of "election", strictly
speaking. Still, they are frequently mistaken for an application of the election
principles' and, worse, are often permitted, quite mindlessly, to masquerade
in their name.' All this is despite the fact that the election doctrine is both
firmly established in Anglo-Commonwealth contract (and wider) law, and of
4 See also F Dawson and DW McLauchlan The ContractualRemedies Act 1979 (Sweet
& Maxwell (NZ) Ltd, Wellington, 1981) at 120 ("Although, in outline, the doctrine of
election can be simply stated, much of the law in this area is in fact unclear. In part, this is
due to a confusion as to the true theoretical basis of the doctrine of election"); CJ Rossiter
"The Doctrine of Election and Contracts for the Sale of Land" (1986) 60 ALJ 563 at 563
("Despite generous and proliferating case-law there is still no clear and authoritative
exegesis of the law of election to settle the many obfuscated and contentious areas with
which the doctrine abounds"); JE Redmond "The Logical Basis of the Doctrine of
Election in Contract" (1963) 3 Alberta LR 77; FMB Reynolds "Election Distributed"
(1970) 86 LQR 318.
5 Namely, loss of the power thereafter to disaffirm the contract.
6 Namely, where the precluded party had for some legal reason enjoyed an initial "right"
to either continue or end the contract.
7 As Stephen J said in Sargent v ASL Developments Ltd, above n 3, at 642 (McTiernan
ACJ agreeing): "In many instances what may pass for an application of the [election]
doctrine is in truth but the inevitable consequence of the party's conduct, a consequence
that would follow even if no such doctrine existed." For discussion of affirmation being
used in a number of senses that do not involve the doctrine of election, see Spencer
Bower, above n 2, at 380ff.
8 "[T]here have been occasions when the sterilization of a right has been dubiously
attributed to one doctrine rather than another": Commonwealth v Verwayen, above n 3,
at 423 per Brennan J. As Kirby J recently observed in Agricultural and Rural Finance
Pty Ltd v Gardiner,above n 2, at [124], parties have been encouraged, because of the
lack of clarity in the law in this area, to plead multiple alternative ways of classifying
the same facts.
vital importance to legal advisers and their clients, especially in commercial

and conveyancing disputes.
In a nutshell, the essence of election as a legal concept is the communi-
cation of an unequivocal, and ultimately irreversible, choice between two
(or more) inconsistent jural alternatives. The alternatives involved might be
different remedies, different substantive rights,9 different procedural steps
or requirements, or different parties; 0 at the broadest conceptual level, it
matters not what the choice is between." What matters juristically is that
9 It is noteworthy that writers and judges in the leading cases routinely speak of an
"election between substantive rights" when addressing the question of a choice between
affirming and disaffirming a contract for some qualifying reason (repudiation, breach,
misrepresentation, equitable fraud, non-satisfaction or failure of condition, or whatever).
See, for example, Spencer Bower, above note 2, at 40ff; Sargent v ASL Developments
Ltd, above n 3, at 641 per Stephen J (McTiernan ACJ agreeing) and at 655 per Mason J.
Strictly speaking, such language might appear misleading, at least in strict Hohfeldian
terms. The "right" to disaffirm a contract is really a legal "power" to disaffirm that
contract - that is, a capacity, on the part of the one entitled to "elect", to effectuate a
change in parties' legal relation by bringing the contract - at least the primary rights and
duties created thereby - to an end unilaterally, either by way of cancellation (discharge),
rescission or rejection of an unconditional tender of performance, as the case may be.
Election between "remedies", in contrast, arises because the right-holder has a choice
between alternative and inconsistent claim-rights, or between different (and of course
inconsistent) methods of enforcing a single claim-right. Generally, see BWV Stewart
"The Essence of Election" (LLB(Hons) Dissertation, University of Auckland, 2001).
For Stewart, common law election turns upon the decision whether or not to exercise a
power. No election arises when a person's decision relates to the exercise of a liberty or
an immunity.
10 Compare Spencer Bower, above note 2, at 360.
11I do not want to be taken as suggesting that there is precise identity in approach and
justification across all manifestations of "election" between inconsistent courses of
legal action. As one descends from the broadest conceptual level, there are important
distinctions in the criteria, principles and rationales applicable to election in varying
contexts. Mention has already been made, for example, of the difference between
election at common law and in equity (see above n 2). JS Ewart, in his famous Waiver
Distributedamong the Departments Election, Estoppel, Contract, Release (Harvard
University Press, Cambridge (Mass), 1917) at 67, distinguished between three types
(or contexts) of election and said (ibid, at 71): "For the situation, in all classes of cases
is, to this extent the same: One person is possessed of a right of choice (between two
properties, between continuation and termination of a contract, between two remedies),
and some other person's interest will be affected by the choice. So far there is identity;
but it may very well be that, for the proper adjustment of rights, different rules may
be found to be necessary for the different classes of case." See also Oliver Ashworth
(Holdings)Ltd v Ballard (Kent) Ltd [2000] Ch 12 (CA) at 28B-C per Robert Walker LJ
("But there is a volume of binding authority showing that for many purposes, including
determining the time at which an election must be made, it is necessary to distinguish
Fine-TuningAffirmation ofa Contractby Election: Part1 41
the electing party is, for whatever reason, confronted1 2 with inconsistent
legal alternatives (which are unconditionally accrued") that he or she
cannot adopt, enjoy or maintain at the same time, or indeed sequentially. 4
A "choice" (or "election") must" therefore be made, because the alternatives
election between remedies from election between rights"). Election between remedies,
which merely involves a "choice between different methods of enforcing one ascertained
right" (Ewart, above in this n, at 70), is clearly different from election between which of
two inconsistent rights or legal situations will be enforced. Unlike the latter, the former
is part of procedural law, rather than substantive law, and, for the non-electing party,
involves no "vulnerability" to having one's legal relation altered. "Irreversibility" (or
preclusion) in the context of election between remedies is explicable by reference to
principles governing the law of procedure, and is justified for public interest reasons;
see, for example, AL Corbin Corbin on Contracts (West Publishing Co, St Paul, Minn,
1960) at § 1221 ("public policy and general welfare") and EA Farnsworth Changing
Your Mind: The Law ofRegrettedDecisions (Yale University Press, New Haven, 1998)
at 188-191. Generally, on election between remedies, see Spencer Bower, above n 2 at
384-395.
12 See Immer (No 145) Pty Ltd v Uniting Church in AustraliaPropertyTrust (NSW) (1993)
182 CLR 26 (HCA) at 41-42 per Deane, Toohey, Gaudron and McHugh JJ ("at the heart
of election is the idea of confrontation which in turn produces the necessity of making
a choice" (ibid, at 42)). The language of "confrontation" was also used by members
of the High Court of Australia, when discussing the election principles, in the earlier
decisions of Sargent vASL Developments Ltd, above n 3, at 656 (Mason J) and Khoury
v Government InsuranceOffice ofNew South Wales (1984) 165 CLR 622 (HCA) at 633
per Mason, Brennan, Deane and Dawson JJ.
13 See McDrury v Luporini [2000] 1 NZLR 652 (CA) at 664-665 per Tipping J (for the
Court): "There is no doctrine of anticipatory election."
14 See also Spencer Bower, above note 2, at 427: "He cannot seek to enforce or rely on
the contract ... whilst at the same time seeking to avoid it or have it set aside." This is
often thought to be a powerful reason justifying the election rules and consequences.
Caution, however, is required here, as the allegedly electing party usually does not, in
the present context, seek to assert two alternatives simultaneously. Rather, he or she
seeks to terminate the contract having earlier signalled unequivocally an affirmation of
it, claiming that the power to disaffirm remainedall along.The issue in non-termination
cases, therefore, is always whether the allegedly electing party's apparently affirmatory
acts prevent a subsequent purported disaffirmation by that party from being legally
effective.
15 Care must be taken with such apparently mandatory language, which features regularly
in the judgments and commentaries on the law relating to election between inconsistent
substantive rights. Courts and commentators often switch within a very short space
between describing one party as having a "right" to elect and she or he being "required"
to elect. See eg Immer (No 145) Pty Ltd v Uniting Church in Australia PropertyTrust
(NSW), above n 12, at 41; Commonwealth v Verwayen, above n 3, at 408 and 409 per
Mason CJ; Spencer Bower, above note 2, at 359, [XIII. 1.7] ("Where A in dealing with
B is faced with inconsistent courses of action which affect B's rights or obligations and
knowing that the two courses of action are inconsistent and that he or she has the rightto
are, in legal contemplation, "inconsistent" and hence "alternative": neither

can be enjoyed without the extinction of the other.' 6 Once the choice has
been made, and unequivocally communicated (or otherwise "made known")
to the other party," either expressly or by way of indicative conduct'"
leading that other party reasonably to believe that a choice has in fact been
made, the election is complete. Thereafter the election doctrine dictates
that the communicated choice binds irrevocably the one who made it," at
least insofar as the circumstances that gave rise to the particular choice are
concerned, and this consequence obtains (is imposed) by operation of law
- "[i]t is an effect which the law annexes to conduct"2 0 - rather than in
choose between them" (emphasis added)), and at 360, [XIII. 1.8] ("Election comes into
play ... when a party is placed in the position where he is confronted by two mutually
exclusive courses of action and must choose between them" (emphasis added)). At
least in the present context (concerning the choice between affirming and disaffirming
a contract), it is clear that election is merely a power and not a duty. One party cannot
compel the other to make an election. Lord Goff of Chieveley made this clear in Motor
Oil Hellas (Corinth) Refineries SA v Shipping Corporation of India [ 1990] 1 Lloyd's
Rep 391 (HL) [The Kanchenjunga]at 398: "In all cases, he has in the end to make his
election, not as a matter ofobligation,but in the sense that, if he does not do so, the time
may come when the law takes the decision out of his hands, either by holding him to
have elected not to exercise the right which has become available to him or sometimes
by holding him to have elected to exercise it" (emphasis added).
16 Hence the doctrine does not apply where there is no inconsistency between the alternative
rights, for example where there are concurrent legal and contractual rights to disaffirm
the contract. The exercise of one will not constitute an election to surrender the other.
See Waters Lane v Sweeney [2007] NSWCA 200 at [178]-[185] per Tobias JA (Giles
and Santow JAA agreeing).
17 It is occasionally suggested that communication of an affirmatory election is not
necessary (as it is for disaffirmation); see, for example, Sargent vASL Developments Ltd,
above n 3, at 647 per Stephen J (McTiernan ACJ agreeing); Dawson and McLauchlan,
above n 4, at 131. However, this probably does not represent the best view of the law,
and it is now inconsistent with modern authority in any event. The point is discussed
below in part VIII.
18 Such conduct may consist of action or inaction, whether accompanied or unaccompanied
by an actual intention to elect.
19 See, for example, Scarf vJardine(1882) 7 App Cas 345 (HL) at 360 per Lord Blackburn,
a case of election as between possible defendants: "Where a man has an option to
choose one or other of two inconsistent things, when once he has made his election it
cannot be retracted, it is final and cannot be altered." As I shall explain below, however,
the justification for irreversibility varies depending on whether the election is to affirm
or to disaffirm. In the case of the latter, the legally effective act of disaffirmation itself
precludes its unilateral revival later.
20 TropicalTraders Ltd v Goonan (1964) 111 CLR 41 (HCA) at 55 per Kitto J (Taylor and
Menzies JJ agreeing). See also Crainev ColonialMutual FireAssurance Co Ltd, above
Fine-TuningAffirmation of a Contractby Election: Part1 43
virtue of specific "elector intention" as such.2 1 The doctrine thus functions

as a "preclusionary rule" (to adopt the American phraseology2 2): once the
elector has unambiguously communicated a sufficiently informed 23 election
to the counterparty who was "vulnerable" to the original choice, the act
of choice alone results in a permanent loss of the right to pursue the jural
alternative that was not communicated. It is inconsistent behaviour thereafter
to maintain that the alternative choice remains available, that is, without the
consent of the other party. In short, the elector is automatically precluded, by
his or her simple act of election, from reversing the communicated decision
and backtracking after the event, in particular by seeking to reinstate rights or
powers that would otherwise have existed in the absence of the legal reason
for the preclusion. The elector's clear indication of choice between the jural
alternatives thus destroys the inconsistency and functions alone to complete
the election and render it binding, without any additional requirement that
the resultant loss of right or power be supported by form or consideration, or
otherwise adversely relied upon by the non-electing party.24 The law simply
will not tolerate the free enjoyment concurrently of mutually exclusive rights,
positions or attitudes - especially not once the inconsistency between those
rights, positions or attitudes has become known to the elector-in-waiting and
the elector has communicated, objectively, an unmistakable choice between
them. Accordingly, the purpose of the election doctrine is to prevent a party
n 3, at 326 per Isaacs J ("[Waiver resulting from an election] is a conclusion of law when
the necessary facts are established").
21 See Peyman v Lanjani [1985] 1 Ch 457 (CA) at 486-487 per Stephenson LJ; RA Lord
(ed) Williston on Contracts (4th ed, Lawyers Cooperative Pub, Rochester (NY), 2000)
vol 13 at §39:33. Hence, here, as in other contractual contexts, a party's unequivocal
conduct, communicated to the other side, may result in unintended legal consequences
for the former party. This will be further discussed in Part 2 of this article.
22 See, for example, American Law Institute Restatement of the Law of Contracts (2nd ed,
St Paul, Minnesota, 1981) at ch 16, Topic 5; Farnsworth Changing Your Mind, above
n 11, at chs 17-20. The language of "preclusion" also features in some of the earlier
English authorities: eg Clough v London and North Western Railway Co (1871) LR 7
Exch 26 at 35 per Mellor J (though the judgment was written by Blackburn J); Ives and
Barker v Williams [1984] 2 Ch 478 (CA) at 483 per Lindley LJ.
23 In Part 2 of this article we will explore just how "informed" an election to affirm must
be in the contractual context. Must the elector know that, as a matter of law, the power to
disaffirm had arisen in his or her favour, or does mere knowledge of the facts giving rise
to the disaffirmation power suffice to bring the doctrine into play? Can a party rely on his
own unchallenged ignorance of his legal position to prevent a judgment of affirmation
by way of election against him?
24 Clough v London and North Western Railway Co, above n 22, at 34 per Blackburn J;
Sargent vASL Developments Ltd, above n 3, at 646-647 per Stephen J (McTiernan ACJ
agreeing); Peyman v Lanjani, above n 21, at 494D per May LJ and at 500D-E per Slade
LJ; The Kanchenjunga, above n 15, at 398-399 per Lord Goff.
from acting unfairly by simultaneously taking up inconsistent positions

without the approval of the other party,25 regardless of whether his or her
attempt to do so was intentional or not, and regardless of the existence of
form, consideration or unfair prejudice on the other side. Such a stance,
moreover, promotes certainty in human (especially commercial) affairs and,
by dint of this virtue, even wrongdoers are, as a matter of basic fairness,
entitled to know where they stand after an unequivocal election has been
communicated to them by their victim (or by his or her conduct in the cir-
cumstances).
It is important to note, too, that these principles of election, and hence
the "doctrine" of the same name, are to a significant degree generic, hence
of wide application in the law. Specific contextual deviations apart, 26 they
come into play whenever a party is confronted with the necessity of choosing
between inconsistent jural alternatives, regardless of the reason for that
confrontation, and they may be applied "to instruments, to relations, to
transactions and to proceedings in litigation". 27 The election principles and
doctrine are not, like this article, restricted in their scope to contractual
relationships or disputes, although such phenomena or incidents are
natural homes for their potential operation. For it often happens in legal
contractual settings that one party is, following certain events, confronted
with a choice between either: (1) asserting an existing claim-right by holding
the other party to a contractual relationship (that is, "affirming" the valid
and subsisting performance obligations inter se); 28 and (2) exercising an
25 Crainev ColonialMutual FireAssurance Co Ltd, above n 3, at 326 per Isaacs J. Again,

in the contractual context, the inconsistency is that the right to enforce the contract,
having once been affirmed, cannot coexist with a power unilaterally to end the contract,
at least not a power to end it for the reason that justified the original power to disaffirm
the contract.
26 Typically these are introduced by statute (for example sales of goods legislation; see,
for example, Peyman v Lanjani, above n 21, at 483E-F per Stephenson U) or specific
contractual provision. See also the qualifications made above at n 11.
27 G Spencer Bower and AK Turner The Law Relating to Estoppel by Representation (3rd
ed, Butterworths, London, 1977) at 324. See also the discussion below in part IV
28 Accordingly, whenever I speak of "affirmation" in this article, I am referring to any
unequivocal indication by the allegedly electing party of his or her intention not to
exercise the power of disaffirmation that had become available to him or her. Such an
intention may or may not exist in fact, but, in any event, the objective effect of such a
communication upon the non-electing party is always the same: that the one entitled
to disaffirm has, at least as a matter of appearance, determined instead to stand by or
adhere to the contract in question, at a time when the alternative, but inconsistent, power
of disaffirmance had become available. Conceptually, therefore, affirmation is simply
the legal consequence of the power-holder's decision not to disaffirm, and its effect is
to maintain the status quo inter se (albeit that the inconsistent power to disaffirm will
have been lost): the contract "remains in beingfor thefuture on both sides": Harbutt'
Fine-TuningAffirnation of a Contractby Election: Part I 45
inconsistent legal power allowing that relationship to be put to an end

(that is, "disaffirming" those obligations);29 and that the other party is,
correspondingly, vulnerableto having his or her current legal position altered
by the unilateral decision of the party so confronted and empowered.3 0 I say
"following certain events" here in order to remain deliberately broad, for the
doctrine of election generally cares not what triggered the necessity of the
choice between maintaining the contractual relationship and ending it." All
that matters is that the party confronted with the choice cannot insist on the
continued performance of the contract while at the same time asserting an
uninterrupted unilateral power to determine the contract, whether by notice
of rescission, cancellation, termination or otherwise.3 2 The right to insist
on performance of the contract following a serious breach or repudiation, a
serious misrepresentation inducing formation, non-fulfilment of a contingent
condition, an act of duress, undue influence or unconscionable dealing
inducing formation, or whatever, suffices to bring the election principles and
doctrine potentially into play; provided only that the party enjoying that right
also enjoys (knowingly?) a legal power to abolish the contractual relationship
"Plasticine"Ltd v Wayne Tank and Pump Co Ltd [ 1970] 1 QB 447 (CA) at 464-465
per Lord Denning MR. See also Yukong Line Ltd of Korea v Rendsburg Investment
Corporationof Liberia [1996] 2 Lloyd's Rep 604 at 607 per Moore-Bick J ("If the
injured party elects to affirm the contract both parties' rights and obligations under it
remain completely unaffected"). Accordingly, the affirming party (A) remains bound
to perform her obligations unless the effect of the other party's conduct is to prevent
the performance ofA's obligations coming due or otherwise to excuse A from having to
tender performance.
29 Unless context necessitates otherwise, I shall use the word "disaffirm" ("disaffirmance",
"disaffirmation", disaffirmatory", etc) as a neutral umbrella label to refer to whatever is
the opposite of "affirm" ("affirmance", "affirmation", "affirmatory", etc). This is simply
to avoid possible confusion over the sometimes distinct concepts of "cancellation",
"discharge", "rescission" and "termination".
30 In Hohfeldian terms, the parties are, in this context, typically in a "power-liability
relationship". Note that this does not obtain when the election is merely between
inconsistent remedies, which allows for a different set of "election" principles in that
context. For further general discussion, see Stewart, above n 9, at §111.
31 See Peyman vLanjani, above n 21, at 494 per May LJ: "For the purposes of this judgment
I will confine myself to the case where a party to a contract becomes entitled either to
rescind it or to affirm it as the result of some conduct on the part of the other party to it,
but in my opinion the same principlesapply where as a result of the applicationof the
relevant law to the materialfacts such a choice becomes available" (emphasis added).
32 See Public Trustee v Pearlberg [1940] 2 KB I (CA) at 9 per Slesser LJ, quoting Gray v
Fowler(1873) LR 2 Ex 249 at 272 per Kelly CB: "You cannot be acting on the contract
and assuming it to exist, and at the same time exercising a right to put an end to it by
rescinding it." His Lordship described this as "a very reasonable rule" (ibid).
for one or more of those distinct reasons.33 This generally obtains, moreover,
regardless of whether the power to end the contractual relationship exists
by reason of an express contractual provision, the common law (including
equity) or statute (for example, s 7 of the Contractual Remedies Act 1979).
As a rule, the principles of election in the present connection are identical
irrespective of the source of the power to disaffirm.34
Now, as just indicated, this is an article about the power to elect whether
or not to disaffirm valid and subsisting contractual rights and obligations. I
must, however, be more particular still and indicate that it is an article only
about the non-exercise of the power to disaffirm the performance rights and
obligations under such a contract - an article about affirmation of a contract
as opposed to disaffirmation of the same" - for special problems arise in
connection with the former that do not feature, either at all or at least equally,
in connection with the latter. 6 Moreover, it is doubtful that the election
doctrine itself operates to effect preclusion (irreversibility) in the context of
disaffirmation, in contrast to that of affirmation. For as Stephen J pointed
out in a leading case in this area,37 it is not strictly speaking the doctrine of
election that destroys the right unilaterally to revive and enforce a contract
after disaffirmance, but rather the act of effective termination itself:38 "what
33 See the discussion below in part IV

34 Compare NC Seddon and MP Ellinghaus Cheshire & Fifooth Law of Contract (9th
Australian ed, LexisNexis Butterworths, Chatswood (NSW), 2008) 526 at [11.47]:
"Unless otherwise stated, the principles of election are the same, whatever the source of
the right to rescind or terminate." But compare the same authors ibid, at 529, [11.50]:
"It is not resolved whether the principles of election and affirmation apply universally,
whatever the source of the right to terminate or rescind. There appears to be no reason in
principle why there should be different rules in cases of rescission for misrepresentation,
but possibly in fraud cases the courts may be reluctant to impose an estoppel on the
representee."
35 See above at n 28: "affirmation" is simply the legal consequence of the elector's decision
not to exercise the power to disaffirm the contract, or, perhaps, of his or her mere failure
to do so. It is possible that affirmation of a contract can occur otherwise than by election
(see also n 40 below), but this is a matter I shall return to in Part 2 of this article.
36 Compare Immer (No 145) Pty Ltd v Uniting Church in Australia PropertyTrust (NSW),
above n 12, at 41 per Deane, Toohey, Gaudron and McHugh JJ. For example, it is in
the nature of things that disaffirmation will be an intentional act done with knowledge
that the right to so elect exists. "However, acts of affirmation, unlike acts of avoidance
or termination, do not evidence the elector's knowledge that the right exists and is
exercisable": KR Handley "Exploring Election" (2006) 122 LQR 82 at 83. Generally,
on the requirements for disaffirmation at common law, see D O'Sullivan, S Elliot and
R Zakrzewski The Law ofRescission (Oxford University Press, Oxford, 2008) at ch 11
("Electing to Rescind").
37 Sargent vASL Developments Ltd, above n 3, at 642.
38 See also DW Greig and JLR Davis The Law of Contract(Law Book Co, Sydney, 1987)
is dead is dead", pure and simple." Accordingly, whereas "affirmation" is

clearly a species of election in its fullest sense 40 - it is capable of func-
tioning both as the process (or "mechanism") by which a party chooses not
to end the contractual relationship, as well as the legal consequence of that
party's having so chosen (preclusion) - that is not equivalently true for
disaffirmance. Although "election" may well have been the mechanism by
which the elector chose to determine the contract effectively, it is not the
election doctrine that governs thereafter any subsequent incapacity on his
or her part to revise the election once communicated.
II Prospectus
Owing to the size (and challenge) of its subject matter, this article will be
published in two parts. This first part critically examines miscellaneous
features of the election doctrine's scope, rationale, criteria, relationship to
other legal preclusionary categories and operation, and examines these as
they relate to affirmatory decisions or conduct in particular. These features
have continued to confound many modern courts and commentators,
and hence they have contributed directly to the lack of consistency and
coherency that continues to mark (and mar) this area of contract law. In
order to introduce the troubling and unsettled features of the doctrine, frame
the discussion and illustrate the application of the election principles and
criteria in the contractual context, I shall begin with a local case study on
affirmation - Jansen v Whangamata Homes Ltd 41 - which is arguably now
at 1255, suggesting that the doctrine of election in truth only operates where the innocent
party chooses to affirm the contract.
39 Johnson vAgnew [1980] AC 367 (HL) at 398 per Lord Wilberforce.
40 Coastal Estates Pty Ltd v Melevende [1965] VR 433 (FCSC) at 453 per Adam J
(affirmation is the determination of an election by affirming the contract); Spencer
Bower, above note 2, at 380 ("In this context, affirmation is often used as a synonym for
election or to describe the communication by one party to the other party of the election
to treat the contract as valid and subsisting"). Compare Priestley JA in Hawker Paciic
Pty Ltd v HelicopterCharterPtyLtd (1991) 22 NSWLR 298 (NSWCA), who (at 304E)
did not view "affirmation" as an "intelligible legal category in its own right". Rather,
he saw it as covering "situations governed by two particular legal theories, election and
estoppel". Thus, for affirmation it must be shown that the innocent party either elected
not to avoid the contract or became estopped from asserting its right to avoid the contract.
On this view, affirmation can occur otherwise than by election. See also the remarks of
Nourse LJ in Goldsworthy v Brickell [1987] 1 Ch 378 at 410 (affirmation might occur
expressly, that is by "confirmation", or impliedly, for example by laches, acquiescence
or estoppel).
41 Jansen v Whangamata Homes Ltd HC Hamilton CIV-2003-419-1511, 29 November
the leading New Zealand authority on the election doctrine as it relates to

and applies in that context.
Part 2 of the article will continue in the same vein, but focus on what
is perhaps the most difficult and controversial question in the field: What
are the necessary mental elements of an effective contractual affirmation
by election? This will necessitate an examination of the well-accepted, but
potentially problematic, distinction between "actual election" and so-called
"imputed election", which may not, in fact, be a form of "election" at all.
I shall ultimately argue that a principled, workable and just approach to
affirmation of a contract by election demands that all elections be conceived
of as "actual" in nature; although "actual election" readily embraces
"inferred" (as well as express) election, provided that the electing party
knew of his or her disaffirmation power when she or he performed acts that
unequivocally recognised the continued existence of the contract. However,
the election doctrine might also, in a principled way, allow an election to
affirm to be "imputed" to the party entitled to disaffirm, and still denominate
it as an instance of "election", but only where that party is, pursuant to
a supplementary principle or policy, 42 possessed of at least constructive
knowledge of his or her disaffirmation rights. All other cases of preclusion
should be viewed as something other than "election", and be administered
under some other preclusionary rule, such as estoppel. This is because
a principled approach to contractual election would, I submit, produce a
narrow doctrine of election. It would, as well, avoid the perpetuation of
unnecessary fictions, such as "election" without knowledge whatsoever of
one's legal alternatives, since such fictions almost always divert analysis
and cloud the law. In recommending this approach, moreover, I take it as
axiomatic that a principled, workable and just approach to the common
law election doctrine in contractual settings would, in addition to achieving
(so far as is possible) consistency with all other features and operations of
modem contract law, produce principles and criteria that, conceptually and
in their practical application: (1) preserved the greatest freedom for the party
entitled to disaffirm, and (2) did so for the longest possible time, while (3)
protecting the non-electing party from reliance injury or unfair speculation
at that party's risk or disadvantage.
Finally, it must also be mentioned that nothing I shall say in either part
of this article is intended to controvert the inevitable legal reality that all
preclusions from disaffirmation, whether based on genuine elective behaviour
or otherwise, are heavily fact-dependent; and so under no circumstances can
2004 [Jansen] or [Jansen(HC)]; Jansen v WhangamataHomes Ltd [2006] 2 NZLR 300

(Glazebrook, Chambers and O'Regan JJ) [Jansen] or [Jansen (CA)]
42 For example, the policy of not allowing parties to plead ignorance of the content of their
own contracts: L'Estrange v Graucob Ltd [1934] 2 KB 394 (CA).
Fine-TuningAffirmation of a Contract by Election: Part I 49
a court avoid making its decision in the context of the totality of the relations,
dealings and circumstances of the case at hand. However, that the question
of affirmation of a contract by election (or otherwise) is a factual one in each
case does not relieve courts and commentators of the general responsibility
to settle and describe, in ajust, practical and principled way, the application
criteria and intellectual boundaries of the doctrine in the abstract.
III A Local Case Study in Affirmation: Jansen v Whangamata

Homes Ltd
A The facts and dispute
On 8 December 2002, the plaintiffs, the Jansens, entered into a written

sale and purchase agreement with the defendant, Whangamata Homes
Ltd, under which the former agreed to purchase from the latter a unit in a
"spec" development at Whangamata. The parties contemplated that titles
would be created under the Unit Titles Act 1972. Under the agreement,
settlement was to occur either on 30 May 2003 or upon issue of both the
code compliance certificate and the unit title, whichever occurred later. The
agreement contained a special condition, cl 22, as follows:
Sunset Clause
If the settlement has not occurred by the 30th day of June 2003, either party
may, by notice in writing to the other, cancel this agreement.
In the event, the deposit and all monies paid by the purchasers shall be
refunded to the purchaser and neither party shall have any right or claim
against the other.
By 30 June 2003, settlement had not occurred. Nor had the code com-
pliance certificate and the unit title for the plaintiffs' unit been issued. Three
months had then passed when, on 30 September 2003, the defendant, through
its solicitors, and quite unexpectedly to the plaintiffs, gave formal notice of
cancellation of the agreement pursuant to cl 22. The company refunded the
deposit and all other monies that the plaintiffs had paid under the contract
to that point.
The plaintiffs, who had remained ready, willing and able to complete the
agreement throughout, disputed the purported cancellation. They claimed
that the defendant company had lost the right to cancel the contract under
cl 22 because it had by its conduct after 30 June 2003 unequivocally elected
to affirm the contract. The plaintiffs filed standard proceedings in the High
Court seeking an order for specific performance of the agreement and other
remedies. However, they later sought leave to apply for summary judgment
on the ground that the defendant had no arguable defence to the claim for
specific performance. The question for the Court, therefore, was whether the
plaintiffs had indeed established that the defendant had no arguable defence
to that claim.
Since the outcome of the leave application would turn largely on the
result of the application for summary judgment on its merits, the plaintiffs
had to satisfy the Court that by 30 September 2003, it was no longer open
to the defendant to exercise the power of cancellation under cl 22. The
defendant denied that it had made an election to affirm, with the consequence
that it was, on 30 September, still free to rely on its cl 22 cancellation power.
The essential facts were undisputed. In support of their claim of
irrevocable affirmation, the plaintiffs relied on three specific acts by the
defendant after the date upon which the cl 22 cancellation power had become
exercisable (30 June 2003). Up to that point it would appear that construction
of the unit was progressing normally, and that the parties were each moving
toward settlement of the transaction. The three affirmatory acts alleged were
pleaded as follows:
* The first affirmatory act: On 6 July 2003, the defendant invoiced the
plaintiffs for extras and variations to the unit, undertaken at the plaintiffs'
request, as well as quoting an additional sum for an aluminium gate.
(Although there was no prior written agreement between the parties as
to the cost of the extras and variations as envisaged by cl 15.4 of their
agreement, there was no doubt that the work had in fact been carried out
pursuant to that clause.)
* The second affirmatory act: On 1 September 2003, the defendant's

solicitor wrote to the plaintiffs' solicitor advising that the plaintiffs'
unit was about "two weeks from completion", and further advising that
the unit plan and an application for a new title had been lodged with
Land Information New Zealand. The defendant's solicitor also asked the
plaintiffs' solicitor, "in anticipation of the issue of the title and settlement
being concluded", to forward "your Transfer", which was no doubt a
reference to cl 3.5 of the general terms of sale on the Auckland District
Law Society's Agreement for Sale and Purchase of Real Estate (Seventh
Edition (2) July 1999), which clause formed part of the plaintiffs'
agreement with the defendant.4 3 In effect, the defendant was advising
43 Clause 3.5 reads: "The purchaser shall prepare, at the purchaser's own expense, a
memorandum of transfer of the property, executed by the purchaser if necessary. The
the plaintiffs that the time for the latter to honour their obligation under
cl 3.5 had now arrived.
The third affirmatory act: On 10 September 2003, the defendant's

solicitor wrote to the plaintiffs' solicitor requesting payment of extras
and variations, and advising that the titles for units had been issued,
although the plaintiffs' unit had not yet been completed or the code com-
pliance certificate issued. The letter also repeated the request for payment
for the extras and variations as per the first affirmatory act above.
In essence, counsel for the plaintiffs submitted that these three matters
in combination were, objectively considered, consistent only with com-
munication of a settled choice on the part of the defendant to proceed to
settlement - to affirm the contract and keep it on foot - rather than to
exercise the cl 22 cancellation power. Accordingly, the defendant could have
no defence to the plaintiffs' claim for specific performance of the agreement.
B The trialdecision"
In the High Court, Randerson J concluded that the plaintiffs had not
established to the requisite standard that there was no arguable defence.
There was, in his Honour's view, "a clearly arguable defence on the basis that
the defendant was entitled to exercise its right to cancel under clause 22".45
As to the legal principles that governed his decision, Randerson J began
by noting, unfortunately without elaboration, that the "doctrines of election,
waiver, and estoppel are closely related but there are important conceptual
differences between them". 46 The plaintiffs, however, did not rely on estoppel
but rather confined their claim to the doctrines of "waiver and election" (or,
more precisely, the doctrine of election "as a species of waiver"). 47 The Judge
then cited the following passage from the fourth edition of Spencer Bower's
The Law Relating to Estoppel by Representation, which he considered
encapsulated the concept of election at common law: 48
purchaser shall tender the memorandum of transfer to the vendor or the vendor's solicitor
a reasonable time prior to the settlement date."
44 Jansen (HC), above n 41.
45 Ibid, at [49].
46 Ibid, at [24].
47 Ibid.
48 Ibid; Spencer Bower, above note 2, at 359.
Where A in dealing with B is faced with inconsistent courses of action which

affect B's rights or obligations and knowing that the two courses of action
are inconsistent and that he or she has the right to choose between them, A
then makes an unequivocal choice between them and communicates that
choice to B, A is prevented from afterwards resorting to the course of action
which he has deliberately rejected and communicated to B his intention of
rejecting. The election binds A immediately it is communicated to B and is
not based on proof of detrimental reliance.
Although this passage refers to A as the would-be elector needing to have

knowledge both of the facts giving rise to the choice and of the right to choose
itself before he or she will be found to have made an irrevocable election,
Randerson J noted the continuing uncertainty as to whether the latter type
of knowledge is required in New Zealand: "It is generally accepted that the
electing party must at least have knowledge of the relevant facts constituting
the breach but there has been debate about whether the electing party must
be shown to have knowledge of the legal consequences of those facts."49 I
shall have more to say about that debate in Part 2 of this article, suffice it
for now to observe that Randerson J felt free to refrain from entering into it
"because both parties must be taken to have been aware of the right to cancel
under clause 22 of the agreement". 0
His Honour also held that, in the contractual realm, the doctrine of
election was not confined merely to circumstances where there had been a
serious breach or a repudiation of a contract, or where a contingent condition
had failed. The doctrine might also apply where, for example, there had
been a causative pre-contractual misrepresentation, or indeed where a purely
extraneous event had occurred, such as under a "war clause" in a charter-
party.' Moreover (as the war-clause example makes clear), the entitlement to
elect may be conferred by the contract itself as distinct from the general law.
In support of these conclusions, Randerson J relied on the following obiter
52
passage from Lord Goff of Chieveley's judgment in The Kanchenjunga:
Election itself is a concept which may be relevant in more than one context.
In the present case, we are concerned with an election which may arise
49 Ibid, at [29].
50 Ibid, at [30].
51 Ibid, at [25] and [39].
52 The Kanchenjunga, above n 15, at 398. The other Lords of Appeal were in agreement.
Of course, in New Zealand, s 7(5) of the Contractual Remedies Act 1979 makes it
clear, at least in relation to the contracts to which the Act's cancellation rules apply,
that the doctrine of election applies to contractual repudiation, serious breach (actual or
anticipatory) and serious misrepresentation inducing contract.
Fine-TuningAffirmation of a Contractby Election: Part I 53
in the context of a binding contract, when a state of affairs comes into

existence in which one party becomes entitled, either under the terms of
the contract or by the general law, to exercise a right, and he has to decide
whether or not to do so. His decision, being a matter of choice for him, is
called in law an election. Characteristically, this state of affairs arises where
the other party has repudiated the contract or has otherwise committed a
breach of the contract which entitles the innocent party to bring it to an end,
or has made a tender of performance which does not conform to the terms
of the contract. But this is not necessarily so. An analogous situation arises
where the innocent party becomes entitled to rescind the contract, i.e. to
wipe it out altogether, for example because the contract has been induced
by a misrepresentation; and one or both parties may become entitled to
determine a contract in the event of a wholly extraneous event occurring,
as under a war clause in a charter-party. Characteristically, the effect of the
new situation is that a party becomes entitled to determine or rescind the
contract, or to reject an unconditional tender of performance; but, in theory
at least, a less drastic course of action might become available to him under
the terms of the contract. In all cases, he has in the end to make his election,
not as a matter of obligation, but in the sense that, if he does not do so, the
time may come when the law takes the decision out of his hands, either by
holding him to have elected not to exercise the right which has become
available to him or sometimes by holding him to have elected to exercise it.
Citing two Australian authorities," Randerson J also stated that an

election may take the form of "a deliberate and conscious act by the electing
party", or it "may be imputed by the law treating the electing party as having
exercised an election irrespective of actual intention".5 4 But, in any event,
his Honour continued:55
It is a question of fact whether an unequivocal choice has been made

between the courses of action open but it must be shown that the electing
party has made a firm and settled choice and does not intend to go back
53 Champtaloup v Thomas [1976] 2 NSWLR 264 (NSWCA) at 274-275 per Mahoney

JA; Zucker v StraightlacePty Ltd (1986) 11 NSWLR 87 (NSWSC) at 93 per Young
J. He might also have mentioned Sargent v ASL Developments Ltd, above n 3, at 656
per Mason J; CoastalEstates Pty Ltd v Melevende, above n 40; Khoury v Government
Insurance Office of New South Wales, above n 12, at 633-634 per Mason, Brennan,
Deane and Dawson JJ. His Honour also referred to what he regarded as a "helpful"
discussion by Harrison J in Nectar Ltd v SPHC Operations (NZ) Ltd, above n 3, at [88].
54 Jansen, above n 41, at [26].
55 Ibid, at [27], citing Spencer Bower, above n 2, at 419-421.
54 [2010] New Zealand Law Review
on it. Putting it another way, the electing party must be shown to have
committed irrevocably to one of two inconsistent courses of action.
Against those legal principles and propositions, the factual question that
confronted Randerson J was whether the plaintiffs had demonstrated that the
defendant in Jansen, by its conduct after 30 June 2003, had "unequivocally
and irrevocably elected to proceed to complete the agreement and thereby
waived the right to cancel under clause 22". If that test was met, that meant
that the plaintiffs could show that the defendant had no arguable defence
based on its purported cancellation under that clause or otherwise.
As mentioned, Randerson J held that there had been no unequivocally
affirmatory conduct on the part of the defendant. Hence, on 30 September
2003, when the defendant notified the plaintiffs of its decision to cancel the
contract, the opportunity to do so still lay within the defendant's power by
virtue of cl 22. The valid cancellation would thus provide an ironclad defence
to the plaintiffs' claim for specific performance of the agreement.
In justifying this conclusion, Randerson J noted that, although the law
does not lightly find that a party had elected unequivocally and irrevocably
to adopt a particular course of action so as to disqualify him or her from later
adopting an alternative course - "[w]here there is an ongoing right to cancel
such as that conferred by clause 22, the court will not be astute to find that
a party has made an unequivocal election except where the conduct relied
upon is of such a nature and length as to enable the court confidently to infer
that the party has indeed made a firm and clear election and is not merely
keeping its options open"" - both parties in this case had to be taken as
being conscious from the outset of the availability of the unqualified power to
cancel under cl 22 from 30 June onwards, that power being enshrined in the
parties' own contract after all." His Honour found that nothing had changed
in the conduct of the defendant after 30 June compared to what had been
occurring beforehand: the parties were clearly working toward settlement
for some time prior to 30 June 2003, and that course of conduct simply
continued after that date, when the cl 22 cancellation power first became
exercisable. Although the defendant's sending of an account for extras and
variations to the plaintiffs on 6 July 2003 - the first allegedly affirmatory
act, above - was an act "towards settlement and in anticipation of it", in his
Honour's view this act was "not clearly inconsistent with the later exercise
of the right to cancel because the contract contemplated that, in the event of
cancellation, all monies paid under it would be refunded"."
56 Ibid, at [30].
57 Ibid, at [42].
58 Ibid, at [40].
59 Ibid, at [44].
The same could be said, Randerson J held, for the second affirmatory act
alleged: the letter of 1 September 2003 requesting a memorandum oftransfer
in anticipation of settlement. This was "not plainly inconsistent with the
subsequent exercise of the right to cancel", his Honour said, because "[w]hile
there was no reservation of the right to cancel under clause 22, none was
required because it was a right which the agreement contemplated would be
available until settlement"."o
Also, for the reason given in relation to the first affirmatory act alleged,
the third affirmatory act pleaded - the second request for payment of
variations set out in the defendant's letter of 10 September 2003 - was
not clearly inconsistent with a continuing cancellation power under cl 22.
The contract remained conditional on the code compliance certificate being
issued, despite the fact that title had been issued, and that certificate remained
outstanding as at the date of cancellation. 6 1
Randerson J added that the clear purpose of cl 22 was to enable either
party to cancel should settlement be delayed, for whatever reason, beyond
30 June 2003, and no specific timeframe for the exercise of that power was
stipulated in the clause. 62 Given also that, as at 30 September, settlement
still was not imminent (the unit being under construction and no code
compliance certificate having yet been issued), the Judge added that "a
period of three months after 30 June 2003 was not an unreasonable period
for ... [the defendant] to continue to work towards completion of the unit
and settlement while maintaining the option of cancelling the agreement if
it wished to do so"1.63
The plaintiffs appealed to the Court of Appeal, not because they believed
that Randerson J had misstated the applicable law, but rather on the ground
that the Judge had erroneously applied that law to the undisputed facts.
C In the Court ofAppeal"
The Court of Appeal allowed the plaintiffs' appeal, holding, on the primary
issue, 5 that the defendant had no arguable defence to the plaintiffs'
60 Ibid.
61 Ibid, at [45].
62 Ibid, at [46].
63 Ibid, at [48].
64 Jansen (CA), above n 41.
65 A second issue was whether the defendant had an arguable defence to the plaintiffs'
petition for specific performance based on the plaintiffs' alleged delay in commencing
the proceeding. The Court of Appeal held that there was no unreasonable delay on the
facts, but no law was discussed in relation to the issue (see ibid, at [34]-[40]).
claim for specific performance on the ground that, as at 30 September

2003, the company still enjoyed a cancellation power under cl 22 of the
parties' agreement. In the Court's view, there could be no doubt that, by 10
September 2003 at the latest, the defendant had manifested an unequivocal
election to continue with the contract rather than to exercise the alternative
and inconsistent power to end it. The Court therefore granted leave to the
plaintiffs/appellants to apply for summary judgment, as well as, inter alia,
awarding (on terms) specific performance of the agreement itself.
Chambers J delivered the judgment of the Court. He began by sum-
marising the legal principles as set out by Randerson J below, including the
passage quoted from Spencer Bower and the indicated distinction between
"deliberate and conscious election" and "imputed election". In short, the
Court of Appeal "completely accept[ed]" the correctness of the trial judge's
statement of the applicable law.66 Where the Court disagreed, however, was
in relation to the legal consequences of the undisputed facts, and in particular
of the three allegedly affirmatory acts detailed above.
As to the first act - the defendant's invoice of 6 July 2003 demanding
payment for extras and variations done pursuant to the agreement - the
Court held that this was evidence of an unequivocal election on the part of the
defendant to continue with the agreement, as "a demand for payment for work
done to the unit was consistent only with the agreement remaining on foot ...
If [the defendant] had wanted to keep open its clause 22 right, it should have
deferred making demand for payment."67 The Court was not persuaded by
Randerson J's finding that the demand was not inconsistent with maintenance
of the cancellation power "because the contract contemplated that, in the
event of cancellation, all monies paid under it would be refunded".68 The
refund provision was, in the Court's view, irrelevant; what mattered was that,
after the date when the cancellation power became immediately exercisable
(30 June), the defendant "demanded payment for work which has been
done under the contract and which was inextricably part of the unit to be
supplied". 69 In fact, when the plaintiffs received the invoice, they were put to
their election under cl 22, hence were required to respond to the defendant's
affirmation, which they did by demonstrating an intention to continue with
the agreement rather than cancelling it. Although the plaintiffs disputed
how much they were required to pay under the invoice, there was never any
doubt that they would pay, hence no doubt about their ultimate intention to
continue."o
66 Ibid, at [14]-[19].
67 Ibid, at [23].
68 Jansen (HC), above n 41, at [44].
69 Jansen (CA), above n 41, at [24].
70 Ibid, at [25].
Even if the Court were wrong in that conclusion, Chambers J considered

that the second allegedly affirmatory act on behalf of the defendant - the
1 September 2003 letter from the defendant's solicitor to the plaintiffs'
solicitor advising that settlement would soon take place, and that the time
for the plaintiffs to tender their memorandum of transfer under cl 3.5 had
now arrived - was indisputably an irrevocable election by the defendant
to proceed to settlement:' "[I]t is really not possible to think of a more
unequivocal act than asking the purchasers to prepare the memorandum of
transfer in anticipation of a settlement shortly to take place."7 2 The Court of
Appeal flatly opposed Randerson J's apparent conclusion that the contract
contemplated that the cl 22 power to terminate the agreement was exercisable
at any time up till settlement, virtually come what may. That conclusion
would be inconsistent with the election principles that his Honour had set
out earlier in his judgment," as well as resulting "in an unsatisfactory state
of affairs, where both sides are left in a state of uncertainty as to the nature
of their ongoing legal relationship".74 It would mean that the plaintiffs would
have to hold themselves in readiness for possible settlement while being
unable to rely on the defendant's apparent continuing intention ultimately
to settle.
D The significanceof the decision?
Granted, the Court of Appeal's decision was one that turned straight-
forwardly on the application of the law to the undisputed facts, and in that
regard one can have no quarrels with it. With respect, the Court was correct
in finding that, on those facts, an election to affirm had been made and
unequivocally communicated after 30 June 2003, with the legal result that
the defendant (and indeed the plaintiffs, who had also affirmed) irrevocably
lost the cancellation power that it would have otherwise enjoyed by virtue of
cl 22 of the parties' agreement. The Court of Appeal's decision is significant,
however, for its unqualified adoption of the trial judge's statement of the
governing principles in this area. Accordingly, until the Supreme Court
decides to pronounce on the subject," Jansen is likely now to be treated as a
71 Ibid, at [26].
72 Ibid, at [28].
73 Ibid, at [27]-[28].
74 Ibid, at [32]. .
75 The defendant in Jansen was unsuccessful in seeking leave to appeal to the Supreme
Court against the summary judgment entered by the Court of Appeal; see Whangamata
Homes Ltd v Jansen [2005] NZSC 71, (2005) 18 PRNZ 82 (Tipping and McGrath JJ).
The Supreme Court was not persuaded that the case warranted the granting of leave "to
(if not the) leading authority on the law relating to affirmation of a contract
by election in New Zealand. That, in my respectful opinion, is problematic
to the extent that Randerson J's exegesis of the applicable law in this area
perpetuates uncertainty and incoherence in relation to the relevant principles
and criteria in the field. For it seems to me that crucial (and interconnected)
questions remain, after Jansen, as to the relationship of election to other legal
concepts such as "waiver" and "estoppel", the precise mental element of an
affirmatory election (including the extent to which, if at all, such an election
must be "knowing" and "intentional"), the nature and scope of the accepted
distinction between "actual election" and "imputed election", and the true
scope of the election principles themselves. Additional queries concern: the
extent to which, if at all, communication is a requirement for affirmation (as
opposed to disaffirmation); the rationale for the law rendering an election to
affirm permanently binding even in the absence of consideration, form or
prejudicial reliance on the other side; and the time within which an election
to disaffirm should (must?) be made after the power of disaffirmation first
becomes exercisable. Again, these are questions that I want to explore over
the two parts of this article - with a view, hopefully, to "fine-tuning" the law
relating to affirmation of a contract by election, and in the process rendering
it more intelligible, coherent, stable and just.
IV The Scope of the Principles of Election between Affirming

and Disaffirming a Contract: How Generic Are They?
On the basis of Lord Goff's dictum in The Kanchenjunga,'6 both the High
Court and the Court of Appeal in Jansen accepted that the election rules
constitute a wide-ranging doctrine governing the choice between mutually
inconsistent jural alternatives regardless of what generated the necessity
of choice in the first place. So, as Randerson J correctly noted in the High
Court, the doctrine is not confined to cases of "prior breach of contract or
ventilate again what is essentially a factual issue" (ibid, at [3]). None of the criteria for
granting leave to appeal, as set out in s 13(2) of the Supreme Court Act 2003, had been
demonstrated. Moreover, the Supreme Court was certain that the Court of Appeal was
correct in its factual finding that there had been "a clear election or waiver preventing the
appellant from what would otherwise have been an ability to cancel in terms of clause
22. That clause cannot possibly be construed as giving a continuing, day-to-day, right
of cancellation, unrestrained as to time and irrespective of the conduct of the appellant
in the meantime" (ibid, at [4]).
76 The Kanchenjunga, above n 15 at 398. See above text at n 52.
a failure of condition", but extends as well to situations of pre-contractual

misrepresentation or "a wholly extraneous event occurring such as a war
clause in a charter-party".n His Honour also observed, based on the same
dictum, that the elector's entitlement to make an election may be conferred
by the contract itself as distinct from "the general law" (which I shall assume
for present purposes encapsulates all disaffirmation rights arising dehors the
contract, whether at the common law or via statute).7
Interestingly, Lord Goff's dictum in The Kanchenjunga says nothing
explicitly about "failure of condition" (as Randerson J put it), although this
seems implicit in his Lordship's "war clause" example, which is merely
a kind of contingent condition after all. Randerson J, though, seemed to
conceive of "a failure of condition" as something distinct from "a wholly
extraneous event occurring such as a war clause in a charter-party", as he
mentioned the two quite separately in the relevant passage of his judgment."
It is not clear, however, what material difference his Honour had in mind
here, although the distinction did seem to influence the way the Judge viewed
cl 22, the contractual source of the parties' election power in Jansen. He
said: 0
[C]lause 22 is rather different in character from say, a clause giving a right

to cancel should some wholly extraneous event occur. Clause 22 confers on
both parties an ongoing right to cancel exercisable at any time after 30 June
2003 and without the need to assign any reason for doing so.
Yet as I read clause 22, it is simply a clause that gives rise to a legal power
on the part of either party to cancel the agreement by written notice to the
other "[i]f settlement has not occurred by the 30th day of June 2003", and
the effluxion of time, not being within the power or control of either party,
is by its nature a "wholly external event".8 ' In other words, there is nothing
to take Jansen outside the regular "non-fulfilment of a contingent condition"
cases to which it has long been accepted that the general election principles
77 Jansen (HG), above n 41, at [39].

78 See also Peyman v Lanjani, above n 21, at 487D-E per Stephenson U, 494A-C per
May U.
79 Jansen (HG), above n 41, at [39].
80 Ibid, at [40].
81 Granted, "settlement" might not be a wholly external event in the sense that either or
both parties are typically responsible for taking steps to bring settlement about, but in the
present case it was also dependent on the actions and decision-making of an independent
third party in respect of issuing the code compliance certificate and the unit title.
ordinarily 82 apply.83 For from the standpoint of the election doctrine, it must
surely be irrelevant what the failed condition was that gave rise to the choice
between mutually inconsistent jural alternatives, provided that it did in fact
produce the necessity of a choice between such alternatives. His Honour,
therefore, did not need to resort to the mere dictum in The Kanchenjunga
to conclude that the election principles applied to the case before him, or to
deal with the fact that "[n]either counsel cited any case where circumstances
similar to the present had arisen"." A more direct route to the conclusion that
the election principles and doctrine are of general application in connection
with the choice between affirming and disaffirming a contract would have
been via the leading Australian cases, especially SargentvASL Developments
Ltd" and Immer (No 145) Pty Ltd v Uniting Church in Australia Property
Trust (NSW).8 6 Both cases were decided by the High Court of Australia,
and each, like Jansen, concerned the question of whether there had been an
election to affirm after the non-fulfilment of a contingent condition, where
the power to elect to "rescind" the agreement by either party for such non-
fulfilment was contained in a contractual provision." In the course of his
82 Some condition subsequent clauses might give rise to automatic termination, depending
on the construction to be placed on the particular clause, but generally the destruction
of the contract pursuant to such clauses depends on a disaffirmation having been
communicated by a party entitled to so elect. Generally, see DW McMorland "A New
Approach to Precedent and Subsequent Conditions" (1980) 4 Otago L Rev 469 at
473-474; JP Swanton "'Subject to Finance' Clauses in Contracts for the Sale of Land"
(1984) 58 ALJ 633 and 690 at 694-697; Seddon and Ellinghaus, above n 34, at [20.8].
83 Compare Seddon and Ellinghaus, above n 34, at [20.91 ("In general the rules governing
the exercise of a right [to terminate for non-fulfilment of a contingent condition] are the
same as those governing election to terminate for breach"), and at [21.28] (the concepts
of election to affirm, waiver and estoppel "apply equally to termination for breach,
termination for non-fulfilment of a contingent condition, and termination at will").
85 Sargent v ASL Developments Ltd, above n 3. Although Randerson J relied on two
Australian authorities in support of the distinction between "actual" and "imputed"
election, no mention is made of Sargent v ASL Developments Ltd, which remains a
pre-eminent authority on the election doctrine in Australia.
86 Immer (No 145) PtyLtdv Uniting Church inAustraliaPropertyTrust (NS9, above n 12.
87 In Sargent vASL Developments Ltd, above n 3, the appellants had agreed to sell land to
the respondent. Under the contract, either party was entitled to "rescind" the agreement
by written notice if it was established that the land was subject to town-planning controls
other than those stated in the contract. In the event, the land was subject to such unstated
controls. Almost two years later the appellant vendors sought to terminate the contract
pursuant to their contractual entitlement. The High Court ofAustralia, however, held that
they were precluded from now disaffirming the contract because they had by reason of
their conduct previously and unequivocally intimated a non-disaffirmatory choice - an
affirmation. They had received quarterly payments of interest due under the contract,
Fine-TuningAffirmation of a Contract by Election: PartI 61
judgment in Sargent,Mason J observed that the election doctrine is triggered

whenever one person has a right to end the contract for whatever reason,
regardless of the source of that right (that is, whether it be the contract or
the general law), for it is in all cases simply the existence of the alternative
and inconsistent entitlement to insist on performance that creates a right of
election, and hence what triggers the doctrine upon an affirmatory election
being made." His Honour also added that:"
... it should be kept firmly in mind that the doctrine of election is of general
application and that no good purpose is to be served by drawing distinctions
in its various applications unless considerations ofjustice make it necessary
or expedient to do so.
Thus, there is ordinarily no good reason to distinguish between the

different sources and contexts of elections between the "right" to either affirm
or disaffirm contractual obligations, at least as regards the consequences of
a finding that an affirmatory election has been made.9 0 Still, the source of
the election power remains important apropos the operational mechanics or
requirements of the election itself, as these can turn precisely on the source
of the power to disaffirm. In short, if the disaffirmation power is conferred by
the common law, the common law requirements for election will govern the
case.91 If, however, the power to disaffirm is conferred by a contractual term,
recouped payments of rates from the purchaser and joined with the purchaser in seeking
to have the land brought under the provisions of the Real Property Act 1900 (NSW).
Although the appellants were held to have affirmed even though they were ignorant of
their right to rescind the contract, it is to be noted that the right was contained in the
contract itself - of which more in Part 2 of this article.
88 Sargent vASL Developments Ltd, above n 3, at 655 per Mason J ("It matters not whether
the right to terminate the contract is conferred by the contract or arises at common law
for fundamental breach - in each instance the alternative right to insist on performance
creates a right of election").
89 Ibid, at 658. It might be added that the election principles ought to be seen as generic in
the contractual context because the non-electing party is vulnerable to having his or her
contractual relationship destroyed by the unilateral decision-making of the other party
regardless of the source of the elector's power to end the contract, and the law's concern
for such vulnerability explains some of the features of the doctrine. See below, text at
n 182-n 188.
90 One would not be surprised to see in the case law a judicial tendency to apply the
doctrinal criteria more stringently (for example by requiring "more convincing" proof
of affirmation) when the non-electing party's vulnerability to loss of a contract resulted
from his or her own wrongdoing (a fortiori deliberate wrongdoing, such as fraud) than
when a mere external contingent condition had failed.
91 See generally JW Carter Breach of Contract (2nd ed, Law Book Co, Sydney, 1991)
[Breach] at [1015]-[1018].
the requirements stated in the contract for election will govern the case.
And if the disaffirmation power is conferred by legislation, the requirements
stated in the relevant statute will apply.93 Where, however, the power to
disaffirm is conferred by either an express contractual term or a statutory
provision, but no specific requirements for election are stated therein, the
generic common law rules will govern the case by default. 94
V When Phraseology Goes Wrong: Differentiating Legal

Preclusionary Categories: "Election" versus "Waiver" versus
"Estoppel"
Let us recall that in Jansen, Randerson J expressed the question before him
at trial as whether the plaintiffs had demonstrated that the defendant had, by
its conduct after 30 June 2003, "unequivocally and irrevocably elected to
proceed to complete the agreement and thereby waived the right to cancel
under clause 22".1 The reference here to "waiver", however, is problematic;
for as mentioned in the prologue to this article, much of the intellectual and
doctrinal instability in this area has stemmed from a serial failure, on the
part of countless courts, counsel and commentators, to differentiate clearly
- and to the extent possible - between quite separate legal concepts and
principles that operate in common contexts and to similar preclusionary
effect. One wonders, for example, how we are to comprehend such
commonly encountered, but ultimately hopelessly confounding, assertions
as the following:
The consequence of the election, if established, is the abandonment, i.e.

the waiver, of a right."
The effect of affirmation is that A "waives" the right to treat the contract as
discharged and to reject B's performance."
92 Ibid, at [1010]-[1014].
93 Ibid, at [1019]-[1022].
94 Generally, see ibid, at [1008]. Compare also Stocznia Gdynia SA v Gearbulk Holdings
Ltd [2009] EWCA Civ 75, [2010] QB 27 (CA) at 38G per Moore-Bick U (Smith and
Ward LJJ agreeing): "In those cases where the contract gives a right of termination they
are in effect one and the same [as the right to treat the contract as discharged by reason
of repudiation at common law]."
95 Jansen (HC), above n 41, at [30] (emphasis added).
96 The MihaliosXilas, above n 1, at 1034 per Lord Scarman.
97 Spencer Bower, above note 2, at 403, [XIII.2.3 1].
Fine-TuningAffirmation of a Contractby Election:Part1 63
It is ... clear that a person may have affirmed a contract and waived his right
to rescind even though he had no intention of doing so.9
A man may have a right given him by his contract or by statute or by the
common law, and a right to choose whether to enforce or waive that right. 99
Can [the plaintiff] now choose to enforce that right against the first
defendant or has he so acted as to have affirmed the agreement and waived
his right to rescind it?' 00
Election leads, I think, to waiver, whether in choosing to object or not

to object to breaches of contract or in acting in accordance with rules of
procedure or statutory provisions.' 0'
Waiver is not a precise term of art ... It can be used to describe the effect
of an election ... 02
Recurrently the terms "election", "waiver" and "estoppel" are employed

so indiscriminately in the case law and commentary in the field that it
becomes extremely difficult at times to determine the precise basis upon
which a disaffirmation power has been lost in the particular case.103 Indeed,
in Jansen itself we were told that although the plaintiffs did not rest their case
on estoppel, but rather "focused attention on waiver and election", election
was "regarded as a species of waiver".'" With respect, such unscientific
use of legal terminology is to be deplored, 0 for in the present context,
98 Zucker v StraightlacePty Ltd, above n 53, at 93D per Young J.

99 Peyman v Lanjani, above n 21, at 481 F per Stephenson LJ.
100 lbid, at 482A.
101 Ibid, at 487B.
102 OliverAshworth (Holdings)Ltd v Ballard(Kent)Ltd, above n 11, at 28G-29A per Robert
Walker U.
103 For an illustrative case in point, see Larratt v Bankers and Traders Insurance Co Ltd
(1941) 41 SR (NSW) 215 at 226 per Jordan CJ.
104 Jansen (HC), above n 41, at [24]. See also LC Fowler & Sons Ltd v St Stephens College
Board of Governors [19911 3 NZLR 304 (HC) at 308 per Thomas J: "the doctrine of
election is frequently misnamed. Rather, it is to be regarded as being an instance of
waiver (or estoppel or release)". However, as the following discussion will reveal, it is
waiver that tends to masquerade for election, rather than vice versa.
105 See also Ross T Smyth & Co Ltd v TD Bailey, Son & Co (1940) 164 LT 102 at 106 per
Lord Wright: "The word 'waiver' is a vague term, used in many senses. It is always
necessary to ascertain in what sense and with what restrictions it is used in any particular
case ... The use of so vague a term without further precision is to be deprecated."
as elsewhere in the law, terminology can make a vital difference.10 6 Jural

language, especially, must be meaningful, precise and accurate, and the rules
must be properly applied, as differing results can be achieved through the
application of different rules. 07 In other words, the area of present concern
is one where linguistic imprecision can rapidly convert into conceptual
confusion, and conceptual confusion into legal error. If we are to make
progress in understanding the concept of affirmation of a contract by election,
therefore, and in particular if we are to avoid the mischief worked by decades
of mindless adherence to the phraseology of "waiver", it is imperative that
we attempt to distinguish election from other legal preclusionary concepts,
particularly estoppel and waiver. 0
Granted, Randerson J correctly noted in Jansen that "[t]he doctrines of
election, waiver, and estoppel are closely related but there are important
conceptual differences between them"."o' Yet we were not then told what
those "important conceptual differences" are, or indeed in what way or ways
the doctrines are "closely related". 110 Certainly they are closely related in the
sense that their operational contexts and jural effect on the parties' existing
contractual relationship are, for practical intents and purposes, mostly
coterminous, as are some of their respective application criteria (such as
the need, under each doctrine, for the party seeking preclusion to show that
there was, by words or conduct, an unequivocal signal by the other party
that she or he was pursuing one course of action or alternative rather than
the other'"). As Brennan J observed in Commonwealth v Verwayen, election,
waiver and estoppel are "cognate concepts: each relates to the sterilization
of a legal right otherwise than by contract"." 2 Others have noted that all
106 Sometimes it is said that it does not really matter in practice which term is used; see, for
example, Morbienes Compania Naviera SA v FerrostalAG [1975] 1 Lloyd's Rep 386
[The Democritos] at 398 per Kerr J. But see Commonwealth v Verwayen, above n 3, at
469-470 per Toohey J ("the law has to work with words. It is important ... that labels
are used with clarity.").
107 Compare Carter Breach, above note 91, at 382.
108 See also DW McMorland Sale of Land (2nd ed, Cathcart Trust, Auckland, 2000) at
423-424.
110 Indeed, as we shall see in Part 2 of this article, his Honour's later acceptance of the
distinction between "actual" and "imputed" election may even be to compound the
problem of demarcation among the distinct preclusionary categories operant in this area.
Ill See, for example, Glencore Grain Ltd v FlackerShipping Ltd [2002] EWCA Civ 1068,
[2002] 2 Lloyd's Rep 487 (CA) [The Happy Day] at [67] per Potter LJ; Peyman v
Lanjani, above n 21, at 501G per Slade U.
112 Commonwealth v Verwayen, above n 3, at 421.
Fine-TuningAffirmation ofa Contract by Election: Part I 65
share "a common foundation in a simple instinct of fairness","l3 but that

each is nevertheless separate and distinct, being based on a different set of
principles. However, convincingly articulating the differences among the
applicable principles can be challenging at times, the greatest difficulty
doubtless lying in the discrimination between "election" and "waiver", which
are frequently commingled." 4 The term "waiver" in particular has been
described as a "slippery word worn smooth with overuse",' and as "a term
of shifting meaning""'6 that serves as a "chameleon concept"" 7 not only
in connection with contractual rights more specifically but across the law
generally as well."I
This problem of delineating legal preclusionary categories, notice,
is hardly new. Almost a century ago John S Ewart proclaimed that there
was "no legal situation, no legal concept, which can be properly described
by the word 'waiver"', although he admitted that, much like "suction" in
physics - a word that, while in common use and comprehension, in fact
describes no natural force - the term "waiver" might nevertheless enjoy
some semantic utility or convenience in law while describing or constituting
no independent legal category or justificatory reason.' '1 Mostly, though,
Ewart was scathing of courts' and lawyers' inconsiderate adherence to the
phraseology of waiver. He declared that "[t]here appears to be no limit to the
ingenious misapplications of the word 'waiver"',' 20 also stating:' 2'
The word is used indefinitely as a cover for vague, uncertain thought. And
although, on occasion, it may have helped some judges to do right under
an appearance of legal principle, yet, upon the whole ... its presence in
113 Oliver Ashworth (Holdings) Ltd v Ballard (Kent) Ltd, above n 11, at 27 per Robert
Walker LJ; Spencer Bower, above n 2, at 355.
114 Seddon and Ellinghaus, above n 34, at [21.28] and [21.31]. See also Foranv Wight (1989)
168 CLR 385 (HCA) at 396 and 456-458.
115 Commonwealth v Verwayen, above n 3, at 467 per Toohey J, recalling Roscoe Pound's
observation in his foreword to JS Ewart's Waiver Distributed,above n 11.
116 Commonwealth v Verwayen, above n 3, at 422 per Brennan J.
117 Carter Breach, above n 91, at 354.
118 See also Austin J's discussion on waiver in Lewis v Cook [2000] NSWSC 191 at [26]-
[35]; EL Rubin "Toward a General Theory of Waiver" (1981) 28 UCLA Law Review
478; Agricultural and Rural FinancePty Ltd v Gardiner,above n 2, at [50]-[54] per
Gununow, Hayne and Kiefel JJ, and at [118]-[145] per Kirby J.
119 Ewart, above nI I, at 14.
120 Ibid, at 11.
121 Ibid, at 5.
our system of jurisprudence has been disastrous not only to clarity of

conception, but to the general administration of justice.122
Ewart's project, therefore, was to expose waiver as an "empty category"

best "distributed" among the other familiar legal "departments" of election,
estoppel, variation of contract and release.' 23 He spurned the ubiquity and
reckless versatility of the concept. It had too many "aliases",' 24 made possible
by the laxity of its definition: "For if you are content to say that 'waiver' is
'An intentional relinquishment of a known right', you plainly equip it for
successful masquerading in very dissimilar departments of the law." 25
If Ewart was, as I believe, right about waiver, why have courts and
commentators persisted for so long with its usage? 26 One might be forgiven
for thinking that this is more than a slightly bewildering phenomenon, for
despite extended judicial recognition of the problem, and repeated academic
calls for eradication (or at least more disciplined invocation) of the term, the
semantic deployment of "waiver" as a synonym or catch-all tag for other
applicable preclusionary concepts continues to abound in modern law,127
122 Writing shortly thereafter, in 1919, Corbin wrote that waiver was a word of "indefinite
connotation" that "like a cloak ... covers a multitude of sins"; see AL Corbin "Conditions
in the Law of Contracts" (1919) 28 Yale LJ 739 at 754. So it was, for example, that in
the otherwise lucid doctrinal discussion in the 1920 case of Craine v ColonialMutual
Fire Assurance Co Ltd, above n 3, at 326, Isaacs J used the term "waiver" to refer to
what was really common law "election". "Waiver" was also used in an obvious case of
"election" in Society Italo-Belgepour le Commerce et IIndustrie v Palm and Vegetable
Oils (Malaysia) Sdn Bhd [ 1981] 2 Lloyd's Rep 695 [The Post Chaser] and More OG
Romsdal FylkesbatarAS v The Demise Charterersof the Ship "Jotunheim" [2004]
EWHC 671, [2005] 1 Lloyd's Rep 181 (Commercial Court).
123 See also JW Carter "Waiver (of Contractual Rights) Distributed" (1991) 4 JCL 59
["Waiver"], especially at 65-66; Carter Breach, above note 91, at [1041]-[1042]; HG
Beale (gen ed), Chitty on Contracts (30th ed, Sweet & Maxwell, London, 2008) vol 1
[Chitty] at [24-007]-[24-008]. For an (unsuccessful) attempt to reformulate, in terms of
the doctrine of "waiver", the equitable principles relating to estoppel, see ID Campbell
"Gratuitous Waiver of Contractual Obligations" (1964) 1 NZULR 232.
124 Generally, see Ewart, above n 11, at ch 2.
125 Ibid, at 23.
126 The late Allan Farnsworth suggested that the courts' fondness for the waiver concept lies
in allowing greater flexibility in dealing with the parties' conduct during performance
than would the course-of-performance and contract modification rules: "An argument
based on waiver has an advantage over one based on course of performance since the
latter is confined to interpretation. And it has an advantage over an argument based on
modification because it avoids three requirements for a modification [assent, written
evidence (where necessary), and consideration]." See EA Farnsworth Contracts (3rd
ed, Aspen Law & Business, New York, 1999) at 541.
127 See, for example, Chitty, above n 123, at [24-007] ("The word 'waiver' is used in law
Fine-TuningAffirmation of a Contract by Election: Part 1 67
and in all of the major common law legal systems. For example, while it
is very common to find reference in legal judgments1 28 and authoritative
secondary works1 29 to such misleading conceptual or doctrinal designations
as "waiver by election" (or "elective waiver") and "waiver by estoppel", it
is also clear that, just as Ewart had identified, the term "waiver" is enjoying
no independent juristic identity in any of these phrases. 3 ' On the contrary, it
is parasitic upon the very operation of those other legal concepts that are in
fact doing the legal work - election and estoppel - while adding nothing
itself by way of substance or illumination."' As Carter has complained:13 2
in a variety of different senses and so bears 'different meanings'); The Kanchenjunga,

above n 15, at 397 per Lord Goff, S Wilken The Law of Waiver, Variation and Estoppel
(2nd ed, Oxford University Press, Oxford, 2002) at ch 3; FMB Reynolds "The Notions
of Waiver" [1990] LMCLQ 453.
128 Kammins Ballrooms Co Ltd v Zenith Investments (Torquay) Ltd [1971] AC 850 (HL)
at 882-883 per Lord Diplock, adopted by Spencer Bower, above n 2, at 355; Oliver
Ashworth (Holdings)Ltd v Ballard(Kent) Ltd, above n 11, at 30 per Robert Walker LJ,
adopted by Spencer Bower, above n 2, at 370; Nectar Ltd v SPHC Operations(NZ) Ltd,
above n 3.
129 See, for example, Chitty, above n 123, at [24-007] and [24-008]. At [24-007], the author
says that "waiver by election" signifies the "abandonment of a right which arises by virtue
of a party making an election", which of course may be merely to describe waiver as an
effect rather than as a cause. Further, "[a]ffirmation is an example of such a waiver, since
the innocent party elects or chooses to exercise his right to treat the contract as continuing
and thereby abandons his inconsistent right to treat the contract as [at an end]". "Waiver
by estoppel", in contrast, arises "when the innocent party agrees with the party in default
that he will not exercise his right to treat the contract as repudiated or so conducts
himself as to lead the party in default to believe that he will not exercise that right".
The author asserts that this type of waiver does not exist as an independent principle
but rather is an application of the principle of estoppel in equity deriving from Lord
Cairns' classic statement in Hughes v MetropolitanRailway Co (1877) 2 App Cas 439.
130 See also the observations of Lord Diplock in Kammins Ballrooms Co Ltd v Zenith
Investments (Torquay) Ltd, above n 128, at 882-883; Oliver-Ashworth (Holdings) Ltd
v Ballard (Kent) Ltd, above n 11, at 28G-29A per Robert Walker LJ. Regrettably, in
Agriculturaland RuralFinancePty Ltd v Gardiner,above n 2, at [54], Gummow, Hayne
and Kiefel JJ did not consider it necessary to consider whether classifications such as
"waiver by election", "pure waiver" or "unilateral waiver" are useful.
131 See also Commonwealth v Verwayen, above n 3, at 491 per McHugh J ("Most cases
which purport to apply the doctrine of waiver are really cases of contract, estoppel or
election"); compare also ibid, at 451-452 per Dawson J, at 480-81 per Gaudron J, and
at 406 per Mason CJ: "It has been doubted that waiver exists as a defence or answer in
any case except where it is used as an alternative designation for some other defence or
answer, for example, election, estoppel or new agreement. ... Generally speaking,.
an existing legal right is not destroyed by mere waiver ... ".
132 Carter "Waiver", above n 123, at 61. See also AM Sheppard "Demystifying the Right
of Election in Contract Law" [2007] JBL 442 at 467-469.
"[W]aiver" is a general term used to describe the operation of a number of

principles or concepts. In the context of contractual rights the chief concepts
are election and estoppel. Thus, where it is said that a contractual right has
been waived it is usually meant that the right is not available to the party
who waived it because that person has elected not to exercise the right or is
in the circumstances estopped from exercising the right.
Carter concludes, justifiably in my view, that "the courts must face up

to the question whether waiver is itself a doctrine or merely a short-hand
description of the operation of other doctrines" (election and estoppel),
although he personally doubts that the waiver concept in fact possesses a
non-derivative identity in this context.133 Indeed, if the waiver concept is
to claim any independent legal territory at all, it is likely to be restricted
narrowly to situations involving the unilateral consensual divesture of a
"right" 34 (contractual or otherwise, and typically of a technical or procedural
nature) that exists or is introduced solely for the advantage or benefit of the
party alleged to be "waiving" it'- a process and outcome that is sometimes
referred to as "unilateral waiver". 36 Waiver is certainly distinct from election
133 Ibid, at 73.

134 Including contingent conditions and defences. As Farnsworth points out, however, even in
this context the idea that, definitionally, waiver involves "the intentional relinquishment
of a known right" is misleading: "What is involved is not the relinquishment of a right
and the termination of a duty but the excuse of the non-occurrence of or a delay in the
occurrence of a condition of a duty." See Farnsworth Contracts,above n 126, at 540-541.
For Farnsworth Changing Your Mind, above n 11, at 135, it would be best if the word
"waiver" were confined to the consensual relinquishment of a (non-promissory) condition
(of one's duty) as opposed to relinquishments of rights, which is about discharge (eg
accord and satisfaction) rather than waiver (of the advantage of the condition).
135 See Commonwealth v Verwayen, above n 3, at 423 per Brennan J; Heron Garage
PropertiesLtd v Moss [ 1974] 1 WLR 148 (Ch); Lancelot St Elmo Balbosa vAyoubAli
[1990] 1 WLR 914 (PC). It is also possible that room exists for an independent doctrine
of waiver in the context of the adjudicative process, in contrast to that of contractual
or statutory rights. See also Agriculturaland Rural FinancePty Ltd v Gardiner,above
n 2, at [144]-[145] per Kirby J: "I am inclined to accept that a party may unilaterally
release or abandon a right and be held to such a 'waiver' beyond instances of contractual
variation, estoppel and election. In my view, 'waiver' certainly extends beyond the very
particular circumstance of an indication of non-reliance on a statute of limitations.
... I would accept a residual category of manifest unfairness at common law that is
distinct from estoppel and election. The law will provide relief by upholding a 'waiver'
in circumstances where not to do so would be manifestly unfair to the beneficiary of the
'waiver'."
136 The HappyDay, above nI11, at [64] per Potter U. Generally, on "unilateral waiver", see
Spencer Bower, above n 2, at 372-373. See also McMorland, above n 108, at 163-169.
It remains controversial, however, whether there is, apart from the established doctrines
Fine-TuningAffirmation ofa Contract by Election: PartI 69
in the sense that a right may be "waived" even though there is no alternative
right inconsistent with it,' the prevention of unfair inconsistency in the
selective enforcement of "alternative rights" being the distinctive purpose
of the election doctrine."' Moreover, it is a misconception to say that when
one "elects" to continue with one's liability under a contract one "waives
(abandons, renounces, surrenders) the right to disaffirm",'3 9 for the one so
electing had no right to both alternatives simultaneously. Owing to their
inconsistency, one merely had a choice between them,14 0 and one cannot
conceivably "waive", "surrender", "renounce" or "abandon" what one never
completely enjoyed in the first place.14 ' Accordingly, in election situations
a party "waives" nothing; she merely exercises a choice - here between
ending the contract or not - and once she has publicly made the choice
not to end the contract, the law, via its election doctrine, simply takes that
option that was not chosen out of her hands. Thus, the electing party does not
"waive"; she is merely "legally precluded" from acting inconsistently with
her communicated choice. The perpetuation of any contrary view in modern
law "can be explained only by the power of the habitual use of erroneous
phraseology".14 2 Hence, it is suggested, adherence to the phraseology of
"preclusion by election", as employed for example by some of the American
sources, should be preferred to that of "waiver by election".
The key conceptual distinction between election and estoppel, it would
seem, is more straightforward. 143 Election (and indeed waiver to the extent
of election, variation and estoppel, an independent concept or doctrine of "unilateral

waiver", even of non-promissory contingent conditions that exist exclusively for the
abandoning party's benefit; see Spencer Bower, above n 2, at 371ff.
137 Compare Connionwealth v Verwayen, above n 3, at 424 per Brennan J.
138 As Brennan J explained (ibid, at 423): "These distinct doctrines serve different purposes:
election (in either species [that is, at common law or in equity]) ensures that there is
no inconsistency in the enforcement of a person's rights; estoppel or equitable estoppel
ensures that a party who acts in reliance on what another has represented or promised
suffers no unjust detriment thereby; waiver recognizes the unilateral divestiture of certain
rights."
139 The inaccuracy in this idea can readily be seen by reference to the converse case. If a
party elects to end the contract, we would not say that he or she had "waived" his or her
right to proceed. Compare Ewart, above note 11, at 25; see also at 7 and 8.
140 As Ewart cogently remarked (ibid, at 13): "[I]n election, the act has a legal effect upon
the relationship between two persons, or upon the legal right of some party. 'Waiver'
has no such effect. 'Waiver' implies that you have something, and that you are throwing
it away. Election, upon the other hand, implies that you have a right to get one of two
things, or to occupy one of two positions, by choosing between them."
141 Compare ibid, at 138.
142 Ibid, at 8.
143 Generally, see The Kanchenjunga, above n 15, at 397-399; Carter "Waiver", above
n 123, at 65-66; CarterBreach, above n 91, at [1041]-[1042];Chitty, above n 123, at
that it possesses an independent identity) is "unilateral", whereas estoppel

is "bilateral" in its focus and concern. In other words, estoppel can be
distinguished by the need for unfair prejudice or detrimental reliance to be
shown, on the part of the one who has been led reasonably to believe that a
"non-disaffirmatory" decision has been made, before the power to disaffirm
is negatively affected, whereas, for election, "the authorities ... are consistent
in ... regarding the elector's act of disaffirmance or adherence to the contract
as itself completing the election without more".'" The two concepts also
differ in respect of the precise mental element that accompanies each
conceptl 45 - of which more in Part 2 of this article.146
It is fair to say that New Zealand courts have not seriously confronted,
let alone disambiguated, the conceptual boundaries between the various
preclusionary categories competing in this area of contract law. Although the
Court ofAppeal has acknowledged that the distinction between election and
waiver is "often blurred",'4 7 most of Her Majesty's judges have continued
to adhere, again quite mindlessly, to the inaccurate locutions of "waiver" in
contexts where it is claimed that contractual rights or powers have for some
reason been lost.1' I say "for some reason" here because the word "waiver",
[24-007]-[24-008]. An earlier view was that "[t]he facts of a given case are so often
open to the application of either doctrine, and so often enable estoppel to come in aid of
waiver [meaning election], that it is unnecessary to discern accurately the distinction":
Craine v ColonialMutual Fire Assurance Co Ltd, above n 3, at 326-327 per Isaacs J.
144 Sargent v ASL Developments Ltd, above n 3, at 647 per Stephen J (McTiernan ACJ
agreeing), citing Myers v Ross 10 F Supp 409 (1935) at 411: "Estoppel depends upon
what a party causes his adversary to do. Waiver by election depends upon what the party
himself intends to do, and has done." See also Khoury v Government Insurance Office
ofNew South Wales, above n 12, at 633 per Mason, Brennan, Deane and Dawson JJ.
145 The authors of Spencer Bower, above n 2, at 356, for example, describe the "subjective
nature of election which requires full knowledge on the part of the electing party and the
more objective nature of promissory estoppel and estoppel by representation of fact".
146 Another important practical difference between estoppel and election is that estoppel
may involve no more than a temporary suspension of contractual rights or powers. Unless
it would be inequitable to allow disaffirmation, the right to disaffirm may be reasserted
upon the giving of reasonable notice. Election, in contrast, always involves a permanent
loss of the power to disaffirm in respect of the same reason. See The Kanchenjunga,
above n 15, at 399; Commonwealth v Verwayen, above n 3, at 474 per Toohey J.
147 MatamataMetal Supplies Ltd v Waipa DistrictCouncil [1996] 3 NZLR 190 (CA) at 194
per Henry J (for the Court).
148 J Burrows, J Finn and S Todd Law of Contract in New Zealand (3rd ed, LexisNexis NZ
Ltd, Wellington, 2007) at 588-589, n 134, cite two examples of New Zealand courts
using the language of "waiver" - that is in the sense of asking whether a party had
"waived the right to cancel" - when "affirmation" would have been more appropriate
terminology: Kauri Developments Ltd v Nicholson (1986) 2 NZCPR 532 at 540; and
Cycle ManufacturingCo v Williams [1993] 1 NZLR 454 at 465.
Fine-TuningAffirmation ofa Contractby Election: Part 1 71
in its habitual engagement at least, tends never to reveal the precise reason
for the loss of the right or power in question, which reason must typically
be found elsewhere - in other concepts or principles that are operative and
more appropriate to the circumstances, typically election or estoppel.149 In
other words, just as Ewart and others have identified, when a court says
that a contractual right or power has been "waived" by the party originally
possessing it, this is virtually always to state a conclusion or end-result
rather than the process of reasoning that led to it.' 0 (When "waiver" is used
to describe both process and result, the consequences can be even more
confusing!) Certainly, use of the word "waiver" in connection with election
and estoppel - "waiver by election", "waiver by estoppel", and the like - is
unfortunate phraseology considering that the word "waiver" tends to suggest
that there has been a voluntary and intentional relinquishment of a known
right, power or claim.'"' Yet, as mentioned, and as we shall explore further in
Part 2 of this article, the loss of a right, power or claim via election or estoppel
is imposed by operation of law, irrespective of the electing party's specific
intention. 152 At best, the "object" of party-intention in election situations is the
choice between the inconsistent positions - one must at least "intend" to do
the acts that, objectively, represent to the non-electing party an unequivocal
selection between the known alternatives - but it is not further necessary
that, in so acting, one must have "intended" the legal consequences of the
apparent selection, that is to say, that in so acting/choosing one must have
149 The authors of Spencer Bower, above note 2, at 369, put the point very nicely: "A fairly
successful attempt could be made to state with precision what is meant by 'estoppel' and
by 'election' but the term 'waiver' when it is used in the same way, ie as a description
or label for a particular kind of conduct, is not capable of exact definition in the light of
the authorities. Possibly it is more usefully regarded as describing an end result, ie the
abandonment or modification of a right, rather than the process by which that result is
achieved or brought about. When it is used in the latter sense without qualification there
is almost invariably an ambiguity as to the essential nature of the process by which the
party in question can be said to have waived his or her rights. ... [T]he use of the term
by itself tells one nothing about the reason why the party in question will be held to have
abandoned or suspended a right or is bound to accept a different performance."
150 See also Commonwealth v Verwayen, above n 3, at 406 per Mason CJ: "As often as not,
the term 'waiver' is used to describe the result of the application of various principles
rather than to designate a particular legal concept or doctrine." Compare ibid, at 451 per
Dawson J ("'Waiver'is an imprecise term and is used to describe what is done in a variety
of circumstances rather than to assert any particular legal process"); Agricultural and
RuralFinancePty Ltd v Gardiner,above n 2, at [51] per Gummow, Hayne and Kiefel JJ.
151 Compare Commonwealth v Verwayen, above n 3, at 406 per Mason CJ: "According to
its strict legal connotation, waiver is an intentional act done with knowledge whereby a
person abandons a right by acting in a manner inconsistent with that right."
152 That is to say, the presence of an actual intention to relinquish the right, power or claim
is superfluous, and the absence of any such actual intention is irrelevant.
also acted deliberately and purposively with reference to permanently losing

thereafter the opportunity to revive one's original options. With election,
therefore, it is always important to remember that preclusion is automatically
achieved and that the permanent loss of the inconsistent right or power
is not something that the electing party necessarily "chose" or "waived".
Such preclusion occurs, moreover, without form, consideration or proof
of detrimental reliance on the other side. It happens simply by dint of the
fact that the law will not allow a party who has once communicated an
unequivocal affirmatory choice to enjoy, concurrently or sequentially, an
inconsistent disaffirmatory right or power. Why is this, or should this be, so?
How does, or can, the law justify the permanent loss of an inconsistent jural
right or power, even when the non-electing party technically receives nothing
in return and would not (say) be materially harmed by the court allowing a
reversal of the communicated affirmation in the individual case? What could
possibly substantiate a strict irreversibility rule within the election doctrine,
that is, in relation to affirmatory elections as opposed to disaffirmatory ones?
Those are questions to which we now turn.
VI The Irreversibility Rule:' Why Is an Election to Affirm Final

and Binding without Reliance, Form or Consideration?
As mentioned in the prologue above, what is perhaps most significant about

an effective affirmation is its binding nature: quod semelplacuitin electione,
amplius displicere non potest ("If a man once determines his election, it
shall be determined for ever").15 4 The communicated decision to persist
with the contract (that is, not to end it) operates as a complete and effectual
bar - a preclusion - to further action based on the alternative choice of
disaffirmation, and this obtains regardless of whether consideration, formality,
reliance or a specific intention existed in support of the surrender.'"I Again,
why is this, or should this be, so? What is the reason, principle or policy that
153 Again, the rationale for irreversibility may not be uniform across all species of election.
See my remarks above at n 11. In this section I am concerned only with the rationale for
preclusion in the context of the election between affirming and disaffirming a contract.
154 3 Comyn 's Digest, Tit Election, c 2, cited by Farnsworth Changing Your Mind, above
n 11, at 181; Dawson and McLauchlan, above n 4, at 131.
155 There are occasional judicial denials that election alone produces an irrevocable result.
In O'Connor v SP Bray Ltd (1936) 36 SR (NSW) 248 at 262, Jordan CJ, in reference to
alternative rights conferred by a contract, stated: "It would appear ... from the authorities,
that an intimation of an election between alternatives of itself produces no irrevocable
results, except in cases where the intimation, of itself, produces legal consequences
independently of any question of election, or where it is necessary that the choice should
be treated as irrevocable, in order to do justice to the other party." Although Brennan J
Fine-TuningAffirmation of a Contractby Election: Part 1 73
underlies the strict irreversibility rule in the contractual affirmation context?

A convincing answer to these questions is important not least because it
ought to dictate how the courts are to define, characterise and apply the
election concept in that context. It cannot suffice simply to respond that in
New Zealand irreversibility is a statutory consequence, at least in respect of
those contracts to which the Contractual Remedies Act 1979 cancellation
rules apply, because s 7(5) of that Act provides that "[a] party shall not be
entitled to cancel the contract if, with full knowledge of the repudiation or
misrepresentation or breach, he has affirmed the contract". For we might still
legitimately ask what underlies and justifies that statutory rule, the answer
likely being that s 7(5) is merely Parliament's implementation of whatever
are the informing criteria, policies and consequences of the election doctrine
at common law. 156
Now, a trite answer to the questions posed above is that the purpose of
the election doctrine is to prevent a party from simultaneously adopting
inconsistent positions by enforcing his or her rights in a contradictory way -
a "not having your cake and eating it too" sort of objection.' And although
that response is in a relevant sense true, it merely assumes an answer to a
logically prior and more foundational question: Why should a party not be
able to enjoy, simultaneously or sequentially, inconsistent rights if, say, the
other party (or indeed anyone else) is not prejudicially affected as a result?
A convincing rationale for the irreversibility rule is more likely to lie in the
answer to that sort of inquiry. In other words, while the law's concern for
inconsistency in the enjoyment ofjural alternatives can explain why a choice
between the inconsistent alternatives must at some point be made, it cannot
alone explain why a choice, once it has been made, is irretrievable simply
by reason of its having been communicated, objectively, to the other party.
Surprisingly, it is quite rare - the more so in the primary authorities than
in the academic literature - to encounter sophisticatedattempts to justify
a strict irreversibility rule in relation to the election to affirm a contract (as
opposed to the election to disaffirm). I say "surprisingly" here because, given
in Immer (No 145) Pty Ltd v Uniting Church in Australia PropertyTrust (NSW), above
n 12, at 31-32, apparently accepted this viewpoint, it belies orthodoxy in the field.
156 As pointed out by Hardie Boys J in Jolly v Palmer [1985] 1 NZLR 658 (CA) at 663,
s 7(5) of the Contractual Remedies Act 1979 merely reflects the law prevailing before
the Act. Note, therefore, the difference between the Contractual Remedies Act, which
relies on the "affirmation" concept, and the Sale of Goods Act 1908, which prescribes
a similar statutory consequence, but not via the affirmation principles. As Hammond J
pointed out in Crump v Wala, above n 2, at 338, "acceptance" under the Sales of Goods
Act is not identical to "affirmation" - "the mental element is removed". Compare also
Peyman v Lanjani, above n 21 at 488D per Stephenson LJ.
157 See, for example, Sargent v ASL Developments Ltd, above n 3, at 641 per Stephen J
(McTiernan ACJ agreeing); Dawson and McLauchlan, above note 4, at 121, n 9.
that an affirmation cannot be withdrawn even when it would not be materially

unfair to allow that to happen (because, say, no one has yet relied upon it to
his or her detriment), a number of commentators have viewed this as the least
desirable feature of the doctrine.' Irreversibility, therefore, is something
that one would expect to call for positive justification in some measure. 159
It is as well to mention here, too, that some writers have protested that
the usual explanation for the irreversibility rule - that the promisee cannot
claim the benefit of continued performance without also shouldering the
burden of contractual obligations - is less than fully convincing. Rossiter,
for example, has argued:'6
[I]n justice, the option of rescission ought to remain available to the party
deciding to affirm unless the other party has relied upon the affirmation to
his detriment. The affirming party is given no consideration for the loss of
his option, other than the continued benefit of the contract, and the act of
the party affirming is not itself conclusive as is the case when the contract
is rescinded.
For Rossiter, then, and others,' 61 an estoppel rule should (or might) be
favoured in all cases: the irreversibility of an affirmation should always rest
on the proven existence of prejudicial reliance by the non-electing party.
This, however, is inconsistent with the current law - that an affirmation is
permanent without reliance - and, provided that the criteria for operation of
158 See, for example, CP Hine "Election of Remedies, A Criticism" (1912-13) 26 Harv L
Rev 707; JF Andrews "Elections to Affirm or Disaffirm Contracts Voidable for Fraud or
Material Breach" (1962) 36 Tulane L Rev 508 at 519-520; Dawson and McLauchlan,
above n 4, at 121 and 124; Rossiter, above n 4, at 565; McMorland, above n 108, at 423
and 424.
159 One would think that in an article entitled "The Logical Basis of the Doctrine of
Election" (see Redmond, above n 4), we would be educated as to what underlies this
area of the law and its results, but we are not. The author merely asserts that, "[a]s an
exercise in mental discipline, or abstract logic, the principle that one should not elect to
continue a contract which he has the right to repudiate, then later repudiate it, cannot
be criticized" (ibid, at 77). But nowhere are we told why this is or should be so. All that
the author asserts is that "no doubt it is logical that A. should not conduct himself in
a manner indicating affirmation of his contract, and then decide to repudiate" (ibid, at
78). See also Campbell, above n 123, at 235 ("Logic alone would seem to compel the
conclusion that a man cannot at the same time maintain the attitude 'you may' and 'you
may not', 'you need not' and 'you must"').
160 Rossiter, above n 4, at 565.
161 See, for example, Andrews, above n 158, at 520; Seddon and Ellinghaus, above n 34,
at [21.28] ("It may be that the law should, in the interest of simplicity and uniformity,
adopt estoppel as the ruling criterion in all such cases [of loss of right to terminate by
conduct]").
the doctrine are narrowly circumscribed and applied (especially the knowledge
requirement, of which much more in Part 2 of this article), it is not required
by "justice" either. Rossiter's concern for want of consideration in support of
the loss of an option that results from affirmation cannot support a universal
estoppel rule in the present context, even though consideration remains a
formal requirement for the formation of simple contracts, and (perhaps 6 2)
for their modification and release as well. Although one can understand the
possible need in justice for all informal relinquishments of true obligations
or claim-rights to be supported by valid consideration (or its equivalent),
the magnitude of the advantage that is lost through the act of affirmation is
insubstantial by comparison to what is being surrendered in other types of
case caught by the rule (such as accord and satisfaction): affirmation results
in the loss of a mere legal power as opposed to a full-blown claim-right.163
162 There appears to be a case for abandoning altogether the consideration rule, at least
in the context of contract modifications, in some common law jurisdictions, including
New Zealand, leaving the validity of such transactions to be determined according to
the classical "autonomy" or "consent" tests (such as duress, fraud, "public policy");
see Antons Trawling Co Ltd v Smith [2003] 2 NZLR 23 (CA); Nay Canada v Greater
FrederictonAirport Authority Inc (2008) 290 DLR (4th) 405 (NBCA). Although the
cases are not as well reasoned as they might have been in favour of abandonment of
the rule (see, in relation to the Antons case, B Coote "Consideration and the Variation
of Contracts" [2003] NZ Law Rev 361), it might be argued that consent is a stronger
reason for binding the consenting party in the modification context than in the area
of future commitments (that is, originating promises). That is because surrenders of
existing rights by definition "speak to the present", and, as Atiyah once pointed out,
the law tends to draw a distinction "between a present consent and a consent to some
future action". Atiyah added that "it is in the case of a present consent that the economic
assumptions about the consumer knowing his own best interest are at their strongest":
PS Atiyah The Rise andFall ofFreedom of Contract(Oxford University Press, Oxford,
1979) at 754-756, quoted by Farnsworth ChangingYour Mind, above n 11, at 121. For
Farnsworth, the force of a present consent is (or at least should be) greater in law than
for a future one (say, in relation to an originating commitment as to the future), because
"we are more competent in ordering our present actions than our future ones" (ibid, at
120). "If, then, we are better able to protect ourselves against the possibility of second
thoughts in cases of relinquishments and preclusions than in cases of commitments,
paternalism argues in favor of distinguishing between the two" (ibid, at 121).
163 Indeed, the act of affirming or disaffirming a contract does not normally affect the
claim-right that the electing party might possibly have to compensation in respect of
the event that gave rise to the election itself. See Atlantic Shipping & Trading Co Ltd v
Louis Dreyfus & Co [1922] 2 AC 250 (HL) at 262 per Lord Sumner; The Progressive
Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17 (HCA) at 31 per Mason J,
50 per Brennan J,55-56 per Deane J (Dawson J agreeing); Carter Breach, above n 91,
at [1105]. This is because an affirmatory election does not eliminate the wrong that
gave rise to the right to elect, merely the alternative of putting an end to the contract;
see McDrury v Luporini, above n 13, at 664 per Tipping J. Surrender of the claim-right
Besides, in modem law the requirement of consideration in the context of

executory bilateral contracts of variation has become significantly diluted, if
not eviscerated altogether, by such authorities as Williams v Roffey Brothers
& Nicholls (Contractors)Ltd'" and Musumeci v Winadell Pty Ltd.'6 These
authorities recognise the possibility of consideration subsisting in the form
of incidental "factual" or "practical" benefits or advantages that accrue (or
are expected to accrue) to the promisor from his or her continued contractual
relationship with the promisee, despite the absence of a corresponding-
"legal" detriment moving from the promisee. Such a practical advantage or
benefit to the non-electing party is frequently likely to obtain in affirmation
settings as well, as has been recognised in a leading case in the field.166
Rossiter's (and others') objections aside, a handful of rationales have been
advanced over the past century or so in support of the strict irreversibility
of an election to affirm once communicated.' 67 Far and away the most
will generally have to be supported by consideration (accord and satisfaction) or else be

effectuated under seal (or, possibly now, estoppel: Collier v P & MJ Wright (Holdings)
Ltd [2007] EWCA Civ 1329, [2008] 1 WLR 643). On the "magnitude" of the advantage
that can be relinquished by waiver, see Farnsworth Changing Your Mind, above n 11, at
156 (what is being given up is not a material part of the agreed exchange).
164 Williams v Roffey Brothers & Nicholls (Contractors)Ltd [ 1991] 1 QB 1 (EWCA).
165 Musumeci v Winadell Pty Ltd (1994) 34 NSWLR 723 (NSWSC). See also Machirus
PropertiesLtd v Power Sports World (1987) Ltd (1999) 4 NZConvC 193,066 (HC).
166 See Sargent vASL Developments Ltd, above n 3, at 641 per Stephen J (McTiernan ACJ
agreeing), citing SA Williston A Treatise on the Law of Contracts (3rd ed, Lawyers
Co-operative Publishing Co, Rochester (NY), 1972) vol 5 at [683]: "the [election]
doctrine is not out of harmony with the general rule that a binding surrender of a right
requires a sealed release or consideration; by surrendering one right the elector thereby
gains an advantage not previously enjoyed, the ability to exercise to the full the other
inconsistent right". With respect, this reasoning appears weak, if not circular, even on a
"practical benefits" view of consideration. The ability to enjoy the contract and not the
inconsistent power to terminate, that is, "the surrender", is a consequence of the election
to affirm. It cannot plausibly explain why the affirmation should be treated as permanent.
167 A notable example is Ewart, above n 11. He thought that "the contract" provides the
rationale: "election is effective [that is, irreversible], because the parties have, in their
contract, so agreed" (ibid, at 75); "the right to elect comes from contract, and ... its effect
is prescribed by contract" (ibid, at 83). But this is self-evidently untrue, at least as a
general legal proposition, a fortiori in the case of affirmation as opposed to disaffirmation
(where the contract often does govern election rights and consequences). Occasionally
the reader is reminded of the limits to Ewart's rationale by such statements as "We
have been assuming that the principles of election are those applicable to a policy
containing a clause providing that it shall be void upon the happening of some event"
(ibid, at 95). Ewart's explanation of the irreversibility rule, therefore, is incapable of
being generically applied, for example to affirmations, and in particular those following
upon a disaffirmation power arising dehors the contract.
Fine-TuningAffirmation of a Contractby Election: Part 1 77
common validation encountered for the preclusionary rule in regular contract

situations, however, is the interrelated need for "certainty" ("stability",
"predictability") and "fairness" in practical affairs.' 68 This is encapsulated,
for example, in the following passage from Mason J's judgment in Sargent
69
vASL Developments Ltd:1
No doubt this rule [that an election, once it is communicated, cannot be

recalled] has been adopted in the interests of certainty and because it has
been thought to be fair as between the parties that the person affected is
entitled to know where he stands and that the person electing should not
have the opportunity of changing his election and subjecting his adversary
to different obligations.
The non-electing party - even if he or she has been guilty of fraud,

duress or cynical repudiation - is entitled to act with confidence as to
where he or she stands after notification of a firm choice by the electing
party, 7 0 which seems "only fair" as well."' A doctrine that fixes the rights
of the parties immediately upon the choice being made and communicated
doubtless affords the non-electing party that confidence and accordingly
avoids the unfairness, or simple inconvenience, that inheres in a continuing
state of uncertainty. It is self-evidently undesirable that the non-electing
168 I mention that the need for certainty and fairness is "interrelated" because uncertainty
and unfairness are not necessarily mutually exclusive reasons in the present connection.
There may be real unfairness in being left in a state of uncertainty as to where one stands
in relation to another party, to whose choices and actions one is vulnerable. One party
should not be left at the other party's mercy indefinitely.
169 Sargent v ASL Developments Ltd, above n 3, at 656. See also Zucker v Straightlace
Pty Ltd, above n 53, at 95D per Young J: "It seems to me that it is of the essence of the
philosophy behind the common law doctrine of election that the non-electing party is
entitled to conduct his affairs on the basis that the electing party has chosen to exercise
one of two inconsistent rights and not exercise the other."
170 Compare Andrews, above n 158, at 520; Spencer Bower, above n 2, at 375: "In the case
of waiver by election, the waiver is binding because X has to choose between inconsistent
rights and commits himself to one rather than the other. The choice becomes binding at
the point of communication because Y is entitled to know where he stands with certainty
before he can be required to act. This is the justification for the limited doctrine of
election by which a firm choice between two alternative courses of action is binding."
171 "Even the victim of fraud is expected to deal fairly in this way with the one who has
perpetuated the fraud": Farnsworth Changing Your Mind, above n 11, at 188. See also
Ewart, above n 11, at 108: admitting that the defrauder is not entitled to much sympathy,
yet his conduct affords little reason for saying that the other party can retain an indefinite
option between approbating and reprobating the transaction.
party should be "faced with the dilemma of uncertainty",172 all the while
remaining vulnerable as to which way the other party will eventually jump.
It would appear that this justification found favour with the Court of Appeal
in Jansen,173 the Court remarking on an "unsatisfactory state of affairs,
where both sides are left in a state of uncertainty as to the nature of their
ongoing legal relationship".174 Relatedly, the strict irreversibility rule might
also implement a general desire on the part of courts to preserve ongoing
relationships of a significant nature, such as construction and real estate
contracts.17 1
Occasionally it is implied that "unfairness" is a justification for the
irreversibility rule independently of an apparent concern for promoting
certainty as between the contracting parties involved: that, upon the
communication of an unequivocal election to affirm by one party to the
other, the irreversibility rule implements "the broad principle of fair dealing
that it would be unfair for a party to blow hot and cold or to attempt to
enforce inconsistent rights".' 6 But why, exactly, stability considerations
aside, should it be thought "unfair" to allow an affirming party to go back
on her communicated decision, particularly if the other party has not yet
materially altered his or her position on the strength of the affirmation and
hence would not be harmed thereby?
172 Oliver Ashworth (Holdings) Ltd v Ballard (Kent) Ltd, above n 11, at 30 per Robert
Walker U; Spencer Bower, above n 2, at 407.
173 The Court in Jansen (CA), above n 41, at [14] refers to a passage from Spencer Bower,
above n 2, at 359, that was referred to by Randerson J in the High Court simply to
describe the doctrine (Jansen (HC), above n 41, at [24]), but in quoting the passage
actually enlarges the description to include its rationale as well. The words appearing
in the Court of Appeal's reference, but not in Randerson J's, are: "The election binds A
immediately it is communicated to B and is not based on proof of detrimental reliance. It
is binding at the point of communication because the underlying rationale of the doctrine
is that parties to an ongoing legal relationship are entitled to know where they stand. B
must be entitled to rely on A's deliberate choice with confidence."
175 See Farnsworth ChangingYour Mind, above n 11, at 158; Farnsworth Contracts, above
n 126, at 596; GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd
(2003) 128 FCR I at [364] per Finn J. It is well known that contract law rules are
structured and applied in favour of upholding the parties' relationship rather than seeing
it destroyed. Contract terminations are not favoured in law, hence the law's evident
bias against such matters as finding repudiation as a matter of inference, that terms are
"conditions" (agreed essentiality) allowing termination for minor breach, that a contract
is irremediably uncertain or has been frustrated, and the like. So when there is solid
evidence of affirmation, it is equally unexceptional that courts will not readily respect
or assist a reversal.
176 Spencer Bower, above n 2, at 358.
Fine-TuningAffirmation ofa Contract by Election: PartI 79
One response to this question might be that although the election doctrine
and its irreversibility rule are not, like estoppel, designed to protect a party
from the injurious consequences of actual reliance on the other party's
apparent affirmation, they might nevertheless be concerned to insulate
non-electing parties (as a class) from the possibility of reliance in a more
diffuse sense, that is, in the form of "lost opportunities".'I The fact that an
affirmation is communicated raises the concern that detrimental reliance
may follow, even though such reliance (in the form of a lost opportunity) is
difficult to prove as a positive matter in each and every case. And the rationale
for a no-exceptions irreversibility rule is not diminished or destroyed just
because in some cases it is provable that no loss of opportunity has actually
occurred or could possibly occur on the facts; the rule is based on a generic
risk, and on the practical advantages of favouring a rule based on "assent"
over one based on actual, provable reliance.I's The late Professor Farnsworth
thus argued that it is not difficult to justify a bright-line "assent rule" under
which one's affirmation of a contract is strictly irreversible without proof of
actual reliance by the other party because, as with the assent rule that binds
a party to his or her assent (promise) under a wholly executory bilateral
contract, such a rule serves as a "surrogate" for reliance, thereby protecting
"unprovable reliance", as well as assisting the parties to know where they
stand, which in turn allows them to proceed "with a minimum of controversy
and delay".' 79 He explained:'
The other party may have relied on your ratification, and the reliance may
have consisted in lost opportunities, just as in the case of the assent rule
... in connection with your promise [at contract formation]. If you indicate
your intention to stand by an existing contract, the other party may forgo
other opportunities just as that party may have done when the contract was
made in the first place. As the possibility of such reliance was a sufficient
177 To borrow an example given by Ewart, above note 11, at 117: An insured party under
a contract of insurance is not informed of the termination of his policy. In the absence
of such information, he may be entitled to assume that there has been no termination
and that the policy remains on foot. Relying on that assumption, he may take out no
other insurance over his property, and consequently may suffer loss if the insurer is
subsequently able to disaffirm the policy after an insurable event has occurred.
178 Hence, the irreversibility rule operates in effect as an irrebuttable presumption of
reliance. It cannot be rebutted even though it can be shown in the particular case that
there was no actual reliance (lost opportunities) by the non-electing party, or indeed
no possibility of such reliance, as might happen, for example, when a purported
disaffirmation follows very soon after an affirmation (as occurred, for example, in
Turner v Labafox InternationalPty Ltd (1974) 131 CLR 660 (HCA)).
179 Farnsworth Changing Your Mind, above n 11, at 60.
180 Ibid, at 183.
ground to impose liability in the case of unexecuted bilateral agreements,

so too it is a sufficient ground to preclude a party from reasserting a power
of avoidance.
This explanation of the irreversibility rule, although not explicit in Anglo-

Commonwealth case law, is certainly consistent with the well-expressed view
(for example, see Mason J in SargentvASL Developments Ltd above) that the
"rule has been adopted in the interests of certainty". Indeed, it is difficult to
see the explanation as being independent of the aforementioned "dilemma of
uncertainty" rationale. Also, one is left wondering why a "lost opportunities/
unprovable reliance" rationale can reallyjustify a no-exceptions irreversibility
rule in all affirmation cases when an "actual reliance" rationale in the related
estoppel situation can (in general) justify a suspensory rule only, allowing
(in theory at least) a communicated decision to affirm to be reversed upon
the giving of reasonable notice and/or elimination of the causal detriment if
possible. Some opportunities lost in virtue of an apparent affirmation will
be retrievable while others will not. It is impossible to generalise reliably
about that. In the end, Farnworth's justification seems to be rooted more
in administrative convenience than in protecting unprovable reliance. To
my mind, the goal of protecting unprovable reliance does not satisfactorily
explain why an affirmatory election, once made, should be permanent.
Professor Farnsworth, however, offered an additional argument in
defence of the election doctrine's irreversibility rule, and it is one that rests
entirely on "basic fairness" grounds. What is more, the argument produces
a rationale for the doctrine that has been adopted in at least one Australian
authority: GEC Marconi Systems Pty Ltd v BHP Information Technology
Pty Ltd.181
The essence of Farnworth's alternative rationale lies in the desirability
of avoiding opportunism. The irreversibility rule responds to the mischief
of allowing one contracting party to play "fast and loose" in awaiting
outcomes at the expense of the other contracting party, who is vulnerable
to the first party's decision-making in that regard. "Procrastination permits
speculation", said Farnsworth, "and there is a pronounced judicial distaste
for allowing one party to speculate at the other's risk." 8218In other words,
it is unfair to allow the electing party to wait and see how things turn out
and only then decide whether to put an end to the relationship: "There
would evidently be unfairness ... in letting the injured party procrastinate
and thereby prolong the time during which the other party is at the injured
181 GEC MarconiSystems Pty Ltd v BHP Information Technology Pty Ltd, above n 175, at
[364] per Finn J. Citing Marconi, Seddon and Ellinghaus, above n 34, at 1045, n 285,
seem to accept the anti-speculation rationale.
182 Farnsworth ChangingYour Mind, above n 11, at 184.
party's mercy."' (This objection applies even where the event that gave
rise to the disaffirmation power was serious wrongdoing on the part of the
non-electing party.) Although one need not make an election unless the
other party is at one's mercy -judges sometimes speak in terms of a party
being "confronted" with the "necessity" of making a choice (that is, at the
time when the acts recognising the continued existence of the contract were
communicated) 184 - the real upshot and concern of the election doctrine is
that, having once made your election, the other party should no longer be at
your mercy. Thus, by preventing the party entitled to elect from speculating
protractedly or indefinitely on the future progress of the contract at the other
party's risk or possible disadvantage, the law determines that the electing
party must permanently decide whether to exercise his or her disaffirmation
power or not. So expressed, the election doctrine can be seen simply as a legal
attempt to regulate a power-vulnerability relationship.' The non-electing
party, having no control over the electing party's final decision either to
stand by or to end the parties' legal relationship, is inevitably vulnerable to
the electing party in a way characteristic of election."' The irreversibility
rule, then, is supported or justified by contract law's long-standing aversion
to one-sided commitments, as expressed most notably in its rule against
illusory consideration," which rule is also considered to be founded upon
a curial distaste for speculation or opportunism:'
This anti-speculation principle finds voice in the orthodox catechism that

unless both parties are bound neither is bound, or, as an English court said
three centuries ago, "Either all is a nudum pactum, or else the one promise
183 Ibid, at 185.

184 Immer (No 145) Pty Ltd v Uniting Church in Australia Property Trust (NSW), above
n 12, at 42-43.
185 See also Stewart, above n 9 (the common law election doctrine protects against the
selective enforcement of a person's rights in circumstances where another party is
vulnerable to the exercise of those rights - that is, vulnerable in the form of the potential
for a change in the parties' legal relations).
186 Farnsworth Changing Your Mind, above n 11, at 182; GEC Marconi Systems Pty Ltd v
BHP Information Technology Pty Ltd, above n 175, at [364] per Finn J.
187 Hence, the risk of opportunism in relation to "power-of-approval" or "satisfaction"
clauses has been reduced by the law's recognising that the power of the party who enjoys
the benefit of such a clause is fettered by "honesty" and/or "reasonableness" criteria so as
to save the contract from being void for illusoriness. See, for example, Meehan v Jones
(1982) 149 CLR 571 (HC) at 589-590 per Mason J (Wilson J agreeing). Gibbs CJ, in
the same case, thought that the illusoriness principle simply did not apply to contingent
conditions as opposed to promissory terms; see ibid, at 581-582.
188 Farnsworth Changing Your Mind, above n 11, at 184-185.
is as good as the other."'89 The judicial distaste persists even if the other
party has been guilty of fraud or duress.
Such a rationale, it seems to me, is sufficient for the rule that an

election to affirm once made is permanent, and it comports well with other
features of contract law such as the illusoriness principle. However, it is
again difficult to disentangle the anti-speculation rationale entirely from
the dilemma-of-uncertainty rationale, above. Certainty considerations
demand that the non-electing party must be able to rely upon the electing
party's apparent continuing intention to perform the contract, as does the
principle of mutuality. Again, in Jansen the Court or Appeal was patently
concerned to avoid countenancing a continuing state of affairs whereby only
one party to the contract (the plaintiffs) had to act as if they were bound, by
holding themselves in readiness for possible settlement under the contract,
while being unable to rely on the other contracting party (the defendant)
being similarly bound ultimately to settle, despite the defendant's conduct
indicating a present intention to do so.
VII Time for Election: When Must an Election to Affirm Be

Made?
In addressing the question of why an election to affirm should be irreversible

even in the absence of formality, consideration, or proof of actual reliance,
Professor Farnsworth also explained that such permanency is bound up
with the requirement of "prompt decision": "If a party could reverse an
election, the party would, in effect, have additional time before making
a final decision",190 and "[p]rocastination permits speculation ... at the
other [party]'s risk".191 Hence, it is sometimes said in connection with the
election between affirming and disaffirming a contractl 9 2 that the electing
189 Harrisonv Cage (1698) 5 Mod41 at412,(1698) 87 ER 736 (KB) at 737 perHolt CJ.
190 Farnsworth Changing Your Mind, above n 11, at 184.
191 Ibid. So, for example, an insurance company that was knowingly entitled to terminate
a policy for breach of a condition, or to rescind it for fraud or non-disclosure, cannot
postpone its election until a loss has happened and a claim has been lodged. If it wants
to terminate or rescind, it must exercise that option with some degree of promptness.
192 The timing issue is, of course, not uniform across all contexts of election. For example,
when the election concerned is between inconsistent remedies, the rule is that the
election must be made by the time the plaintiff applies for judgment: UnitedAustralia
Ltd v Barclays Bank Ltd [1941] AC 1 (HL) at 18-19 per Viscount Simon LC, 30 per
Lord Atkin, 34 per Lord Romer, and 50 per Lord Porter. It is probably the same for an
election between alternative persons; see Spencer Bower, above n 2, at 397-398.
Fine-TuningAffirmation ofa Contract by Election: Part 1 83
party "must act promptly if he wishes to rescind. He cannot indulge himself

with a prolonged option."' 93
Such an assertion, however, is apt to mislead, for even orthodoxy permits
a "middle ground"l 94 between affirmance and disaffirmance of a contract,
whereby a contracting party confronted with a choice between such jural
alternatives enjoys a "reasonable time" to consider his or her position. 95 Such
a person is not bound to elect at once but may reserve and postpone judgement,
reflect on his or her position, even make a "conditional election",'96 and keep
his or her options alive,197 at least until such time as the law will take the
matter out of the individual's hands. Thus, someone who delays unreasonably
in disaffirming a contract - that is, omits, fails or refuses to exercise the
choice that the law necessitates of him or her - runs the risk of losing that
power, either because, objectively, such inaction itself justifies an inference
of actual affirmation,'19 or for some other reason, for example because the
193 Ewart, above n 11, at 109.

194 See Rix U's nice explanation in Stocznia Gdanska SA vLatvian Shipping Company (No
2) [2002] EWCA Civ 889, [2002] 2 Lloyd's Rep 436 at [87].
195 Clough v London and North Western Railway Co, above n 22, at 34 per Mellor J ("the
party defrauded may keep the question open so long as he does nothing to affirm the
contract" - note, however, that this is not quite accurate, for in the same passage in
the case Mellor J states that "lapse of time, without rescinding, will furnish evidence
that he has determined to affirm the contract" (ibid, at 35)); Scarfv Jardine,above n 19,
at 360; Tropical Traders Ltd v Goonan, above n 20, at 55 per Kitto J; Sargent v ASL
Developments Ltd, above n 3, at 656 per Mason J ("He may keep the question open, so
long as he does not affirm the contract ... and so long as delay does not cause prejudice
to the other side"); Champtaloup v Thomas, above n 53, at 273 per Mahoney JA; Zucker
v Straightlace Pty Ltd, above n 53, at 93C per Young J; Jolly v Palmer, above n 156, at
663-664 per Hardie Boys J.
196 See, for example, Tropical Traders Ltd v Goonan, above n 20, (election successfully
suspended by an intimation that the right to terminate will be exercised unless payment
was made within a stipulated period of grace).
197 For example, she may negotiate for a variation of the contract, or as to terms on which
she may be relieved of it.
198 Clough v London andNorth Western Railway Co, above n 22, at 35 per Mellor J ("And
lapse of time without rescinding will furnish evidence that he has determined to affirm
the contract; and when the lapse of time is great, it probably would in practise [sic]
be treated as conclusive evidence to show that he has so determined"); Ewart, above
n 11, at 80 ("lapse of a reasonable time after knowledge, without election to terminate,
is evidence of election to continue the status quo"); ibid, at 98 ("the time for election
having lapsed, the non-election to terminate [is] equivalent to election to continue");
Scandinavian TradingTank CoAB v FloatPetroleraEcuatoriana[ 1981] 2 Lloyd's Rep
425 [The Scaptrade] at 430 per Lloyd J ("As with other cases of election, eg a right to
accept a breach of contract as a repudiation, mere lapse of time does not of itself operate
as an election ... The lapse of time must be of such a length as to indicate unequivocally
to the defaulting party that the innocent party has elected to affirm. This is sometimes
delay causes prejudice to the other side (estoppel), or because disaffirmation

becomes impossible or inequitable meanwhile (laches, intervention of third-
party rights, loss or alteration of subject matter, and the like).199 Of course,
what is a reasonable time within which to make one's election to affirm
or disaffirm is always a "relative" question. 20 0 It will, where the contract
itself (or possibly a relevant statute) does not fix the maximum period for
disaffirmation upon the happening of a stipulated event, remain a question
of fact in each case and so will naturally vary with the circumstances. 2 0 1
Accordingly, and despite intermittent assertion to the contrary,202 there is
in fact no inflexible separaterule that one must elect "promptly". The only
rule - if indeed it be a true "rule" at all2 03 - is that a party must elect within
a "reasonable time", 2" although occasionally reasonableness will demand
paraphrased by saying that the innocent party has a reasonable time in which to make up
his mind"). See also the authorities cited in Chitty, above n 123, at [6-124], n 494 and
n 496. Substantial delay will often be accompanied by conduct and circumstances that
objectively signal that an affirmatory decision has been made; see JW Carter, E Peden
and G Tolhurst ContractLaw in Australia (5th ed, LexisNexis Butterworths, Chatswood
(NSW), 2007) at [18-50].
199 See Clough v London and North Western Railway Co, above n 22, at 35 per Mellor
J. It is doubtful whether delay or lapse of time is a defence in its own right, that is,
independent of it supporting an estoppel (because the other party has been misled) or
an inference of an election to affirm having been made in fact. See Carter Breach, above
n 91, at 395; Seddon and Ellinghaus, above n 34, at [11.49]. CitingLeafv International
Galleries [1950] 2 KB 86 (CA), Chitty, above n 123, at [6-124] remarks that mere
lapse of time may bar rescission for completely innocent misrepresentation (in equity),
even where there could be no affirmation owing to the representee's ignorance of the
misrepresentation (and hence of the consequent right to rescind), but this would not
follow for fraud or breach of condition of fiduciary duty.
201 Generally, see Chitty, above n 123, at [24-003]; Carter Breach, above n 91, at [1091]-
[1092].
202 See Farnsworth ChangingYour Mind, above n 11, at 184. In GEC Marconi Systems Pty
Ltdv BHP Information Technology Pty Ltd, above n 175, at [358] Finn J noted in passing
the "considerable United States authority in favour of the view that a right to terminate
'must be exercised with reasonable promptness after discovery of the breach': Cities
Service Helex Inc v UnitedStates (1976) 543 F (2d) 1306 at 1315".
203 The fact is that if one is not "bound" as a matter of obligation to elect, one cannot be
"bound" to elect within a reasonable time or any other time. A delaying party is merely
at risk of having the decision taken out of his or her hands. Accordingly, it is sometimes
asserted, rightly in my view, that there is "no general rule that the innocent party must
elect within a reasonable time"; see Dawson and McLauchlan, above note 4, at 126,
citing Allen v Robles [ 1969] 1 WLR 1193. See also WE Cox Toner (International)Ltd
v Crook [1981] IRLR 443 at 446; Sheppard, above n 132, at 454-455.
204 Putting it slightly differently, there is no necessity for a party to elect until after a
reasonable time has elapsed, by which time the other party as a matter of fairness needs
Fine-TuningAffirmation of a Contract by Election: Part 1 85
that a prompt decision be made in the circumstances, for example because

of the class of the contract or the nature of the subject matter and/or position
of the parties. 205 It also follows that there can be no inflexible rule that a
protest, reservation or disclaimer as to one's rights will be ineffective to
prevent a rights-altering election if one has in fact engaged, simultaneously,
in inconsistent affirmatory conduct (such as pressing for performance), 2 06 for
even a party with knowledge of his or her right to disaffirm may, provided
that he or she is acting reasonably and/or in pursuance of his or her legitimate
interests, or performing acts required by practical necessity while making
up his or her mind,207 exercise rights under the contract quite consistently
with preservation or postponement of an ultimate decision in the reverse
direction. 208 Affirmation, which of course must be "unequivocal", is always
to know where she or he stands. Reasonable time for election begins to run from the
time when the party entitled to elect possesses the requisite knowledge of an election,
which is at least knowledge of the facts giving rise to the right to disaffirm and (possibly)
knowledge of the disaffirmation right itself. See Majala Pty Ltd v Ellas [1949] VLR
104 at 109 per Herring CJ. The knowledge requirement for an effective election will be
discussed in Part 2 of this article.
205 In sothe classes of case, such as contracts for the sale or allotment of shares in a company,
the one entitled to elect with knowledge of her rights must do so "with great promptness",
because the rights of creditors and other shareholders tend to be affected: CoastalEstates
Pty Ltd v Melevende, above n 40, at 443 per Sholl J (principle 4). Generally, see Spencer
Bower, above n 2, at 438-439. Where the contract is executory, a longer period is likely
to be allowed than where it has been fully or partially performed: Academy of Health
and FitnessPty Ltd v Power [19731 VR 254.
206 In GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd, above n 175,
at [361], for example, Finn J noted: "There is a considerable body of authority for the
proposition that a party cannot avoid the legal consequences of conduct amounting to
an election by stating that it is acting 'without prejudice': see, for example, Davenportv
The Queen (1877) 5 QSCR 55; Hayne v Hirst (1927) 27 SR (NSW) 480; CentralEstates
(Belgravia)Ltd v Woolgar (No 2) [1972] 3 All ER 610." See also Craine v Colonial
Mutual Fire Assurance Co Ltd, above n 3, at 324-325 per Isaacs J ("A man is bound
by what he does, and he cannot alter what he does by saying he is doing it 'without
prejudice'). As to the effect of contractual "no-waiver" clauses and "without prejudice"
elections, see generally Carter Breach, above n 91, at [1089].
207 See, for example, Barber v Shell (1923) 2 WWR 675 (no loss of rescission rights
merely because defendant had taken steps to preserve crop on the subject land pending
the outcome of the trial); Coastal Estates Pty Ltd v Melevende, above n 40 (payment
of rates by plaintiff after discovery of both the fraud and the consequent disaffirmation
power was construed as reasonable action for the preservation of the property while the
litigation was pending).
208 Compare Immer (No 145) Pty Ltd v Uniting Church in Australia Property Trust
(NSW), above n 12, at 30 per Brennan J; Champtaloup v Thomas, above n 53, at 273
(purchasers of land, knowing of their entitlement to disaffirm the contract because
of the zoning of the land, nevertheless sent requisitions and received replies to them;
a question of fact and judgement in each case, and any reservations that
have been communicated to the non-electing party will simply be among
the factors - none of which can ever be viewed in isolation - that a court
will take into account when assessing whether an unequivocal election to
affirm has occurred, or can be deemed to have occurred.2 09 Once rights are
exercised "adversely" to the non-electing party, however, or there is evidence
that the party entitled to elect is speculating at that other party's risk, no
amount of protest, reservation, assertion or disclaimer is likely to prevent an
affirmatory election from being imputed to that party,21 0 although one may
question whether preclusion here obtains by dint of the election doctrine,
strictly speaking, or for some other, sui generis, 211legal preclusionary reason
(of which more in Part 2 of this article).
VIII .Must an Election to Affirm be Communicated (or otherwise

"Made Known") to the Non-Electing Party?
This is a question that has tended not to be dissected fully and definitively
in the leading authorities. The view has been expressed in New Zealand that
communication of an election to affirm was not necessary at common law -
hence it ought not to be required under s 7(5) of the Contractual Remedies
Act either212 - as all that was required there was "that a contracting party
unequivocally manifested by his conduct his decision to continue with the
vendors, however, knew that purchasers were not intending to elect, because of express
reservations communicated; held: no affirmation). See also Wallace-Smith v Thiess
Infraco (Swanston) Pty Ltd (2005) 218 ALR 1 (FCAFC) at [87]-[89], [151] and [330].
209 Champtaloup v Thomas, above n 53, at 269 per Glass JA; Zucker v StraightlacePty Ltd,
above n 53, at 94D per Young J.
210 Compare Champtaloupv Thomas, above n 53, at 279A per Mahoney JA.
211 In CoastalEstatesPty Ltd v Melevende, above n 40, at 453-454, for example, Adam J
expressed the "fundamental rule" from Clough v London and North Western Railway Co,
above n 22, thus: "[U]nless and until he has lost his right of avoidance of the contract
upon some principle other than election, a party induced to enter into a contract by
misrepresentation has on discovering the facts the right to elect between avoiding or
affirming the contract, and ... this rightcontinues until he has made his election one way
or the other. On principle he should be treated as free to avoid such a contract until such
time as he may have actually elected to affirm it unless upon some other recognizable
groundbased on justice or equity but which has nothing to do with election as such, he
has forfeited his right to elect" (emphasis added).
212 Again, as pointed out by Hardie Boys J in Jolly v Palmer, above n 156, at 663, s 7(5) of
the Contractual Remedies Act 1979 merely reflects the law prevailing before the Act.
See also McMorland, above n 108, at 423 ("[Section 7(5)] ... is taken as an enactment
of the common law doctrine so that the former case law still applies").
Fine-TuningAffirmation of a Contract by Election: Part1 87
contract". 2 13 Similarly, in Sargent vASL Developments Ltd,214 Stephen J (with

whom McTiernan ACJ agreed) stated that an election becomes complete
and irrevocable "regardless perhaps of communication",2 15 and "in the
case of election irrevocably to affirm a contract the election need not be
communicated to the other party".2 16 In the first instance his Honour cited
by way of example Matthews v Smallwood217 (although I can find nothing
myself in that decision that explicitly endorses such a rule, merely silence on
the requirement 218 ), and in the second he referred to JS Ewart's conclusion on
2 19
the issue in his book Waiver Distributed. But the Judge acknowledged, as
well, how Ewart's views are themselves at variance with what was famously
said by Lord Blackburn in Scarf v Jardine:220
The principle, I take it, running through all the cases as to what is an
election is this, that where a party in his own mind has thought that he
would choose one of two remedies, even though he has written it down on
a memorandum or has indicated it in some other way, that alone will not
bind him; but as soon as he has not only determined to follow one of his
remedies but has communicated it to the other side in such a way as to lead
the opposite party to believe that he has made that choice, he has completed
his election and can go no further; and whether he intended it or not if he
has done an unequivocal act - I mean an act which would be justifiable if
he had elected one way and would not be justifiable if he elected the other
way - the fact of his having done that unequivocal act to the knowledge
of the persons concerned is an election.
Now, for Ewart affirmation was not required to be communicated

because he saw non-disaffirmatory election as a "purely unilateral act".
Affirmation merely preserves the status quo and necessitates no cooperation
or responsive action on the part of the other, non-electing party. "To say that
213 Dawson and McLauchlan, above n 4, at 131. See also Carr v JA Berryman Pty Ltd
(1953) 89 CLR 327 (HCA) at 349 per Fullagar J (Dixon CJ, Williams, Webb and Kitto JJ
agreeing) (affirmation found as a result of the electing party's entering into a subcontract
with a third party, even though such conduct, while overt, had not necessarily come to
the other party's attention).
214 Sargent vASL Developments Ltd, above n 3.
215 lbid, at 646.
216 Ibid, at 647.
217 [1910] 1 Ch 777 at 786-787.
218 Besides, the continued receipt of rent was known to the tenant who was seeking in that
case to defeat his landlord's forfeiture based on a prior "waiver" of the contract right to
re-enter upon certain breaches of the subject lease.
219 Ewart, above note 11, at 93.
220 Scarf v Jardine,above n 19, at 360-361 (emphasis added).
communication is an essential ingredient in election, would appear to be

adding something to the meaning of the word."22 ' "To continue the contract,
after the happening of the event, no action is necessary. It continues unless
stopped." 22 2
All that may well be true, but it explains nothing of why the power to
disaffirm permanently stops simply by virtue of the fact that the contract
continues by default, that is, why affirmation through mere maintenance of
the status quo should be binding on the electing party before the moment
of, or irrespective of, communication of a decision to affirm. The issue with
election is whether the power to disaffirm ceases, that is, whether preclusion
occurs, before affirmation is communicated or made known 223 to the non-
electing party. Lord Blackburn's passage above, however, makes it clear
that there must be communication or knowledge to the other party of an
unequivocal act having been done, and that this requirement is bound up
with the finality or irreversibility of the election made.224 Indeed, at least two
of the more plausible rationales for irreversibility of an election to affirm -
protecting against unprovable reliance and avoiding speculation at the non-
electing party's risk - both presuppose "communication" of the affirmatory
choice, whether expressly or by way of a public "unequivocal" act consistent
only with continuance of the contract. Were it otherwise, it would be difficult
to achieve consistency between the criteria for a binding election and the
basic purpose of the doctrine that purports to house those criteria, namely,
allowing those who are vulnerable to another party's election to "know where
they stand" and, thereafter, to be no longer at that power-holder's mercy.
For although election is, unlike estoppel and contract, a unilateral act, even
Ewart accepted that it "invariably has a legal effect upon the relationship
between two persons, or upon the legal right of some party". 225 This is a fact
that is obvious with a disaffirmatory election that destroys the relationship
for both parties, but it is no less true (albeit less drastic) for an affirmation
that continues it and results automatically in the permanent loss of an earlier
unconditionally accrued legal power on the affirming party's side only. Also,
it is difficult to understand why an affirmation must be "unequivocal" if this
is not linked to a belief that the non-electing party is entitled to hold based on

222 Ibid, at 93.
223 As in the disaffirmation context (see eg s 8(1) and (2) of the Contractual Remedies Act
1979), communication here has a wider meaning and includes making something known.
A disaffirmatory election can even be "made known" through silence or passivity; see
Vitol SA v NorelfLtd [1996] AC 800 (HL) (The Santa Clara].
224 See also Spencer Bower, above n 2, at 375 and 417, explaining how the communication
requirement is linked to the goals of finality and certainty in this field.
indications that she or he has received from the electing party's overt words
and conduct in the circumstances.
In contrast to Stephen J's view in Sargent vASL Developments, Mason J in
the same case saw communication to the non-electing party as integral to the
election doctrine: "Essential to the making of an election is communication
to the party affected by words or conduct of the choice thereby made",2 2 6 and
this is also the view of at least one leading contract law text in Australia. 22 7
Later Australian courts have attempted to mitigate the authority of Stephen
J's remarks by reading them down. In Zucker v StraightlacePty Ltd,22 8 for
example, Young J stated: "It may be however that his Honour was merely
saying that unless there is an indication to the contrary parties can assume
that the contract is still on foot." 229 His Honour continued: 23 0
Be that as it may, it seems to me that the great bulk of authority is in favour

of an election not being completed until it is communicated ...
On the basis that there is a need for an election to be communicated, it must

be remembered that the word "communicated" is used in a special sense.
The word usually is put in inverted commas as it is in the High Court in
Khoury 's case and McHugh JA explained in Wood FactoryPty Ltd v Kiritos
Pty Ltd (1985) 2 NSWLR 105 at 146, the special sense in which the word
was used, that is, that it must come to the other party's attention whether
from the electing party or not that the election has been made.
Young J also explained that although the basic philosophy behind the
common law election doctrine is that the non-electing party is entitled to
conduct his or her affairs on the basis that the electing party has chosen
to exercise one of two inconsistent rights rather than the other, this does
not mean that there can be no "communication" of an election to affirm
whenever the non-electing party is ignorant of the event entitling the other
226 Sargent vASL Developments, above n 3, at 655-656.

227 See Seddon and Ellinghaus, above n 34, at 1045 ("Communication is essential to
an election to affirm"). To the contrary, see Carter Breach, above n 91, at [1084]
("communication is essential only where there would otherwise be no unequivocal
act"). Also in favour of the communication rule in Australia, see Khoury v Government
InsuranceOffice ofNew South Wales, above n 12, at 633 per Mason, Brennan, Deane and
Dawson JJ; Commonwealth v Verwayen, above n 3, at 421-422 per Brennan J; Immer
(No 145) Pty Ltd v Uniting Church in Australia Property Trust (NS9, above n 12, at
39 per Deane, Toohey, Gaudron and McHugh JJ; GEC Marconi Systems Pty Ltd v BHP
Information Technology Pty Ltd, above n 175, at [359] per Finn J.
228 Zucker v StraightlacePty Ltd, above n 53.
229 Ibid, at 94G.
230 Ibid, at 94G and 95B, respectively.
party to elect between affirming and disaffirming the contract. 23 1 Nor, a

fortiori, does the necessity for "communication" mean that the non-electing
party must subjectively interpret the electing party's conduct as affirmatory.
A "completed election" occurs even where the unequivocal act does not,
at the time when it took place, have an effect on the other party's mind at
all, that is, in the sense of showing him or her that there has in fact been
an election.232 Young J saw this as consistent with the authorities dealing
with "waiver of forfeiture" in tenancy law,233 and he finally expressed the
communication rule thus:234
[T]hat although the electing party must show the other party that he is
affirming the contract all that is necessary is that he do such acts from which
a court or an ordinary bystander would conclude that he was affirming
the contract on the assumption that the court or bystander knew what the
electing party knew, and it is immaterial that at the time when those acts
were committed, the other party was unaware of the facts upon which the
electing party might have chosen to have rescinded the contract.
Casting further afield, to the United Kingdom, the modem authorities

clearly substantiate a communication or "made-known" requirement for an
affirmatory election 235 (as well as, more obviously, for a disaffirmatory one).
Lest there be any continuing doubt for New Zealand, the Court of Appeal in
Jansen accepted the United Kingdom stance on the need for communication
before an election to affirm is treated as irretrievable, when it accepted
231 Ibid, at 95D.

232 Following Helsham J in ACI OperationsPty Ltd v ManawaiiDevelopment Co No 7 Pty
Ltd (1971) 25 LGRA 235 at 241.
233 So, when a tenant sublets in breach of covenant (say) and the landlord, knowing of this,
accepts rent, the landlord has elected to affirm the lease and "waived" the forfeiture. It
is not necessary to show that when the rent was accepted the tenant was aware that the
landlord knew of the subletting.
234 Zucker v StraightlacePty Ltd, above n 53, at 96.
235 The Kanchenjunga, above n 15, at 398 per Lord Goff ("though, perhaps because a party
who elects not to exercise a right which has become available to him is abandoning that
right, he will only be held to have done so if he has so communicated his election to the
other party"); Yukong Line Ltd ofKorea v RendsburgInvestment CorporationofLiberia,
above n 28, at 607 per Moore-Bick J ("A binding election requires the injured party to
communicate his choice to the other party in clear and unequivocal terms"); Peyman
v Lanjani, above n 21, at 494D per May LJ ("[W]hen the person entitled to make the
choice does so one way or the other, and this has been communicated to the other party
to the contract, then the choice becomes irrevocable even though, if and when the first
person seeks to change his mind, the second cannot show that he has altered his position
in any way").
Randerson J's analysis of the law in the High Court. Randerson J's analysis
included acceptance of the following statement from the authors of Spencer
Bower:2 36
Where A in dealing with B is faced with inconsistent courses of action which

affect B's rights or obligations and knowing that the two courses of action
are inconsistent and that he or she has the right to choose between them, A
then makes an unequivocal choice between them and communicates that
choice to B, A is prevented from afterwards resorting to the course of action
which he had deliberately rejected and communicated to B his intention of
rejecting. The election bindsA immediately it is communicated to B and is
not based on proof of detrimental reliance.
Saliently, the Court ofAppeal237 repeated this quotation but also extended
its endorsement to the immediately following words in the Spencer Bower
text: 238
It is binding at the point of communication because the underlying rationale

of the doctrine is that parties to an ongoing legal relationship are entitled to
know where they stand. B must be entitled to rely on A's deliberate choice
with confidence.
Later in its judgment, the Court of Appeal reiterated its endorsement of

the communication rule for affirmation: "As stated in Spencer Bower, the
election binds immediately upon its communication to the other party and
is irrevocable." 239 That should leave no doubt as to the requirement in New
Zealand, at least until the Supreme Court determines otherwise.
[Part 2 of this article is to appear in a future part of the

New Zealand Law Review.]
236 Spencer Bower, above n 2, at 359 (emphasis added). See also the authors' discussion
ibid, at 417 and 436-437.
238 Spencer Bower, above note 2, at 359.

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The common law election doctrine is well known to judges and

Few areas of modern contract law can be as perplexing, if not at times

1 ChinaNational Foreign Trade TransportationCorporationv Evlogia Shipping Co SA of

vital importance to legal advisers and their clients, especially in commercial

are, in legal contemplation, "inconsistent" and hence "alternative": neither

virtue of specific "elector intention" as such.2 1 The doctrine thus functions

from acting unfairly by simultaneously taking up inconsistent positions

25 Crainev ColonialMutual FireAssurance Co Ltd, above n 3, at 326 per Isaacs J. Again,

inconsistent legal power allowing that relationship to be put to an end

33 See the discussion below in part IV

is dead is dead", pure and simple." Accordingly, whereas "affirmation" is

the leading New Zealand authority on the election doctrine as it relates to

2004 [Jansen] or [Jansen(HC)]; Jansen v WhangamataHomes Ltd [2006] 2 NZLR 300

III A Local Case Study in Affirmation: Jansen v Whangamata

A The facts and dispute

On 8 December 2002, the plaintiffs, the Jansens, entered into a written

* The second affirmatory act: On 1 September 2003, the defendant's

The third affirmatory act: On 10 September 2003, the defendant's

Where A in dealing with B is faced with inconsistent courses of action which

Although this passage refers to A as the would-be elector needing to have

in the context of a binding contract, when a state of affairs comes into

Citing two Australian authorities," Randerson J also stated that an

It is a question of fact whether an unequivocal choice has been made

53 Champtaloup v Thomas [1976] 2 NSWLR 264 (NSWCA) at 274-275 per Mahoney

C In the Court ofAppeal"

claim for specific performance on the ground that, as at 30 September

Even if the Court were wrong in that conclusion, Chambers J considered

D The significanceof the decision?

IV The Scope of the Principles of Election between Affirming

a failure of condition", but extends as well to situations of pre-contractual

[C]lause 22 is rather different in character from say, a clause giving a right

77 Jansen (HG), above n 41, at [39].

judgment in Sargent,Mason J observed that the election doctrine is triggered

Thus, there is ordinarily no good reason to distinguish between the

V When Phraseology Goes Wrong: Differentiating Legal

The consequence of the election, if established, is the abandonment, i.e.

Election leads, I think, to waiver, whether in choosing to object or not

Recurrently the terms "election", "waiver" and "estoppel" are employed

98 Zucker v StraightlacePty Ltd, above n 53, at 93D per Young J.

as elsewhere in the law, terminology can make a vital difference.10 6 Jural

share "a common foundation in a simple instinct of fairness","l3 but that

our system of jurisprudence has been disastrous not only to clarity of

Ewart's project, therefore, was to expose waiver as an "empty category"

in a variety of different senses and so bears 'different meanings'); The Kanchenjunga,

"[W]aiver" is a general term used to describe the operation of a number of

Carter concludes, justifiably in my view, that "the courts must face up

133 Ibid, at 73.

of election, variation and estoppel, an independent concept or doctrine of "unilateral

that it possesses an independent identity) is "unilateral", whereas estoppel