Election (In the context of contracts)

Election refers to the choice of a contracting party to terminate or affirm, and subsequently, which remedy to pursue. When a party becomes entitled to terminate because of breach or some other intervening factor, it is confronted with a decision legally classed as ‘election’, where the aggrieved party can either affirm the contract or terminate it.

According to the doctrine of election, this decision is irrevocable and irreversible, as demonstrated in Sargent v ASL Developments Limited

The rules regarding election are as follows:

  • In order for a party to officially elect to affirm, they must have
    1. Known about the situation that entitled them to terminate
    2. Acted in a way which clearly communicated an intent to affirm
  • A party is not required to elect immediately. They can delay election as long as they wish where the other party’s position is not prejudiced.

If a party elects to affirm, the contract remains in force and all rights and obligations remain binding. The right to terminate for the particular cause is forfeited.

If the party elects to terminate, this is effective and all requirements for further performance are waived. However, previous rights remain recoverable.