Waiver of employer's termination right by doctrine of election

Abstract

A contract creates a legal obligation upon the contracting parties. Generally, a contract may be terminated before completion at common law or by the exercise of express rights set out in the contract itself. Contracts can be brought to an end in a variety of ways, either by performance, agreement, frustration or by breach. Under common law, the innocent party can terminate the contract by the operation of law when a party intimates by words or conducts that he does not intend to honour his obligations or when the guilty party commits breach so serious that evinces its intention not to perform. However, a repudiation of contract does not automatically terminate the innocent party’s obligations under the contract. The innocent party has choices between the right to continue the contract or to accept the repudiation of the guilty party as terminating the contract. In legal terminology the choice is known as “election”. In order for the doctrine of election to operate effectively, there are certain essential elements and conditions to be fulfilled. If an election is not done correctly due to certain circumstances, it can be considered as an ineffective election. The employer’s decision to affirm the contract or treat the contract as an end would be challenged. In situation where the employer elects to terminate the contract, it would become a waiver to the employer’s termination right. Therefore, this study focused on the circumstances that are considered as waiver of the employer’s termination right by election. From the result of this research, it can be concluded that the circumstances that may lead the employer to have waive their termination right by election are delay in termination, unequivocal conduct to affirm and affirmation of contract.