When is a repudiatory breach 'capable of remedy'?

In September, the Court of Appeal handed down judgment in Kulkarni v Gwent Holdings Ltd [2025] EWCA Civ 1206. 

This case is of significance as the court considered whether repudiatory breaches of a contract can be remedied or are inherently irremediable. The key takeaway is that in assessing whether a breach of contract is “capable of remedy” under a contractual provision or statutory provision, a practical rather than a technical approach is to be used. The judgment underscores the importance of clear contractual drafting and timely decision-making by parties and their legal advisers when a breach occurs. 

Background of the Dispute 

The original dispute was in relation to a shareholders’ agreement (SHA) between Gwent Holdings (Gwent) and Mr Kulkarni (Kulkarni). 

Kulkarni claimed that Gwent had breached the SHA by:

• Procuring the allotment of A and B shares by the company to Gwent;
• Refusing to recognise Kulkarni’s appointment of a director to the board; and
• Purporting to terminate the SHA.

The SHA contained a compulsory transfer provision that required a shareholder to offer their shares to the other shareholders if certain events occurred. One of these events was the “Shareholder committing a material or persistent breach of this agreement which, if capable of remedy, has not been remedied within 10 Business Days of notice to remedy the breach being served by the Board (acting with Shareholder Consent)”.

Accordingly, Kulkarni argued Gwent’s breaches of the SHA triggered the transfer clause, and so Gwent had been deemed to have given notice to sell its shares to Kulkarni. 

At first instance, the High Court found that all breaches were persistent and material. (Gwent even admitted that two of the breaches were repudiatory). However, the High Court also found that each breach had been capable of being remedied and had in fact been remedied. Consequently, Kulkarni was not entitled to declarations in respect of the deemed transfer notice. Kulkarni appealed on the basis that the breaches were irremediable and therefore triggered the compulsory transfer provision. His appeal was dismissed. 

Court of Appeal decision 

The Court of Appeal agreed with the High Court, stating “it is not the case that a repudiatory breach of the SHA is necessarily incapable of remedy for the purposes of [the] clause”. 

The issues considered by the Court of Appeal that are fundamental to address are: whether a repudiatory breach of the SHA was necessarily incapable of remedy for the purposes of the compulsory transfer provision; and whether the judge was wrong to conclude that Gwent’s breaches of the SHA were remediable.

What makes a breach of contract “capable of remedy”?

This case is a useful reference point about the precise meaning of the phrase “capable of remedy”. 

The Court of Appeal undertook a detailed review of the principal authorities on the concept of remedy in contract law. The starting point was the definition articulated by Lord Reid in F L Schuler AG v Wickman Machine Tool Sales Ltd [1974] AC 235 where “remedy” was said to mean “cure so that matters are put right for the future” rather than undoing past harm. 

Building on this, the Court of Appeal adopted the formulation from Savva v Hussein (1996) 73 P&CR 150, that a breach is remediable “if the mischief caused by the breach can be removed.” This was reinforced by the Supreme Court in Wickland (Holdings) Ltd v Telchadder [2014] UKSC 57, [2014] 1 WLR 4004, which framed the test as to whether “the mischief resulting from the breach could be redressed”.

The overriding theme identified by the Court of Appeal was that the question of whether a breach is “capable of remedy” must be approached in a practical rather than technical manner. This principle runs through the authorities and was endorsed explicitly by the Court, which rejected overly formalistic interpretations that would render most breaches irremediable. 

Importantly, the judgment clarified that the seriousness, or wilfulness, of a breach does not render it incapable of remedy. These factors may be relevant only where the breach causes lasting harm or undermines trust and confidence, particularly in relationships governed by express duties of good faith. 

The Court of Appeal gave examples of breaches that are typically irremediable, such as the disclosure of confidential information in breach of a non-disclosure obligation. Once confidentiality is lost, it cannot be restored, making the breach incapable of being “put right,”, “removed” or “redressed”.

Application to case 

Applying the “practical rather than technical” approach to the four breaches of the SHA, the Court of Appeal upheld the High Court’s finding that each breach was remediable. The share allotments were reversed, the termination notice was acknowledged as ineffective, and the director was eventually appointed. 

Tension between common law repudiation and contractual remediability 

An interesting point in the Court of Appeal judgment is the distinction between the common law doctrine of repudiatory breach and the contractual concept of remediability. At common law, a repudiatory breach is one that goes to the root of the contract, entitling the innocent party to terminate or affirm the agreement. Once committed, the breach cannot be “cured” by the defaulting party, the choice as to termination or affirmation lies solely with the innocent party.

However, the Court of Appeal in Kulkarni made clear that this common law framework, (i.e. the consequence of repudiation) does not automatically apply to contractual mechanisms. The provisions of the SHA introduced a separate test: whether a breach is “capable of remedy.” 

The Court of Appeal emphasised that remediability is a functional question, not a legal classification. It depends on whether the breach can be corrected in substance, not whether it meets the threshold for termination under common law.

The effect is significant for contractual interpretation: parties must carefully distinguish between common law rights and contractual remedies. A breach may be serious enough to justify termination, but if the contract provides a mechanism for remedy, the court will assess it in practical terms. This reinforces the importance of precise drafting and clarity in defining consequences for breach within commercial agreements.

Learning Points 

1. Importance of clear drafting 

The Kulkarni judgment specifically notes that if the parties had intended a repudiatory breach to be automatically treated as irremediable, they needed to say so expressly in the contract, which they did not. This reinforces the fundamental principle of contractual interpretation: the court must begin with the language the parties chose. In the absence of clear wording to that effect, the court will not imply that a repudiatory breach is incapable of remedy. Instead, it will assess remediability based on the practical consequences of the breach and the structure of the contract itself.

1. Affirmation has strategic implications

The decision to affirm had practical consequences. By choosing to affirm the contract, Kulkarni preserved his rights under the agreement but also limited his remedies to those available within its framework. The court therefore focused on whether the breaches were “capable of remedy” under the relevant clause rather than applying the common law rules on termination.

The case illustrates that once a contract is affirmed, the innocent party cannot later rely on the breach to trigger termination or other common law remedies. Lawyers advising clients in breach of contract scenarios must carefully assess whether to affirm or terminate, as this choice will shape the legal and strategic options available going forward. On the other side, the party who has breached the contract may wish to consider if and how it could put the breach right. 

1. The role of commercial context in interpretation 

The judgment also reinforces the principle that contracts must be interpreted in consideration of their commercial context. In assessing whether the breaches were capable of remedy, the court rejected arguments based on personal relationships or implied duties of trust. It found that the SHA was a commercial arrangement, negotiated at arm’s length, and not governed by any obligation of good faith or confidence.

This underlines the importance of recognising that courts will not imply obligations, or interpret provisions based on informal understandings, unless the contract expressly provides for them. Where parties wish to incorporate elements such as duties of good faith or reliance on prior dealings, these must be clearly drafted into the agreement.