LAW2102 · Contract B
Action for Debt
An action for debt claims a fixed, liquidated sum owing under the contract (typically the price) — not damages. Its advantages are significant: no need to prove loss, the sum is fixed, and mitigation does not apply. The obligation to pay must have accrued, which raises the entire vs divisible obligations distinction, the substantial performance doctrine and apportionment. The chapter's centrepiece is the affirm-and-sue-for-the-price question: can an innocent party, faced with repudiation, perform anyway and claim the price as a debt? That turns on a legitimate interest in performing (White & Carter cf Clea Shipping / The Alaskan Trader). It is examined where a party wants the agreed sum rather than damages.
What this chapter covers
- 011. Action for debt = a claim for a fixed/liquidated sum owing (e.g. the price), not damages
- 022. Advantages — no proof of loss, fixed sum, and mitigation does not apply
- 033. The obligation to pay must have accrued (work done / debt due)
- 044. Entire vs divisible obligations — entire must be fully performed before payment is due
- 055. Substantial performance softens the entire-obligations rule; apportionment legislation can sever
- 066. Affirm-and-sue-for-the-price — perform despite repudiation, then claim the debt
- 077. The legitimate-interest requirement (White & Carter v McGregor)
- 088. No legitimate interest = cannot affirm and sue (Clea Shipping / The Alaskan Trader)
Affirm and sue for the price: action for debt and White & Carter (Topic 11)
- 2 marksIssue. Can Beacon affirm, perform, and recover the $30,000 price as a debt without mitigating?
- 3 marksRule. A right to terminate triggers an election; on affirmation an innocent party may complete performance and sue for the agreed sum as an action for debt — no need to prove loss and mitigation does not apply — IF it can perform without the other's cooperation AND has a legitimate interest in performing (White & Carter v McGregor; cf Clea Shipping / The Alaskan Trader — no legitimate interest means it cannot).
- 4 marksApplication. Lux has repudiated (anticipatory). Beacon may affirm. If Beacon can build and install the sign without Lux's cooperation, it can complete and claim the $30,000 debt with no mitigation. But if installation needs Lux's cooperation or access, or Beacon has no legitimate interest in piling up an unwanted sign (cf Clea Shipping), it is confined to damages (lost profit, mitigated).
- 1 markConclusion. If performance needs no cooperation and Beacon has a legitimate interest, it can bring an action for debt for $30,000; otherwise it should terminate and claim damages (lost profit, subject to mitigation).
Key terms
- Action for debt
- A claim to recover a fixed or liquidated sum owing under the contract (such as the price), rather than damages for loss. Its advantages are that no loss need be proved, the sum is fixed, and mitigation does not apply — but the obligation to pay must have accrued.
- Entire obligation
- An obligation that must be completely performed before any payment becomes due. If performance is incomplete, no part of the price is recoverable as a debt — subject to the substantial-performance doctrine and any apportionment legislation.
- Divisible obligation
- An obligation that is severable into parts, each attracting payment as it is performed (e.g. monthly instalments). Payment for each completed part can be claimed as a debt without completing the whole.
- Substantial performance
- A doctrine softening the entire-obligations rule: where a party has substantially (though not perfectly) performed an entire obligation, it may recover the contract sum less a deduction for the defects, rather than being denied payment altogether.
- Affirm-and-sue-for-the-price
- Where the other party repudiates, the innocent party may sometimes affirm, complete its own performance, and then sue for the agreed price as a debt — provided it can perform without the other's cooperation and has a legitimate interest in performing (White & Carter v McGregor).
- Legitimate interest (in performing)
- The qualification on affirm-and-sue-for-the-price: the innocent party must have a legitimate interest in completing performance rather than accepting the repudiation and claiming damages. Without one, it cannot force unwanted performance and recover the debt (Clea Shipping / The Alaskan Trader).
Action for Debt FAQ
How is an action for debt different from a claim for damages?
An action for debt recovers a fixed sum already owing under the contract (the price), so the claimant need not prove any loss and mitigation does not apply. A damages claim compensates for loss caused by breach and is subject to causation, remoteness and the duty to mitigate. The debt route is more powerful where it is available — which is why the affirm-and-sue-for-the-price question matters.
What is the entire vs divisible obligations distinction?
It determines when the obligation to pay accrues. An entire obligation must be completely performed before payment is due, so partial performance recovers nothing as a debt (subject to substantial performance and apportionment). A divisible obligation is paid in severable parts, so each completed part can be claimed. Classify the obligation first to know whether a debt has accrued.
Can an innocent party always perform after the other party repudiates and then claim the price?
No. Affirm-and-sue-for-the-price (White & Carter) requires two things: the innocent party must be able to perform without the other party's cooperation, and it must have a legitimate interest in performing rather than accepting the repudiation and suing for damages. Where it has no legitimate interest, it cannot pile up unwanted performance and recover the debt (Clea Shipping / The Alaskan Trader).
What does 'mitigation does not apply' mean for a debt claim?
In a damages claim the innocent party must take reasonable steps to reduce its loss and cannot recover avoidable loss. In an action for debt the claim is for a sum already owing, so the duty to mitigate is irrelevant — the claimant recovers the fixed sum regardless of whether it could have reduced any 'loss'. This is a key advantage of the debt route and a point worth making expressly.
How is this topic examined?
Through facts where a party wants the agreed sum rather than damages — often after the other party tries to cancel. You decide whether the obligation to pay has accrued (entire vs divisible, substantial performance), then run the affirm-and-sue-for-the-price analysis: can it perform without cooperation, and does it have a legitimate interest (White & Carter cf Clea Shipping)? Conclude on debt vs damages. Note restitution is not examinable.
Exam move
Build the affirm-and-sue-for-the-price tree and keep it tabbed: (1) has the obligation to pay accrued? — classify entire vs divisible, check substantial performance and apportionment; (2) on repudiation, can the innocent party perform without the other's cooperation? (3) does it have a legitimate interest in performing (White & Carter) or not (Clea Shipping)? → debt vs damages. Always flag the two big advantages of the debt route — no proof of loss and no mitigation — because the contrast with damages is where marks sit. Watch for the cooperation trap: a party that needs the other's access or input usually cannot complete and is pushed back to mitigated damages. Remember restitution (Topic 12) is not taught or examinable, so do not pad with it.
