On 1 March, Danby Ltd tells Ellery Ltd that it will not deliver goods due on 1 September. Ellery Ltd chooses to affirm the contract and wait. In June, before the delivery date and through no fault of either party, a new law makes it illegal to export the goods to Ellery's country. Can Ellery Ltd recover damages from Danby Ltd for non-delivery?

Correct answer: A) No, because by affirming, Ellery kept the contract alive for both parties, and the later frustrating event discharged Danby as well

Explanation

Danby's statement was an anticipatory breach. Ellery could have accepted the repudiation and sued at once (Hochster v De La Tour). Instead it affirmed, so the contract remained in force for both parties, with the risks that brings. In Avery v Bowden the innocent party affirmed and the contract was then frustrated by the outbreak of war, which discharged both parties, so no damages were recoverable. Here the supervening illegality frustrates the contract in the same way, and Ellery has lost its claim for the earlier repudiation.