Double operation clauses and the limits of ratification

Hugo Wilesmith
(2026) 40 Journal of Contract Law 140

Hugo Wilesmith, ‘Double operation clauses and the limits of ratification: Shao v Crown Global Capital Pty Ltd (in prov liq)' [2025] HCA 43’ (2026) 40 Journal of Contract Law 140

Abstract

If a debtor repays a debt, but does so in breach of contractual conditions for repayment, can the creditor accept that the debt has been discharged but nonetheless sue for damages arising from the breach? In Shao v Crown, the High Court of Australia considered the mechanics of a ‘double operation’ clause which created both a duty of repayment and a condition as to the manner for repayment, and the implications of such a clause when the creditor ratifies the discharge of debt. The High Court unanimously held that the creditor could accept that the debt had been discharged without waiving a right to sue for breach of the condition — and in so doing, provided useful guidance about the limits and application of ratification.