The parties had agreed a charterparty. The ship was to sail to Haiphong to load a cargo for delivery in Europe. The charterer had a right to cancel if the vessel was not ready on a certain date, but a few days earlier they repudiated the charter. The vessel would not have been ready in any event.
Held: The charter would have been cancelled, and the owners would have been entitled only to nominal damages. The first issue was whether the ‘expected readiness’ clause was a condition of which the owners were in breach, entitling the charterers to terminate the charter contract. This was decided in favour of the charterers and against the owners. The second issue was whether (if the answer to the first issue was wrong) the charterers had repudiated the contract by cancelling three days before the specified deadline.
Held: Lord Denning held that they had not, but Edmund Davies and Megaw LJJ held that they had.
The court then asked as to the damage suffered by the owners, on the assumption that the charterers’ premature cancellation had been a repudiation. Lord Denning upheld the arbitrator’s finding that they had suffered no damage, saying ‘Seeing that the charterers would, beyond doubt, have cancelled, I am clearly of opinion that the shipowners suffered no loss: and would be entitled at most to nominal damages.’ Edmund-Davies LJ agreed: ‘One must look at the contract as a whole, and if it is clear that the innocent party has lost nothing, he should recover no more than nominal damages for the loss of his right to have the whole contract completed.’
Megaw LJ said: ‘In my view, where there is an anticipatory breach of contract, the breach is the repudiation once it has been accepted, and the other party is entitled to recover by way of damages the true value of the contractual rights which he has thereby lost; subject to his duty to mitigate. If the contractual rights which he has lost were capable by the terms of the contract of being rendered either less valuable or valueless in certain events, and if it can be shown that those events were, at the date of acceptance of the repudiation, predestined to happen, then in my view the damages which he can recover are not more than the true value, if any, of the rights which he has lost, having regard to those predestined events.’
Megaw LJ, Lord Denning MR, Edmund Davies LJ
[1971] 1 QB 164, [1970] EWCA Civ 4, [1970] 3 WLR 601, [1970] 2 Lloyd’s Rep 43, [1970] 3 All ER 125
Bailii
England and Wales
Cited by:
Cited – Golden Strait Corporation v Nippon Yusen Kubishika Kaisha; ‘the Golden Victory’ TCC 15-Feb-2005
The parties had agreed a charterparty. The defendant repudiated the charter, but the Gulf War in 2003 meant that the the contract would have been frustrated in any event shortly afterwards.
Held: The assessment of damages for repudiation of a . .
Applied – Woodstock Shipping Co v Kyma Compania Naviera SA (‘The Wave’) 1981
There was a time charter for 24 months, 3 months more or less at charterers’ option. The owners repudiated the charter and the charterers accepted their repudiation on 2 August 1979.
Held: Assessing the charterers’ loss, and allowing for their . .
Cited – Golden Strait Corporation v Nippon Yusen Kubishka Kaisha (‘The Golden Victory’) HL 28-Mar-2007
The claimant sought damages for repudiation of a charterparty. The charterpary had been intended to continue until 2005. The charterer repudiated the contract and that repudiation was accepted, but before the arbitrator could set his award, the Iraq . .
Approved (Megaw LJ) – SIB International SRL v Metallgesellschaft Corporation (‘The Noel Bay’) CA 1989
The Noel Bay was let on a charterparty to carry oil between ports in Europe, with demurrage provisions. The owners treated the charterer’s failure to nominate a port, as a repudiation. The owners found alternative employment for the ship and sought . .
Approved (Megaw LJ) – North Sea Energy Holdings Nv (Formerly Midland and Scottish Holdings Nv) v Petroleum Authority of Thailand CA 16-Dec-1998
The buyers repudiated an oil purchase agreement and the sellers accepted their repudiation. The sellers could not show that they would have been able to obtain the oil to sell.
Held: They were not entitled to substantial damages. . .
Examined, Megaw LJ discounted – B S and N Limited (BVI) v Micado Shipping Limited (Malta) (‘The Seaflower’) 19-Apr-2000
A time charterparty was dated 20 October 1997 for a period of 11 months, maximum 12 months at charterers’ option. It referred to various major oil company approvals, including that of Mobil, all on the point of expiring, and provided that if, during . .
Cited – Jet2Com Ltd v SC Compania Nationala De Transporturi Aeriene Romane Tarom Sa ComC 15-Mar-2012
The parties had contracted for the defendant to maintain certain of the claimant’s aircraft. Each now asserted breach by the other.
Held: Neither the terms of the contract nor its character made time of the essence for the payments to be made . .
Cited – Bunge Sa v Nidera Bv SC 1-Jul-2015
The court considered the effect of the default clause in a standard form of contract which is widely used in the grain trade. On 10 June 2010 the respondents, Nidera BV, whom I shall call ‘the buyers’, entered into a contract with the appellants, . .
Lists of cited by and citing cases may be incomplete.
Contract, Damages
Leading Case
Updated: 01 November 2021; Ref: scu.223464
