The court considered how to construe a clause in a contract which excluded a remedy provided by law. Lord Diplock said: ‘It is, of course, open to parties to a contract . . to exclude by express agreement a remedy for its breach which would otherwise arise by operation of law . . But in construing such a contract one starts with the presumption that neither party intends to abandon any remedies for its breach arising by operation of law, and clear express words must be used in order to rebut this presumption. Lord Diplock said: ‘in relation to the presumption that each party to a contract is entitled to all remedies which arise by operation of law: ‘To rebut that presumption one must be able to find in the contract clear unequivocal words in which the parties have expressed their agreement that this remedy shall not be available in respect of breaches of that particular contract.’
An equitable set-off for defective work is not easily excluded even in building contracts where sums are payable under an architect’s certificate.
Judges:
Lord Diplock, Lord Reid, Lord Morris of Borth-y-Gest, Lord Salmon
Citations:
[1974] AC 689, [1973] 3 All ER 195
Jurisdiction:
England and Wales
Citing:
Approved – Hanak v Green CA 1958
A builder was sued for his failure to complete the works he had contracted for. The buider sought a set-off against that claim of three of his one claims. One, under the contract, was for losses from the defendant’s refusal to allow his workmen . .
Cited by:
Cited – Astea (UK) Ltd v Time Group Ltd TCC 9-Apr-2003
The question of whether a reasonable time has been exceeded in performance of a contract is ‘a broad consideration, with the benefit of hindsight, and viewed from the time at which one party contends that a reasonable time for performance has been . .
Cited – Stocznia Gdanska S A v Latvian Shipping Co and Others HL 22-Jan-1998
The parties had contracted to design, build, complete and deliver ships. The contract was rescinded after a part performance.
Held: It remained appropriate for payment to be made for the work already done in the design and construction stages: . .
Cited – British Anzani (Felixstowe) Ltd v International Marine Management (UK) Ltd ChD 19-Dec-1978
Money expended by a tenant on discharging his landlord’s covenants will in appropriate circumstances operate as a partial or a complete discharge so as to furnish a defence at law to a claim for unpaid rent; and where the tenant has suffered damage . .
Cited – Melville Dundas Ltd and others v George Wimpey UK Ltd and others HL 25-Apr-2007
The appellant sought an interim payment for works of construction undertaken for the respondents under a JCT contract. The respondents contended that, having terminated the contract on their receivership, the contract and Act meant that the interim . .
Cited – Stocznia Gdynia Sa v Gearbulk Holdings Ltd CA 13-Feb-2009
Orders were placed for the construction of ships. They were not delivered. The buyer, the defendant, cancelled the orders. The defendants sought the loss of profit. The claimants said they were entitled only to the repayment of instalments. The . .
Cited – Geldof Metaalconstructie Nv v Simon Carves Ltd CA 11-Jun-2010
The parties contracted for the supply and installation of pressure vessels by Geldof (G) for a building constructed by Simon Carves (SC). The contract contained a clause denying the remedy of set-off. G sued for the sale price, and SC now sought an . .
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, . .
Cited – Cavendish Square Holding Bv v Talal El Makdessi; ParkingEye Ltd v Beavis SC 4-Nov-2015
The court reconsidered the law relating to penalty clauses in contracts. The first appeal, Cavendish Square Holding BV v Talal El Makdessi, raised the issue in relation to two clauses in a substantial commercial contract. The second appeal, . .
Cited – Phones 4U Ltd v EE Ltd ComC 16-Jan-2018
The parties contracted for the marketing of contracts for the marketing of the defendant’s mobile phone contracts. On the claimant entering administration, the defendant exercised a clause in their contract to terminate the contract. The claimant . .
Cited – Gard Marine and Energy Ltd and Another v China National Chartering Company Ltd and Another SC 10-May-2017
The dispute followed the grounding of a tanker the Ocean Victory. The ship was working outside of a safe port requirement in the charterparty agreement. The contract required the purchase of insurance against maritime war and protection and . .
Lists of cited by and citing cases may be incomplete.
Contract
Updated: 04 August 2022; Ref: scu.223522