The House was asked whether a contract to abandon an arbitration might be implied from conduct, or a lack of conduct.
Held: The abandonment of a contract can be effected by the entry of the parties, expressly or by necessary inference from conduct, into a fresh contract for mutual release from their obligations under the contract said to be abandoned. An argument that mere inactivity of the parties could be construed as an implied agreement to rescind the agreement to arbitrate, failed.
Lord Brandon of Oakbrook considered that an actual abandonment, as opposed to an estoppel precluding an assertion of continuance, required proof of conduct of each party, as evinced to the other party and acted on by him, as ‘leads necessarily to the inference of an implied agreement’ between them to abandon the contract. Lord Roskill referred to ‘the only possible inference [being] that the agreement to arbitrate has been rescinded by mutual consent’. Though Lord Diplock made no similar observation both Lords Keith of Kinkel and Brightman agreed with Lords Brandon and Roskill.
Lord Brandon said: ‘there are two essential factors which must be present in order to frustrate a contract. The first essential factor is that there must be some outside event or extraneous change of situation, not foreseen or provided for by the parties at the time of contracting, which either makes it impossible for the contract to be performed at all, or at least renders its performance something radically different from what the parties contemplated when they entered into it. The second essential factor is that the outside event or extraneous change of situation concerned, and the consequences of either in relation to the performance of the contract, must have occurred without either the fault or the default of either party to the contract.’
Lord Brandon, Lord Diplock
[1983] 1 AC 854, [1983] Com LR 20, [1983] 1 All ER 34, [1983] 1 Lloyds Rep 103, [1982] 3 WLR 1149
England and Wales
Cited by:
Cited – Martin v Medina Housing Association Ltd CA 31-Mar-2006
The former tenant had set out to buy the council house, but had written to say that she did not intend to go ahead. Her son who had taken over the tenancy after her death now sought, twelve years later, to require the authority to proceed at that . .
Cited – Mote v Secretary of State for Work and Pensions and Another CA 14-Dec-2007
The appellant was accused of having received income benefits to which he was not entitled. A prosecution was commenced and at the same time he appealed to the tribunal against the decision that there had been an overpayment. The authorities . .
Cited – SG and R Valuation Service Co v Boudrais and others QBD 12-May-2008
The claimant sought to require the defendants not to work during their notice period to achieve the equivalent of garden leave despite there being no provision for garden leave in the contracts. It was said that the defendants had conspired together . .
Lists of cited by and citing cases may be incomplete.
Contract, Arbitration
Leading Case
Updated: 09 November 2021; Ref: scu.242430