Time Charters. Is payment of hire condition? Last updated 28-Jun-2015

Withdrawal clauses

It is striking that whilst there were a number of cases in the 1970s and early 1980s in which the law on withdrawal clauses in time charters was developed (specifically in the context of charterers seeking to avoid the consequences of late payment of hire) in very few of them is there any consideration of whether such a provision constitutes a condition of the contract …
Per Flaux J in Kuwait Rocks Co v AMN Bulkcarriers Inc (The Astra) [2013] EWHC 865 (Comm) at para 43.

Occasions when the owner cancels time charter for non-payment of hire are not a novelty. This option usually has far reaching consequences and as Lord Sumption outlined in ENE 1 Kos Ltd v Petroleo Brasiliero SA (The Kos) [2012] 2 AC 164 at para 6, owners will not exercise their right of withdrawal unless it is in their commercial interest to do so. And usually, the owners keen to go ahead with withdrawal of their vessel from charterers’ service on rising market with favorable outlook to get better employment. In such market conditions, there would be no need for the owner to consider whether he had suffered loss and damage as a consequence of early withdrawal of the ship, because the reverse is true. Consequently, in disputes around cancellation clause when timecharter rates were rising, there was no commercial stimulus to examine punctual and timely payment of hire from judicial viewpoint of whether such a provision constitutes a condition of the contract.

There are, however, another category of cases mentioned by Lord Sumption , where the owners would be inclined to withdraw the vessel even if market rates have not risen, for example, where the charterers are insolvent or owners depend on prompt payment to fund payments under a head charter or charterers' payment record occasions administrative or other difficulties. His lordship furthermore made it quite clear, albeit obiter, that the non-payment of hire does not itself destroy the charter. He said at para 7:

The second consequence is that any failure on the part of the charterers to pay hire when it falls due will not of itself entitle the owners to damages representing the loss of the bargain or the expenses of termination simply because the owners respond by withdrawing the vessel. This is because the non-payment does not itself destroy the bargain or occasion the expenses, unless in the circumstances it is a repudiation which owners have accepted as such.

In the same case Lord Mance noted that the mere late payment of one instalment did not constitute a repudiatory breach which could entitle the owners to damages for loss of the charter, therefore that rights which withdrawal option contained clause 8 of Shelltime3 gives to the owners shall be distinguished from consequences which follow breach of condition.

Nevertheless, until recently the general view of shipping lawyers, supported also by authors of Wilford on Time Charters, had been that the obligation to pay hire is not a condition. On the other hand, in times of sustained depressive market the owners may suffer from series of delayed payments or part-payments of hire. While they can certainly withdraw vessel from services, most probably there would be no market available. Whereas in situation when charterers regularly fail it is still notoriously difficult to state at what point those failures would reach the point of repudiatory breach thus allowing the owner to successfully to claim for the loss of the remaining contract period. Therefore, in times when charter rates are falling down, owners’ decision whether withdraw the vessel, or continue with the charter is extremely difficult one and highly dependent on whether they can claim damages for loss of charter or not.

As two recent cases, Kuwait Rocks Co v AMN Bulkcarriers Inc (The Astra) [2013] EWHC 865 (Comm) and Spar Shipping AS v Grand China Logistics Holding (Group) Co, Ltd [2015] EWHC 718 (Comm), show that after a history of problems the owners face a difficult decision whether to keep uncertain charter alive or withdraw the vessel from charterers’ service and look for another employment at lower or much lower rates. In the latter case they would need to prove charterers’ repudiation to be able to successfully claim damages for loss of bargain.

Both cases examined an effect of amended NYPE form, which in essence provided that:

… Failing the punctual and regular payment of the hire, …, the Owners shall be at liberty to withdraw the Vessel from the service of the Charterers without prejudice to any claims they (the Owners) may otherwise have on the Charterers.

Undoubtedly decision of the High Court in The Astra [2013] EWHC 865 (Comm) was inspired by desire to provide a solution against deadlock created by defaulting charterers. Flaux J achieved it by extending degree of latitude in giving breach of "punctual and regular payment of the hire" provision in NYPE form an effect of breach of condition. While agreeing that opinions of such eminent commercial judges as Lord Sumption and Lord Mance has to be taken seriously, the learned judge nevertheless found that conclusions they reached were due to the fact that "it was simply not being argued that the provision for payment was a condition". Contrary to the preponderance of judicial opinion, Flaux J held that the obligation to make punctual payment of hire as provided by clause 5 of NYPE 46 is a condition of the contract.

In absence of any direct authority Popplewell J in Spar Shipping AS v Grand China Logistics Holding (Group) Co, Ltd [2015] EWHC 718 (Comm) was inclined, on similar facts, not to follow Flaux J’s decision. In his elaborative judgment the learned judge was categorical that neither aspiration for certainty nor presence anti-technicality clause nor several dicta related to the subject give sufficient weight to argument supporting the view that time being of the essence of payment of hire.

The judge was to admit that the authorities, those which expressly address or mention the question whether payment of hire in time charters is a condition do not speak with one voice. Moreover quite a number of the House of Lords decisions holding that payment of hire to be a condition clearly indicate in favour of Flaux J’s analysis in the Astra. Popplewell J therefore arrived at the difficult conclusion that this issue is not to be found by a judicial game of cards, allocating to the authors of the views the status of colour cards or trumps so as to assess which is the stronger hand.


The Astra

In short, while recognising the modern approach and not being overready to construe terms as conditions unless the contract clearly requires the court so to do, none the less the basic principles of construction for determining whether or not a particular term is a condition remain as before, always bearing in mind on the one hand the need for certainty and on the other the desirability of not, when legitimate, allowing rescission where the breach complained of is highly technical and where damages would clearly be an adequate remedy.
Per Lord Roskill in Bunge Corpn v Tradax SA [1981] 2 All ER 513 at p. 551.

In October 2008 the Astra was chartered for five years on an amended NYPE 1946 form. Clause 5 of the charter provided that hire to be paid punctually and regularly in advance, failing which Owners could elect to withdraw the vessel and terminate the charter. There was also was an anti-technicality Clause 31, stipulating for two banking days’ grace period for the charterers to rectify any failure in payment which was due to oversight, negligence, error or omission.

A history of problems started from January 2009 when Charterers asked for reduction of hire. Similar request was repeated in February, March and April with further threats that otherwise Charterers will simply declare company's bankruptcy. Since then Charterers regularly requested reduction of hire and when they did not pay hire in July 2010 Owners issued an anti-technicality notice in respect of unpaid hire. On the last day of grace period, i.e. midnight of 3 August 2010,  when payment was not received the Owners withdrew the vessel and held the Charterers in repudiatory breach of contract, claiming damages for loss of earnings for the period from 4 August 2010 to 9 November 2013 (the earliest date when the vessel could have been properly redelivered by the charterers) in the sum of US$13,109,977.

The Tribunal rejected Owners claim for loss of earnings based on argument that clause 5 was a condition, breach of which entitled Owners to those damages. However, the Tribunal found that the Charterers had, by their conduct, repudiated the charter and accordingly held that Owners were entitled to damages they claimed.

The Charterers appealed, and Owners also contended in their Respondents’ Notice that the Tribunal was wrong when rejected their arguments that clause 5 is a condition.

Flaux J dismissed Charterers’ appeal on repudiation point holding that on the evidence the tribunal were entitled to conclude that the charterers intended to perform the balance of the charterparty in a manner which was not consistent with it. The tribunal clearly considered that, viewed objectively, the charterers had no intention of paying the full charterparty rate of hire but were only prepared to pay US$21,500 per day, a substantial daily shortfall of more than US$7,000, for more than three years remaining of the charter period. And that amounted to a breach which went to the root of the contract.

Having found for the Owners on repudiation issue, the question whether payment of hire as provided in Clause 5 was a condition became of academic importance only, nevertheless, Flaux J decided that point as well at the request of both parties.

Flaux J found that clause 5 was a condition of the contract. His key reasons were:

1. Owners’ right to withdraw under Clause 5 is a weighty indication that such failure went to the root of the contract and does make time of the essence, even if the failure to pay hire is not otherwise sufficiently serious to be repudiatory.

2. The judge distinguished The Brimnes on the basis that there was no anti-technicality clause in that case making time of the essence.

3. In cases when Owners faced with defaulting Charterers in times of falling market rates the right to withdraw the vessel alone was not an adequate remedy unless the owners had a right to claim damages for loss of the bargain.

4. The importance to businessmen of certainty in commercial transactions which can be achieved only by treating the obligation to pay hire in time as a condition, whereas treating it as an innominate term would mean that owners are forced to "wait and see".

5. The judge conclude that obligation to make punctual payment of hire is a condition, supported by the dicta in the House of Lords and also by the obiter statements of Rix LJ in Stocznia v Latco and the reasoning of Moore-Bick LJ in Stocznia v Gearbulk.

The status of The Astra decision was uncertain from the very beginning, and as some critics noted the judgment created the very thing it seeks to avoid: uncertainty. It run counter to what was considered to be the generally accepted position under English law. Moreover it was obiter, and as such not binding, because the judge upheld the arbitrators’ decision allowing the Owners’ claim on the basis that a repudiatory breach had occurred.


The Spar Shipping

… in the absence of express provision to the contrary, the non-payment of two instalments would not be an event which relieved the owners from their undertaking to do what they had agreed to do but had not yet done.
Financings Ltd v Baldock [1963] 2 QB 104 per Diplock LJ at pp.120-121.

The Claimant Owners had let three vessels on materially identical terms, charters were drawn up on amended NYPE 1993 form. Hire to be paid 15 days in advance (half-monthly. All charterparties included provisions allowing Owners to withdraw the vessel “failing the punctual and regular payment of the hire, or on any fundamental breach whatsoever” of the charter, and an anti-technicality provision giving Charterers a three banking day grace period “to make punctual and regular payment of hire due to oversight, negligence, errors or omissions on the part of Charterers or their bankers”.

Moreover there were guarantees in respect of Charterers’ performance under all three charters provided by the Charterers’ Guarantor.

Vessels were delivered on 31 May 2010, 6 January 2011 and 12 January 2011 and already from 21 April 2011 substantial arrears began to accrue. By the end of June the situation was that altogether 8 instalments for 3 vessels had not been paid. The sums outstanding were approaching in total to US$2.5 million. There were some further delays and no-payments, so by 16 September 2011 the amounts outstanding were totalling some US$1.5 million. Same day Owners sent three letters, one in respect of each vessel, by telex addressed to Charterers’ guarantor, giving notice of defaults under the charters in respect of the non-payment of hire, identifying the amount outstanding and calling on them to fulfil its obligations under the Guarantees by paying those amounts by 23 September 2011.

23 September 2011, Charterers replied that it had agreed to sub-hire on the vessels being paid directly to the Owners and since by their estimation financial support will be arriving at October, they asked owners to remain patient until sufficient financing is in place.

Owners withdrawn the vessels and terminated the charters on 23 and 30 September 2011, with total outstanding sum at the date of termination of the charters was US$1,318,926.02.

Owners commenced arbitration proceedings against Charterers claiming the balance of hire due under the charters and damages for loss of bargain in respect of the unexpired term of the charters. Shortly prior to the hearing of the arbitration Charterers went into liquidation in Hong Kong and the arbitration proceedings were stayed. Thus Owners had to commence proceedings in the High Court against the Guarantor under the Guarantees.

Guarantor refused to admit liability in relation to the unexpired periods of the charters arguing that the right of withdrawal under the charters was a contractual option but there had been no breach of the charters giving rise to a right to damages at common law for repudiation or renunciation. Owners contended that damages for loss of bargain flows from their view that payment of hire was a condition of the charters. Alternatively Owners argued that if payment of hire was an innominate term, Charterers’ conduct was repudiatory.

Similarly as in The Astra, Popplewell J decided case in Owners’ favour on repudiation point, but issue whether the obligation to pay hire on time in an NYPE charter is a condition had nevertheless been fully argued.

Popplewell J disagreed with decision of Flaux J in the Astra and held, in particular, that:

195. … The very inclusion of the contractual right of withdrawal for non payment of hire suggests that in its absence there would be no such right. Such a provision would be otiose if the owner had the right at common law to put an end to the contract for any default in payment of hire as a breach of condition.
196. … there is the presumption that in mercantile contracts, stipulations as to the time of payment are not to be treated as conditions absent a contrary indication in the contract, of which there is none in these charters.
197. … predicated breaches of the term may range from the trivial to the serious. Default in punctual payment may consist in being marginally late, by accident, causing no loss to owners or loss which is insignificant in the context of the long term charter as a whole. In this respect the payment term carries the hallmarks of an innominate term. Bunge v Tradax establishes that this is not determinative, but nor is it irrelevant. Absent considerations of commercial certainty which dictate a different result, the general approach should be that where predicated breaches of a term may have consequences ranging from the trivial to the serious, that is a strong indication that it is to be treated as an innominate term.
198. I cannot conceive that in the absence of a contractual withdrawal clause, owners and charterers should be taken to have intended that a payment of hire a few minutes late would entitle the owners to throw up a five year charter. … Those are good reasons for giving a stringent interpretation to a contractual option to cancel where that is what the parties have bargained for in clear terms; they provide no warrant for supposing that the parties would have had such an intention if they had not contracted for a right of withdrawal in such circumstances. Although they may also colour the approach to the factual inquiry whether the default deprives the shipowner of substantially the whole benefit of the contract, and may justify setting the bar at which non payment is repudiatory or renunciatory at a lower level than would be the case in relation to payment obligations under contracts of a different nature, I cannot regard them as sufficient to justify any failure to pay hire punctually being treated as allowing owners to put an end to a long term time charter in the absence of express agreement.

Finally the judge especially stopped at the certainty issue, citing word of Lord Roskill that certainty is a desideratum which must be counterbalanced with the need not to impose liability for a trivial breach in undeserving cases. He pointed out that a very considerable measure of certainty is conferred by the withdrawal clause itself as an option to cancel, which gives to shipowner the right to put an end to future performance. However, also noticed that some level of uncertainty is regularly faced by commercial parties whose contracts commonly contain innominate terms, and charterparties contain many such terms. The learned judge concluded:

I see no reason why shipowners should be treated more favourably in this respect than others; owners of vessels are not unique in the commercial world in relying on prompt payment by their contractual counterparty to finance their performance of the contract. … The principal function of both conditions and express contractual termination provisions is to ensure certainty so far as the right to terminate is concerned. That can be achieved by an option to cancel without conferring an unmerited right to damages.

Perhaps the single most important plank supporting his ultimate conclusion is his view that the right to withdraw is, in and of itself, rather neutral as regards the status of the obligation to pay hire. In this regard he focused on the Court of Appeal decision in Financings v Baldock [1963] 2 Q.B. 104. In that case, in the context of a hire-purchase agreement relating to a truck, it was argued that a right to terminate for (among other things) non-payment of hire meant that the obligation to pay hire was elevated to a condition. The Court of Appeal rejected that argument.

The judgment also addresses an argument about the assessment of damages in the absence of an available market for the full remaining period of the charter, but where shorter periods were available.The judge provided explanation of link between available market and measure of risk the owner and charterer prepared to take when concluding contract. That measure of risk distributed over the time of charter is a decisive element in determination of the rate of hire and availability of any replacement to the lost bargain. The judge said at para 221-222:

221. Where at the date of termination there is no market available for a replacement charter for the full length of the unexpired term, there is no "available market". This is because a time charter for a particular period reflects the appetite for risk which the owner and charterer are willing to take for that period. The agreed rate of hire is fixed for the period of the charter, during which market rates, whether on the spot market or for shorter term time charters, may vary up or down. Each party takes the risk that the hire locked in for the fixed term will prove more beneficial or burdensome than would have been the case had they fixed for a shorter period and been free, or required, to go into the market before the end of the fixed term. The length of the period for which each party is willing to take this risk is an essential element of the bargain. One element in determining the rate of hire will be a reflection of that risk. For these reasons the length of charters available in the market is an essential element in determining whether there is an available market for a replacement charter. A six month time charter represents a different bargain from a two year charter because of the different nature of the risk each party is willing to run. If the unexpired term is two years and there is no appetite in the market to fix for longer than six months, the owner cannot replace what he has lost in specie. Four successive six month charters are not a like for like replacement for a two year charter. His lost contractual rights cannot therefore be valued by reference to a market in which he can replace them.
222. Once this is recognised, it is apparent that if at the date of termination there is no available market for a substitute charter of the length of the unexpired term of the broken charter, there is no question of the owner breaking the chain of causation in his choice of employment for the vessel over the unexpired term. He cannot replace the bargain he has lost. He has to choose to mitigate his loss by employing the vessel in a different kind of revenue earning contract. It follows that absent any argument of failure to mitigate, the owner’s loss in such a situation is to be calculated by reference to his actual earnings, irrespective of the availability of a market for two or more successive charters for the unexpired term. The availability of a market for shorter charters does not constitute an available market in which he can replace his lost bargain. Shorter time charters are merely one of a number of forms of substitute employment by which the owner may mitigate the loss caused by the charterer’s breach in circumstances where there is no ability to replace the lost bargain with a like for like replacement.

The Spar Shipping

There was a delay in fulfilling the obligation to pay the money, it may have been with or without good reason (if that would have made any difference), but it did not go to the root or essence of the contract, nor do I think that there is any sound principle upon which it could do so.
Mersey Steel and Iron Co v Naylor Benzon & Co (1884) 9 App Cas 434 per Lord Blackburn at p.444.

In Martindale v Smith (1841) 1 Q.B. 389, case concerned with sell of a chattel, Lord Denman CJ, considering failure of the vendee to pay the price at the appointed time, held that time is not of the essence of the contract, unless it is made so by express agreement. Later in Mersey Steel and Iron Co v Naylor Benzon & Co (1884) 9 App Cas 434 Lord Selborne stated that one must examine conduct of defaulting party to see whether it amounts to a renunciation.

Chitty on Contracts mentions, at para 21-013, that time charterparties are within those "mercantile contracts" which implicate that the fixed date of payment must be strictly complied with. Authors say that Implication that time of payment of hire is "of the Essence" follows from the owner’s right to withdraw the vessel in default of "punctual payment" of hire. This view, as we can see, is much in line with decision of Flaux J in The Astra.

In Tankexpress A/S v. Compagnie Financi re Belge des Petroles S.A. [1949] A.C. 76 Lord Wright remarked, at p. 94, that payment of hire is a vital matter, but only because default in timely payment would result in loss a valuable charter for charterer. Therefore an underlying idea of such conclusion was that on rising market withdrawal of the vessel transfers the benefit of the windfall from charterer to shipowner .

In Bunge v Tradax [1981] 2 All ER 513 Lord Roskill strongly supported this approach as the one which satisfied the need for certainty, he said at pp.548-549:

The appellants’ arguments may be summarised thus. They submitted that this term was not a condition but was what has come to be described since Hong Kong Fir Shipping Co Ltd v Kasawaki Kisen Kaisha Ltd [1962] 1 All ER 474, [1962] 2 QB 26 as an "innominate" obligation (neither a condition nor a warranty), and that when a term is an innominate obligation the question whether or not a breach gives the innocent party the right to rescind depends on whether the innocent party was thereby deprived "of substantially the whole benefit which it was intended he should obtain from the contract". … It was further argued that since the respondents accepted that they could not show that admitted breach by the appellants in giving a late notice had deprived them of substantially the whole benefit which it was intended they should obtain from the contract, the respondents had no right to rescind on account of that late notice. …

My Lords, it is beyond question that there are many cases in the books where terms the breach of which do not deprive the innocent party of substantially the whole of the benefit which he was intended to receive from the contract were nonetheless held to be conditions any breach of which entitled the innocent party to rescind. Perhaps the most famous is Bowes v Shand (1877) 2 App Cas 455. Reuter v Sala (1879) 4 CPD 239 is another such case. … Parties to commercial transactions should be entitled to know their rights at once and should not, when possible, be required to wait on events before those rights can be determined. Of course, in many cases of alleged frustration or of alleged repudiatory delay it may be necessary to await events on the happening or non-happening of which rights may well crystallise. But your Lordships’ House has recently reiterated in a series of cases arising from the withdrawal of ships on time charter for non-payment of hire the need for certainty where punctual payment of hire is required and has held that the right to rescind automatically follows a breach of any such condition.

His Lordship directly addressed question whether a term the breach of which do not deprive the innocent party of substantially the whole of the benefit which he was intended to receive from the contract can nonetheless be condition, and concluded that it can when there is a need for certainty at stake. Lord Roskill clearly was of view that such delay in payment even if it did not go to the root or essence of the contract but being a conditions entitled the innocent party to rescind it.

In his turn Lord Diplock in Afovos Shipping Co SA v R. Pagnan & F.lli (The Afovos) [1983] 1 All ER 449 said, at pp.554-555, that failure to comply with primary obligation to pay one of minimum 42 and a maximum of 54 semi-monthly instalments by delay in payment of one instalment, is incapable in law of amounting to a breach which would have the effect of depriving the owners of substantially the whole benefit which it was the intention of the parties that the owners should obtain from the unexpired of the time charter extending over a period of between 21 and 27 months. But disagreed on condition point, linking breach of condition which repudiates contract with fundamental breach:

The owners are to be at liberty to withdraw the vessel from the service of the charterers; in other words they are entitled to treat the breach when it occurs as a breach of condition and so giving them the right to elect to treat it as putting an end to all their own primary obligations under the charterparty then remaining unperformed. But although failure by the charters in punctual payment of any instalment, however brief the delay involved may be, is made a breach of condition it is not also thereby converted into a fundamental breach …

As one can see his Lordship treats failure to pay hire in time as breach of condition, but not always "converted into a fundamental breach", i.e. not only bringing contract to the end but also giving the right to claim damages for non-performance. This passage is difficult to reconcile with Bunge v Tradax and with Lord Diplock’s earlier statement in United Scientific Holdings v Burnley Borough Council [1978] AC 904 at 924, where he said:

In some stipulations in commercial contracts as to the time when something must be done by one of the parties or some event must occur, time is of the essence in others it is not. In commercial contracts for the sale of goods prima facie a stipulated time of delivery is of the essence, but prima facie a stipulated time of payment is not (Sale of Goods 1893, section 10 (1)), in a charterparty a stipulated time of payment of hire is of the essence.

It follows that time of payment in view of his Lordship is, on the one hand, of the essence and condition, but, on the other hand, such condition, breach of which is not repudiatory.

Popplewell J explaining such outcome in The Spar Shipping, suggested that Lord Diplock’s analysis shall be understood in a way that the effect of the withdrawal provision is to make the payment term a condition although in the absence of the withdrawal provision it would be an innominate term. But it is really difficult to see how if time is of the essence and a condition one can avoid consequences which follows breach of such condition.

To solve this puzzle of words, one can derive some further help from the next decision of the House of Lords in Scandinavian Trading Tanker Co AB v Flota Petrolera Ecuatoriana (The Scaptrade) [1983] 2 All ER 763 where Lord Roskill agreed with Lord Diplock, who delivered the only reasoned judgment, that "time is made of the essence" of the payment of hire and accordingly a condition. His Lordship said at p.768:

Prima facie parties to a commercial contract bargaining on equal terms can make 'time to be of the essence' of the performance of any primary obligation under the contract that they please, whether the obligation be to pay a sum of money or to do something else. When time is made of the essence of a primary obligation, failure to perform it punctually is a breach of a condition of the contract which entitles the party not in breach to elect to treat the breach as putting an end to all primary obligations under the contract that have not already been performed.

The freight market is notoriously volatile. If it rises during the period of a time charter, the charterer is the beneficiary of the windfall which he can realise if he wants to by sub-chartering at the then market rates. What withdrawal of the vessel does is to transfer the benefit of the windfall from charterer to shipowner.

Notably that Lord Diplock stopped short of any mentioning of what should happen in such case with the charterers’ "secondary obligation to pay compensation (damages) for non-performance of primary obligations". However, the result which Lord Diplock attributed to charterers’ failure to pay hire in time, i.e. that it "[puts] an end to all primary obligations under the contract that have not already been performed", is possible, on the basis of his Lordship’s conclusion in Photo Production, only as a result of operation of "two exceptions":

(1) where the event resulting from the failure by one party to perform a primary obligation has the effect of depriving the other party of substantially the whole benefit which it was the intention of the parties that he should obtain from the contract, the party not in default may elect to put an end to all primary obligations of both parties remaining unperformed (if the expression "fundamental breach" is to be retained, it should, in the interests of clarity, be confined to this exception);
(2) where the contracting parties have agreed, whether by express words or by implication of law, that any failure by one party to perform a particular primary obligation ("condition" in the nomenclature of the Sale of Goods Act 1893), irrespective of the gravity of the event that has in fact resulted from the breach, shall entitle the other party to elect to put an end to all primary obligation of both parties remaining unperformed.

In simple words construction "time to be of the essence", when attributed to failure pay hire in time, is able from word of Lord Diplock to make all primarily obligations to come to end, but such result can be achieved either if it is a breach of condition or breach of such gravity that deprives the other party of substantially the whole benefit which it was the intention of the parties that he should obtain from the contract. Thus concluding that all primary obligation came to end, Lord Diplock implied in The Scaptrade that such breach is a repudiatory one.

It is remaining unclear how such conclusion can be reconciled with obiter dicta in ENE 1 Kos Ltd v Petroleo Brasiliero SA (The Kos) [2012] 2 AC 164.


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