Unpacking King Crude Carriers v Ridgebury November LLC

Timothy Dodsworth (0:01)

Hello, and welcome to Unpacking Contract Law, the UK-based contract law podcast delivering unsolicited opinions on new and old contract law cases. The purpose of these podcasts is to provide you with an insight into our thoughts, ideas, and ideologies around all things contract law. It also provides us with an outlet for all our opinions, so you listen at your own peril.

Each podcast will feature a new contract law case with a discussion from three contract law enthusiasts. And it is thus my great pleasure to introduce you to Maggie Hemsworth, Severine Saintier, and myself, Tim Dodsworth. Welcome to Unpacking Contract Law.

Séverine Saintier (0:41)

Good morning.

Good afternoon.

Good evening, dear listener, wherever you are listening from.

Welcome to podcast number 36 And we are discussing a reasonably recent Supreme Court decision.

And the title is King Crude versus Ridgebury LLC. Before we start, we thank the kind sponsor without whom, without which this podcast would not be possible. The University of Reading School of Law. And this case was suggested not by one, but by two independent and separate listeners. Sylvia from Austria, thank you for the suggestion. And Andrew from the UK, thank you for the suggestion. So, on to the facts. So, King Crude and two other parties, the three appellants, agreed to buy three second-hand oil tanker, as you do, from the two defendants. The contract was drafted on a standard sales contract for vessels, so-called Norwegian Sales Form 2012

And it was amended for the purpose of the parties. The amendment required the buyer to lodge 10% deposit of the purchase price with a designated third party and had to provide the necessary documentation. In breach of contract, the buyers did not provide the required documentation, which meant that the deposit account could not be opened, the deposit could not be paid. Pursuant to the contract, if that was not done, the seller were entitled to cancel the contract, which they did. And what the seller claimed is that they were entitled under what is called the Maquais and Dick Principle of Law, which tells us that when there is condition in a contract which gives rise to a debt, which is owed to a party when fulfilled, when that in breach, when a party in breach wrongfully prevents the condition from being satisfied, the victim, the inauthent party, is entitled to treat that condition having been fulfilled, and therefore does not claim damages, but claims the amount of money due as a debt. And so therefore, the sellers claim that they were entitled to the 10% deposit. The buyer, of course, claimed that that was not possible, and therefore claimed that the seller's sole remedy was not in debt, but in contractual damages. They also claim that since the market price for each of the three vessels that had been agreed to be bought was higher at the date of termination compared to the contract price, the seller didn't suffer any loss, and therefore were only entitled to nominal damages. The parties went into arbitration where the arbitrator said, yes, a claim in debt is possible. The Mackey and Dick principle exists in English and Welsh law. Then there was an appeal from the arbitration to the commercial court saying, no, that claim is not possible. It is not possible. And so therefore there was an appeal to the Court of Appeal, who, yo-yoing back, said, yes, that claim in debt is possible. And appeal was allowed to the Supreme Court, which unanimously reverted to the commercial court, that claim is not possible. So the question in effect is to know whether the Mackey principle, which was heard by the House of Lords from a Scottish court, whether it is part of English law. This was a unanimous decision, and in effect, the question at the core of the Mackey principle, the so-called deemed fulfillment of a condition, whether it exists in English and Welsh law, is can a wrongdoer be able to rely on their own breach and benefit from it or not? In a unanimous decision, it was decided that the claim is not possible because Mackey and Dick principle is not part of English law. This was done in Six Point. There was also the court also considered whether it would be possible to arrive at a similar outcome without relying on the Mackey and Dick principle on contract interpretation and then also on implied terms. There were secondary claims, but I think the main core of this is whether Mackey and Dick principle is part of English law, which is not, and then the question of contract interpretation, whether a similar outcome could have been reached by other means, contract interpretation or implied terms. So is that right that a wrongdoer can rely on their own breach?