Legal Updates

Commercial Law – Breach of Contract – Repudiatory Breach – Non-Performance - Acceptance of Repudiatory Breach

The case of Westbrook Resources Ltd v Globe Metallurgical Inc [2007], concerned a claimant who was entitled to damages arising out of the defendant's repudiatory breach of contract. The defendant was a manufacturer and supplier of metals. The claimant was a trader in metals.

Following a number of lengthy negotiations the claimant and the defendant concluded a contract in January 2005. The contract was for the sale by the claimant to the defendant of approximately 30,000MT of manganese ore. The terms of that contract included as to size 'Screened over plus 1/2" screen at DLA'. It should be noted that 'DLA' was a reference to the United States' Defence Logistic Agency, a government agency which assembled huge quantities of manganese ore in stockpiles throughout the United States as part of strategic stockpiles of raw materials that might be required for military or national defence purposes.

Over time DLA elected to sell some manganese ore via a tender process. The claimant successfully bided for two stores of manganese ore at Anniston, Alabama and Large, Pennsylvania respectively.

The contract was not performed. According to the claimant, the contract was terminated by the claimant in May 2005 on account of the defendant's repudiatory breach which the claimant had subsequently accepted.

The breach in question was said to be the refusal of the defendant to pay for the first barge of materials the claimant had arranged under the contract. Subsequent to the claimant sending an ultimatum stating that the defendant had two options, namely to pay for the first barge or risk the claimant treating the contract at an end, both parties accepted that the contract was ended and sought to mitigate their losses.

The claimant then brought proceedings seeking damages for non-performance, whilst the defendant counterclaimed for damages flowing from the claimant's repudiatory breach of contract.

The court decided that on the facts, the defendant had indeed committed a repudiatory breach. They held that the claimant had accepted that breach and was therefore entitled to damages.

Please contact us for more information on assessing damages due under termination of a contract at enquiries@rtcoopers.com

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© RT COOPERS, 2007. This Briefing Note does not provide a comprehensive or complete statement of the law relating to the issues discussed nor does it constitute legal advice. It is intended only to highlight general issues. Specialist legal advice should always be sought in relation to particular circumstances.

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