Contract Termination and Specific Peformance

Arcos Ltd v EA Ronaasen & Son [1933]

• Buyers purchased timber

• Described as being half an inch thick

• Sellers delivered nine sixteenth of an inch thick

• Held: Buyer entitled to reject the goods under Sale of Goods Act even if goods are commercially usable

Schuler (L) AG v Wickman Machine Tool Sales Ltd [1974] AC 235

• Contract granted Wickman sole selling rights for machinery manufactured by Schuler

• Clause stated that it is a condition that Wickman send a representative to visit the six largest UK motor manufacturers at least once a week

• Failed to make these visits

• Held: not a condition in the technical sense - would be commercially unreasonable as even one missed visit would allow termination

Bettini v Guy (1876) 1 QBD 183

• Claimaint was a singer

• Unable to arrive to rehearsals which the singer was required

• D could not terminate the contract as it was a warranty - rehearsals were not central to the contracts purpose, main obligation was to peform in concerts which he could still do

Poussard v Spiers and Pond (1876) 1 QBD 410

• Same facts as Bettini v Guy however D could terminate the contract as it was a condition - hired a replacement and treated the contract as terminated

• Her presence was essential as the lead performer

Hong Kong Fir Shipping v Kawasaki Kishen Kaisha [1962] 2 QB 26

• A ship was chartered for 24 month

• Owners promised it would be fitted for ordinary cargo service

• Ship was old and poorly maintained + engine room crew incompetent

• Ship broke down repeatedly

• Charterers claimed the breach entitled them to terminate contract

• Held: term was not a condition or a warranty - innominate term

  • Lord Diplock: the breach was not serious enough, the charter was for 24 months and only 20 weeks were lost - chsrterers still received mot of the benefit - no right to terminate only damages

Cehave NV v Bremer Handelgesellschaft, The Hansa Nord [1976] QB 44

• D agreed to sell claimaints a shipment of a large quantity of goods

• Price of cargo was £100,000

• Clause 7 of contract sale required shipment to be made in good conditions

• Buyers rejected cargo on grounds that shipment was not made in good condition - but goods were only defective in a limited part of the ship

• Buyers repurchased the cargo for £30,000

• Held: innonimate term, consequences of breach not serious to give rise to termination

Bunge Corporation New York v Tradax Export SA, Panama [1981] 1 WLR 711

• Soya bean to be shipped in three shipments of 5000 tonnes

• Contract required buyers to give the seller min 15 days notice of readiness of the vessel to be loaded

• Buyers gave notice on 17 June instead of 13th

• Held: sellers entitlted to terminate contract as the notice requirement was a condition

Sky Petroleum Ltd. v VIP Petroleum Ltd. [1974] 1 All E.R. 954

• D agreed for 10 years to supply to the claimaint for its filling stations at fixed prices with all the petrol needed by the claimaint

• After 3 years D purported to terminate the contract

• Claimaint sought to enforce supply of petrol (specific peformance)

• Held: specific peformance granted - during oil crisis it was impossible to obtain petrol elsewhere so damages inadequate

Beswick v Beswick [1968] A.C 58

• Peter Beswick entered into contract with his nephew

• Transferred coal business to his nephew in consideration of the nephew agreeing to employ him as a consultant + agreeing to pay £5 a week to his widow after his death

• Nephew failed to pay the widow after he died

• Held: widow granted specific peformance to enforce nephews promise

Co-operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd [1998] AC 1

• Hilsborough Shopping Centre had 25 shops

• D were the lessees of the largest shopping unit

• Lease required D to keep the supermarket open during usual hours of business

• 16 years of the 35 year lease expired when D closed the supermarket

• Claimaints sought specific peformance of the supermarket opening

• Held: specific peformance refused, damages were the appropriate remedy - specific peformance should not force a business to operate at a loss

Doherty v Allman (1878) 3 All Cas. 709

• D leased property from plaintiffs

• Lease contained a negative obligation - tenants agreed not to alter or pull down the buildings

• Tenants demolished the buildings

• Landlord sought an injunction to restrain the breach

• Held: injunction refused, damages rewarded instead

  • Even where a covenant is breached the court is not obliged to grant an injunction

  • Injunction would be dispropoprtionate

  • Landlord loss could be compensated financially

Araci v Fallon [2011] E.W.C.A. Civ 668

• Araci owned a racehorce

• Fallon had a contractual obligation to ride Aracis horse whenever required

• Contract contained a negative obligation - Fallon agreed not to ride for any rival owner in the same rice

• Before a major race Fallon announced he would ride for a competitor instead

• Araci sought an injunction to stop Fallon

• CA granted the injunction: if a contract contains a negative promise the court may restrain the breach

Tesco Stores Ltd v Union of Shop, Distributive and Allied Workers [2024] UKSC 28

• Tesco made a commitment to pay a higher level of pay to a group of employees agreeing to relocate to a new site

• Gave notice to the relevant employees that it intended to remove retained pay from their contracts in exchange for a payment

• If an employee did not agree their contract would be terminated

• Employees sought injunction to restrain Tesco from terminating their employment to remove the retained pay term

• Held: employers right to terminate contracts could not be exercised for the purpose of depriving the employees their right to retained pay