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13 Express Contractual Provisions

John E. Stannard

From: Delay in the Performance of Contractual Obligations (2nd Edition)

John Stannard

From: Oxford Legal Research Library (http://olrl.ouplaw.com). (c) Oxford University Press, 2023. All Rights Reserved. Subscriber: null; date: 06 June 2023

(p. 365) 13  Express Contractual Provisions

13.01  Though we have now spent twelve chapters discussing aspects of the common law of contract in so far as it relates to delay, it must now be admitted that that law is not so important in this context as one might expect. There are three reasons for this. The first is that there are large areas where the common law no longer applies at all, most notably in relation to consumer contracts, where it has largely been superseded by the Consumer Rights Act 2015. The second is the increasing recognition that for many businessmen the law of contract only has a very marginal role to play in the conduct of their day-to-day affairs; even where disputes arise, recourse to the law of contract is very much a matter of last resort.1 Last but not least, many issues relating to delay in commercial contracts are primarily governed not by the common law, but (p. 366) by express terms in the contract. It is with these express terms that this chapter is concerned.

13.02  Many of these express terms relating to delay are highly specialised in nature, and vary depending on the type of contract involved. Many of them are therefore of little relevance outside the particular field in which they are employed, and can only be understood by expert practitioners in that field. However, other terms of this sort are of wider relevance, and indeed frequently crop up in the general cases. As well as this, express terms of any kind raise an important issue of principle, which is the extent to which the remedies they provide can be allowed to supplant those given by the general law. It is therefore worth discussing them at least in outline in the present context.

13.03  Of course, the difference between contracts governed by the general law and contracts governed by express terms is a matter of degree rather than kind. At one end of the scale it would be hard to imagine any contract without express terms of some kind, whereas at the other even the most sophisticated and specialised contract cannot be expected to cover all eventualities that may arise. It follows that most if not all contracts will be somewhere in between, being governed by a mixture of express terms and principles derived from the general law. It also follows therefore that there is bound to be some overlap between the subject matter of this chapter and the principles discussed in those that have gone before.

13.04  In the pages which follow we shall look at two topics. First of all, we shall sketch out a selection of commonly occurring types of contract and see how they provide for delay. Then we shall look at how some of these commonly occurring terms relate to equivalent provisions under the general law.

A.  Common Types of Contract

13.05  Just as there is no limit to the number of different contexts in which the law of contract can be applied, so there is no limit to the number of different specialities in which express contractual terms relating to delay may be found. However, we shall concentrate on four areas, these being the areas in which many if not most of the cases seem to fall. In each case we shall briefly describe the nature of the relevant contract and the obligations arising under it before going on to indicate common types of provision relating to delay.

(1)  Charterparties

13.06  Broadly speaking, a charterparty involves the hire of a ship. Charterparties can take different forms, but the most important ones are the charterparty by demise, the time charterparty, and the voyage charterparty.

(p. 367) (a)  Charterparties by demise

13.07  A charterparty by demise, or ‘bareboat’ charter as it is sometimes called,2 can be compared to the hire of a self-drive car.3 In such a charterparty the charterer obtains a possessory interest in the ship,4 which will be at his or her disposal throughout the agreed period, and will normally make the necessary arrangements for the provision of a captain and crew.5 Though charters of this sort are not as common as once they were,6 they are still found in cases where the charterer wants to have use of a ship for a period of time, and also as a method of financing the purchase of new ships.7

13.08  The basic obligation of the owner under a bareboat charter is to deliver the ship at the agreed time and location in a seaworthy state.8 The basic obligation of the charterer is to keep the ship in good order, to pay the hire when due, and to redeliver the ship at the end of the charter in proper condition.9

13.09  A common bareboat charter is that provided on the Bimco Barecon 2001 form.10 This provides for delay in a number of ways:

  • •  Time of delivery.11 The owner is obliged to deliver the ship at the agreed time, though some leeway is given. As well as this, the owner must give proper notice of the expected time for delivery.

  • •  Cancellation clause.12 This gives the charterer the option of cancellation if the ship is not delivered by the due date.

  • •  Seaworthiness.13 As we have seen, this is a common cause of delay, and the owner will normally be obliged, both before and at the time of delivery, to exercise due diligence to make the ship seaworthy and fit for service.

  • •  Payment of hire.14 The charterer will be obliged to pay hire at the due time,15 and the owner is given the right to withdraw the ship if this is not done.16

  • (p. 368) •  Time of redelivery.17 The charterer will be obliged to redeliver at the end of the charter period, and to pay liquidated damages in the event of failure to do so.18

(b)  Time charterparties

13.10  As with a charterparty by demise, a time charterparty puts the ship at the disposal of the charterer for the period specified.19 However, a time charterparty does not give the charterer any possessory rights in the ship,20 but merely the right to exploit her earning capacity.21 If a charterparty by demise is equivalent to the hire of a self-drive car, a time charterparty is more like the hire of a taxi for a set period.22 Though the charterer will be permitted and indeed expected to give orders to the captain and crew,23 the owner remains responsible for supplying and paying them.24 Where a charterparty by demise is equivalent to a lease, a time charterparty is essentially a contract for services.25

13.11  The basic obligations of the owner under a time charterparty are to supply the ship in a seaworthy state,26 to deliver her to the charterer at the specified time27 and place,28 to pay wages,29 maintenance30 and insurance,31 and generally to place the ship at the charterer’s disposal for the time specified in the charter.32 The basic obligations of the charterer are to pay hire33 and certain other expenses,34 not to (p. 369) use the ship in a way inconsistent with the terms of the charter,35 to indemnify the owners against any consequences of their orders,36 and to redeliver her on time,37 at the proper place,38 and in proper condition.39

13.12  A common time charter is that provided on the NYPE (New York Produce Exchange) form (NYPE 92).40 This provides for delay in a number of ways:

  • •  Date of delivery.41 This is the date the ship will be put at the disposal of the charterers.

  • •  Cancellation clause.42 This allows the charterer to cancel if the ship is not delivered on time.

  • •  Speed warranty.43 The charterers will need to know this so they can plan their voyages.

  • •  Seaworthiness.44 The vessel must be ‘tight, staunch and strong and in every way fitted for ordinary cargo service’; as indicated above, delays caused by unseaworthiness will give rise to a right to damages, and may even entitle the charterers to cancel the contract.45

  • •  Payment of hire.46 The charterer will be obliged to pay hire at the due time, and the owner is given the right to withdraw the ship if this is not done.47

  • •  Off-hire clause.48 This provides for suspension of hire in certain situations, most notably breakdowns in machinery and repairs occasioned by accidents to the ship.

  • •  Time of redelivery.49 The charterer will be obliged to redeliver at the end of the charter period.

(c)  Voyage charterparties

13.13  A voyage charterparty is a very different animal. If a charterparty by demise is equivalent to the hire of a self-drive car, and the time charterparty equivalent to (p. 370) the hire of a taxi for a specified period, then a voyage charterparty is equivalent to the hire of a taxi for a journey, or the hire of a removal van. A voyage charterparty has been described as a contract whereby the owner undertakes to provide the services of a vessel and crew for the accomplishment of a stipulated adventure involving the carriage of specified goods between designated places of loading and discharge, in return for which the charterer agrees to pay an agreed consideration known as ‘freight’.50 Like a time charterparty, a voyage charterparty is a contract for services, but for services of a very different sort. In the words of Lord Hobhouse:51

Under a voyage charter the owner or disponent owner is using the vessel to trade for his own account. He decides and controls how he will exploit the earning capacity of the vessel, what trades he will compete in, what cargoes he will carry. He bears the full commercial risk and expense and enjoys the full benefit of the earnings of the vessel.

13.14  The structure of a charterparty by demise and of a time charterparty is relatively simple: (1) the owner delivers the vessel to the charterer at the beginning of the specified period; (2) the charterer makes use of it during the specified period; and (3) the charterer then redelivers it at the end of the specified period. But a voyage charterparty is a much more complex affair, which is said to involve four basic stages.52 The first is when the ship sails to the loading port, where the owner gives notice of readiness to load.53 The second is when the charterer loads the ship; normally the charterparty allows a certain number of days for this, which are known as ‘laytime’ or the ‘lay days’. The third is when the ship sails with the cargo to the discharging port. Finally we have the fourth stage, where the charterer unloads the cargo. After this the ship is free to sail away on another engagement.

13.15  Within this framework, a number of basic obligations arise. For the owner these include: (1) the obligation to provide a seaworthy ship, and to ensure that it remains seaworthy at all relevant times;54 (2) to sail to the loading port with all due dispatch;55 (3) on arrival, to give notice of readiness to load,56 ensuring that the ship is indeed ready to take the cargo on board;57 (4) to perform all specified duties with regard to the loading of the cargo;58 (5) to perform the (p. 371) charter voyage with all due dispatch and without undue deviation;59 and (6) to perform all specified duties with regard to the discharge of the cargo.60 For the charterer they include: (1) the obligation to nominate ports, berths, and times of loading and discharge in so far as these are not already provided for in the contract;61 (2) to provide the cargo;62 (3) to perform all specified duties with regard to loading and unloading within the time specified;63 and (4) to pay the required freight.64

13.16  It will be obvious from all of this that delays may arise at any stage of the enterprise. The law generally makes provision for this in two ways. The first is by using the notion of conditions precedent;65 a voyage charterparty is a highly choreographed affair, in which prompt performance of a particular step by one party will inevitably depend on prompt performance of the previous step by the other.66 The second is by specific provisions in the contract itself. Some of these will be considered in more detail below, but broadly speaking the responsibility for delay will normally depend on whether the ship is out at sea or in port.67 In the former case, the risk of delay will generally be on the owner, but once the ship has arrived in port the risk will transfer to the charterer, who will have to pay liquidated damages by way of ‘demurrage’ if the ship is not loaded or unloaded within the time specified.68

13.17  One standard form of charter is the AMWELSH 93 coal charter,69 which makes the following provision for delay:

  • •  Seaworthiness.70 The vessel must be ‘tight, staunch and strong, and in every way fit for the voyage’.

  • •  Speed warranty.71 The vessel must sail ‘with all convenient speed’, both on the approach and on the charter voyages.

  • •  Notice of expected readiness72 (to be given by the ship’s Master).

  • (p. 372) •  Cancellation clause.73 This can be exercised by the charterers if the notice has not been given by close of business on the named date.

  • •  Commencement of laytime.74

  • •  Rate of loading and unloading warranty (so many tons per day).75

  • •  End of laytime.76

  • •  Exceptions (including express provisions for riots, earthquakes, acts of God, strikes, etc).77

  • •  Demurrage clause (to be paid at set rate if laytime exceeded).78

  • •  Deviation clause (allows the Master to make reasonable deviations from the direct route in cases of emergency).79

(2)  Construction Contracts

13.18  The law on construction contracts covers not only building projects of a traditional kind but also such matters as the provision of hardware and software systems and offshore oil and gas installations.80 Dealing with delay in the context of such contracts is a particularly difficult challenge. This is due to a number of factors: the length of time that the project may take, the complexity of the work to be undertaken, the large numbers of parties who may be involved, and not least the principle of accessio, whereby buildings and other structures attached to land become the property of the owner of the land.81 All this makes it very difficult for the parties to a construction contract to pull out. There is more chance of delay in a contract of this nature, and when delay does occur it can be harder to remedy.82 The law in this area is a vast topic in its own right, and is mainly the province of specialists, but given that some of the cases on the topic crop up in a more general context it is worth at least touching on it in a work of this sort.

13.19  The obligations of the parties to a construction contract may be set out in immense detail,83 but the basic elements of those obligations are relatively simple. The duties (p. 373) of the contractors are to complete the work without undue delay,84 to use materials which are of satisfactory quality and fit for their purpose,85 and to do the work undertaken with all due care and skill.86 The duties of the employer are to allow the contractors on to the site,87 to co-operate with the contractors in the performance of their duties,88 to give all necessary instructions as to the carrying out of the work,89 and to pay for the work at the time and in the manner specified by the contract.90

13.20  Given the factors mentioned above, it is not surprising that many if not most construction contracts will contain express provisions relating to delay. Where the project in question is a major one, these will almost certainly be individually negotiated, but even the standard form contracts used in the field can run into many pages and contain a multitude of terms. One example that is relatively accessible to the non-specialist is the JCT 2005 Edition Intermediate Building Contract, which includes the following provisions relating to delay:

  • •  Contract particulars.91 These are annexed to the contract, and contain the dates of commencement and of completion, together with a schedule of the work to be done and (if relevant) the sections in which it is to be divided.

  • •  Reckoning periods of days.92 This deals with the situation where an act is required to be done within a specified period of days after or from a specified date,93 the default rule being that the period shall begin immediately after that date and shall exclude public holidays.

  • •  Extension of time clause.94 This allows the architect or contract administrator to grant extensions of time when the progress of the work has been disrupted by one or more ‘relevant events’,95 including variations, exceptionally adverse weather conditions, strikes and lockouts, and other force majeure events beyond the control of the contractors.96

  • (p. 374) •  Certificates.97 These are issued by the architect or contract administrator, and are of particular importance in contracts of this sort. Such certificates fall into two broad classes: certificates of completion,98 and certificates of non-completion.99 A certificate of completion certifies that the work, or the relevant portion of it,100 has now been done, and acts as a condition precedent101 to the right of the contractors to claim payment, either of sums on account (Section Completion Certificates)102 or the final balance (Practical Completion Certificates).103 A certificate of non-completion is issued when the work has fallen behind,104 and entitles the employer to start claiming liquidated damages,105 which will then continue until the work, or the relevant portion of it, has been finished.

  • •  Suspension clause.106 This gives the contractors the power (after due warning to the employer) to suspend work on the site in the event of payments falling into arrear.

  • •  Termination clauses. There are three of these in the contract. One allows the employer in certain eventualities to serve a notice of default on the contractor and to terminate performance if this is not complied with.107 Another makes the same provision for the contractor.108 The third clause gives to either party an option to terminate on the occurrence of certain frustrating events, such as fire, lightning, flood, riot or the exercise of statutory powers by the Government such as to affect the exercise of the works.109

(3)  Conveyancing

13.21  Conveyancing has been described as the process by which legal title to property is transferred,110 most notably real property. Like charterparties and construction contracts, it is a very specialised area of law in its own right, requiring as it does not only an understanding of contract law but also of the law of property and (p. 375) of equity.111 The principles of equity have had a particular impact in the area of delay, and as we have seen the courts are still having difficulty in integrating those principles into the general law even today.112

13.22  A very useful timeline of a conveyancing contract is given by Robert Abbey and Mark Richards.113 It goes as follows:

  1. 1.  Taking instructions and advising client

  2. 2.  Drawing up of draft contract

  3. 3.  Pre-contract searches, enquiries, and planning

  4. 4.  Proof of title

  5. 5.  Mortgage (where relevant)

  6. 6.  Exchange of contracts

  7. 7.  Drawing up of purchase deed

  8. 8.  Pre-completion searches and requisitions

  9. 9.  Financial statements

  10. 10.  Completion

  11. 11.  Stamp duty and registration

  12. 12.  Delays and remedies.

Delays may occur at any stage of this process, but the ones which are of most concern in the present context occur between stages 6 and 10. The basic duty of the vendor is to convey a good title to the purchaser114 no later than the date specified for completion.115 The basic duty of the purchaser is to pay the agreed purchase price.116 As well as this, the purchaser will acquire an equitable title in the property as soon as the contract is signed,117 the vendor being a trustee for the purchaser from then until completion.

13.23  It is perfectly possible to have an ‘open’ conveyancing contract – that is to say, one that is governed purely by the common law118 – but generally one of the standard forms is used, such as the Standard Conditions of Sale,119 which makes the following provision for delay:

(p. 376)

  • •  Date of formation.120 This provides that, subject to express provision to the contrary, on exchange of contracts the contract comes into force when the last copy is posted or deposited at the document exchange.

  • •  Payment of deposit.121 This is of particular importance, as delay in completion may entitle the vendor to terminate the contract and forfeit the deposit122 (see below).

  • •  Time limit on buyer’s requisitions (normally within six days of the matter coming to the buyer’s attention).123

  • •  Timetable for investigation and deduction of title (assuming that this has not already been done before the contract was made).124

  • •  Timetable for preparation of transfer prior to completion.125

  • •  Completion.126 This is to take place on the day specified, or otherwise within twenty working days after the date of the contract.

  • •  Payment of price.127 This is due no later than 2 p.m. on the date of completion.

  • •  Notice making time of the essence. Time is not to be of the essence of the contract unless a notice to complete has been served.128 Such a notice can be served by either party at any time following the time set for completion, provided that the party concerned is able, ready and willing to complete.129 Completion under the notice must take place within ten working days.130 If a purchaser fails to complete in accordance with the notice, the vendor may rescind the contract, forfeit the deposit and claim damages.131 If it is the vendor who fails to complete, the purchaser may rescind, reclaim the deposit with interest and sue for damages.132

  • •  Liquidated damages.133 In the event of default compensation may be claimed to be calculated on an amount equal to the purchase price less (where the purchaser is the paying party) any deposit paid, for the period by which the paying party’s default exceeds that of the receiving party, or, if shorter, the date between the completion date and actual completion.134

(p. 377) (4)  Sale of Goods

13.24  Section 2(1) of the Sale of Goods Act 1979 defines a contract for the sale of goods in terms of a contract by which the seller transfers or agrees to transfer the property in goods to the buyer for a money consideration, called the price. Most contracts of this sort are governed purely by the Act, or by the equivalent provisions in the Consumer Rights Act 2015, but in the context of international trade specialised terms are far more common. There are two types of contract that are of particular importance in this context, these being the ‘c.i.f.’ contract and the ‘f.o.b.’ contract.135

(a)  C.i.f. contracts

13.25  The initials ‘c.i.f.’ stand for ‘cost, insurance, and freight’, these being the elements included in the price, namely the cost of the goods, their insurance during transit and the freight payable for their carriage.136 This has been described as the most important instrument in overseas trade.137 The essence of this type of contract is that the seller of the goods puts them on a ship bound for the specified destination, having taken out insurance for the voyage. The seller then delivers the ‘shipping documents’138 to the buyer, who then pays the price and takes delivery of the goods on arrival. From this it will be seen that there are at least three contracts involved in this situation:139 (1) the main contract between the seller and the buyer; (2) the contract between the seller and the insurer; and (3) the contract of carriage made by the seller.140 However, it is with the first of these that we are presently concerned.

13.26  The duties of a seller under a c.i.f. contract have been set out as follows:141 (1) to make out an invoice in relation to the goods sold; (2) to ship at the port of shipment142 goods of the description contained in the contract; (3) to procure a contract of affreightment under which the goods will be delivered to the agreed destination; (4) to insure the goods for the benefit of the buyer; (5) to send the shipping documents to the buyer.143 As well as this, it is the duty of the seller to comply with any (p. 378) necessary export formalities.144 From this it will be seen that there are essentially two ways in which the seller may default on the contract, one being in relation to the goods and the other in relation to the documents.145 The duties of the buyer are to pay the price146 on receipt of the documents147 and to comply with any import formalities;148 the buyer may also be required under the contract to nominate a destination port if this has not already been done.149

13.27  One commonly used set of contract terms in this form are those provided by the Grain and Feed Trade Association (GAFTA).150 These provide for delay as follows:

  • •  Period of Shipment.151 This can be defined either as a single day or a range of days.

  • •  Extension of Shipment.152 This gives the sellers the right to claim an extension, and provides for the price to be discounted in that event.

  • •  Appropriation Clause.153 This provides for the situation where the goods have already been shipped at the time of the contract. Notices of appropriation must be served on the buyers within ten consecutive days of the bill or bills of lading.154

  • •  Payment.155 This can be either in exchange for and on presentation of shipping documents, or in exchange for shipping documents on or before arrival of the vessel, at the option of the buyers. Alternatively the sellers may call upon the buyers to take up and pay for the documents on or after an agreed number of consecutive days from that of the bill or bills of lading.

  • •  Interest on late payment.156

  • •  Prevention of shipment.157 This allows the seller, on due notice to the buyer, to suspend performance where hindered by various force majeure events, including prohibitions on export, blockades, war, strikes, riots, fires, Acts of God and other unforeseeable and unavoidable occurrences. Should the interruption continue for twenty-one days following the end of the shipment period, the buyer is given an option to cancel. If that option is not exercised, then the contract (p. 379) continues in force for another fourteen days, after which automatic cancellation takes place.

  • •  Default clause.158 This allows the innocent party, after service of due notice of default, to sell or buy against the defaulter, such sale or purchase to establish the default price.159 Damages will then be payable, subject to arbitration in the case of disputes,160 based on the difference between the contract price and the default price.161

(b)  F.o.b. contracts

13.28  The letters ‘f.o.b.’ stand for ‘free on board’.162 This form of contract has a long pedigree, and may be traced back to the practice of merchants going round various ports with a ship and buying goods from local traders; these would then be delivered to the ship and paid for at once.163 Nowadays of course the buyer will not generally go out to the loading port in person, but will nominate a ship164 to go and collect the goods on his or her behalf, but the basic principle remains the same, the obligations of the seller being fulfilled as soon as the goods are put on board the ship, after which the buyer will bear the risk.165

13.29  F.o.b. contracts can take various forms,166 but the duties of the seller under such a contract can be summarised under two heads, one being the loading of the goods on the ship and the other the provision of the necessary documentation to the buyer.167 As far as the loading is concerned, the seller is under a duty to load the specified goods168 onto the specified ship169 at the specified place170 and at the specified time.171 As far as the documents are concerned, these are not strictly speaking an essential part of a contract of this nature, but are nevertheless necessary to confirm to the buyer that the obligations of the seller have been duly carried out.172 The duties of the buyer are basically to nominate a ship on which the goods are to be loaded,173 and to pay the price once that loading has taken place.174 After that (p. 380) the seller drops out of the picture, and it is up to the buyer to make any arrangements necessary to get the goods delivered to their ultimate destination.175

13.30  Once again we may take as an example of this form the standard terms provided by the Grain and Feed Trade Association (GAFTA).176 These provide for delay as follows:

  • •  Period of delivery (at buyer’s call).177

  • •  Notice of nomination (to be given no less than the agreed number of days in advance of loading period).178

  • •  Expected readiness date.179

  • •  Extension of delivery clause.180 This allows the buyer to claim an extension of up to ten days, but during the extension period the goods will be held by the sellers at the buyer’s account, with the buyer being liable for any expenses incurred.

  • •  Payment (by cash against the documents specified in the contract).181

  • •  Interest on late payment.182

  • •  Prevention of delivery for force majeure events.183 This is in similar terms to the one in the equivalent c.i.f. contract,184 but whereas the latter relates to prevention of shipment this relates to prevention of delivery, so reflecting the different obligations of a seller under a contract of this sort.

  • •  Default clause.185 Again, this is in similar terms to the one in the equivalent c.i.f. contract.186

B.  Effect of Express Provisions

13.31  Having considered some examples of express terms relating to delay, we shall now look at how they operate in the context of the general law. In doing so, we shall adopt the analysis seen in earlier chapters – that is to say, in terms of the remedies provided by terms of this sort.

(p. 381) (1)  Specific relief

13.32  Given that in English law the provision of specific relief is at the discretion of the court, there would seem to be no point in inserting a contract term providing for its availability. However, this has not prevented parties from trying to do so. In Warner Bros Inc v Nelson187 the defendant, a well-known film actress, agreed during the term of the contract to work solely and exclusively for the claimant studio. The contract contained a clause in which the defendant formally admitted that the loss of her services could not be adequately compensated for in damages, and agreeing to the availability of an injunction in the event of a breach. Similarly, in Tritav Holdings v National Bank of Canada188 the terms of a lease for a unit in a shopping centre provided for various remedies on the tenant’s default, including specific performance and a mandatory injunction to compel the tenant to keep the business open or to resume trading as the case may be; this was accompanied by an express clause setting out the tenant’s consent to these remedies being granted.189 Commenting on these cases,190 Robyn Carroll suggests that though the courts will clearly not allow their discretion in this regard to be overridden by express provisions of this sort,191 the presence of such provisions, if appropriately drafted, may be a relevant factor in the way in which that discretion will be exercised in any given case.192

(2)  Notice making time of the essence

13.33  We have already commented on the utility of the procedure whereby a promisor who has failed to perform can be served with a notice making time of the essence; if the promisor is still able and willing to perform, the notice can serve as an incentive to do so, and if not, failure to comply with the notice can be good evidence that performance is not likely to be forthcoming. It is therefore not surprising that contracts, especially in the field of conveyancing, often provide for notices of this sort.193 Since their enforcement does not require the intervention of (p. 382) the court, such provisions do not cause problems in principle; rather, the question is how they relate to the promisee’s ability to serve a notice under the general law.

13.34  In the past the courts have been curiously reluctant to enforce such clauses according to their terms. Thus in Smith v Hamilton194 the purchaser of a house was allowed to reclaim her deposit despite having failed to complete either on the due date or following service of a notice to complete. The contract provided for termination and forfeiture of the deposit, either with or without notice, in the event of failure to complete on time.195 However, it was held by Harman J that time not being of the essence originally, it was not open to the vendor to make it so in this way.196 Similarly in Re Barr’s Contract,197 a term allowing the vendor to serve a notice requiring the purchaser to complete ‘within such period (not being less than 28 days) as the notice shall prescribe’198 was held not to entitle the vendor to rely on a notice of that length since it did not give the purchaser sufficient time to raise the price.199 And in Cumberland Court (Brighton) Ltd v Taylor, a similar notice200 was upheld, but partly on the ground that the period allowed would have been reasonable in any event under the general law.201

13.35  In the absence of any good reason to the contrary, there would seem to be no good ground for allowing the court to second guess express provisions of the contract in cases of this type.202 It is not without significance that all of the three cases mentioned above (all of which were only cases at first instance) were decided before it was finally settled that failure to adhere to time stipulations in a conveyancing contract was a breach of contract in the first place.203 One of them has now been overruled,204 and another has been doubted.205 Now that the law on this matter has been clarified, the law in this area might well be reconsidered at a higher level.

(p. 383) (3)  Recovery or forfeiture of liquidated sum

13.36  Where damages for delay are claimed at common law, it is up to the court to assess what those damages should be. But sometimes damages are set by a provision in the contract, and the question then arises to what extent the promisee can recover under that provision. Alternatively, the contract may provide for a deposit or other advance payment which the promisee may seek to forfeit in consequence of the delay. There are a number of possibilities here.

(a)  Liquidated damages

13.37  Where a contract contains a valid liquidated damages clause covering the breach, the promisee can recover the sum specified in the clause, no more and no less.206 Questions of mitigation are irrelevant.207 Nor can the promisor seek to argue that the loss would have been sustained in any event. In Clydebank Engineering and Shipbuilding Co Ltd v Don Jose Ramos Yzquierdo y Castaneda208 the appellants agreed to construct a number of torpedo boats for the Spanish Navy, with £500 a week being payable for late delivery. The boats were not delivered on time, but in the meanwhile the respondents were involved in a disastrous sea battle in which most of their fleet was sunk. But this was held by the House of Lords not to be a bar to a claim for liquidated damages, the whole point of which were to save the court from having to inquire into the claimant’s actual loss.

13.38  The rule that the claimant cannot recover more than the sum specified in the liquidated damages clause means that such a clause can function rather like a limitation clause.209 The claimant cannot ignore the clause altogether and sue for unliquidated damages,210 nor can he or she seek to recover such damages in addition to the sum specified in the clause.211 However, the extent to which a liquidated damages clause bars a claim for unliquidated damages on the same facts depends on the construction of the clause in question. In Aktieselskabet Reidar v Arcos Ltd212 a charterparty provided that the charterers should load the cargo at an agreed rate, and that a fixed rate of demurrage should be paid for detention of the ship beyond the agreed time. The charterers were so slow in loading that by the time the ship was ready to sail the winter season had arrived, which meant that she could carry less cargo. It was held (p. 384) that the shipowners were entitled to claim both ‘demurrage’ for the detention of the ship213 and damages for ‘dead freight’ to compensate them for their inability to carry a full cargo. Liquidated damages clauses can be found in many different types of contract, but such provisions are of particular importance in two situations involving delay, one being the ‘demurrage’ payable by a charterer for detention of a ship, and the other the liquidated damages payable by a contractor for delay in construction contracts.

(i)  Demurrage

13.39  ‘Demurrage’ is the technical name given to the liquidated damages payable, typically in the context of a voyage charter,214 for delay in loading or unloading.215 What normally happens is that the charterer is allowed a fixed period of time – the so-called ‘lay days’ – for the completion of the task, during which the ship is at the disposal of the charterer. If the charterer fails to have the loading or unloading completed in time, this is a breach of contract216 for which the owner of the ship can claim damages for detention, or, if the contract so provides, demurrage at a given rate.217 The law regarding laytime and demurrage is complex and technical,218 and we can do no more than highlight its main features in the present context.

(aa)  Nature of demurrage

13.40  It has been said that a provision as to demurrage is for the benefit of the charterer as well as the shipowner, in that the charterer, at the price of paying the agreed demurrage, is entitled to keep the ship for the agreed time, or if no time has been agreed, for such a time as will not frustrate the commercial object of the adventure.219 However, a charterer who detains the ship beyond the span of the lay days commits a breach of contract,220 and therefore demurrage is properly classified as a species of liquidated damages rather than as a species of option.221

(bb)  Types of demurrage

13.41  Demurrage can be classified as either ‘exhaustive’ or ‘partial’.222 It is classified as ‘exhaustive’ when it covers all delay in loading (p. 385) or unloading; it is classified as ‘partial’ where it only covers a specified period. Where there is a provision for exhaustive demurrage, it excludes any claim for unliquidated damages in respect of the detention of the ship, but in the case of partial demurrage such a claim can arise at the expiry of the set period. This can be illustrated by a charterparty that provides for ‘ten days to load, ten days on demurrage at £X per day’. Say the charterer takes thirty days to load the ship. Nothing will be payable in respect of the first ten days, which constitute the lay days allowable under the charter. In respect of the second ten days, the charterer will have to pay the agreed demurrage. Then in respect of the third ten days, the owners can claim unliquidated damages for detention in the normal way.

(cc)  When does demurrage have to be paid?

13.42  Liability for demurrage normally begins to run as soon as the lay days have expired, and continues to accrue until the cargo is fully loaded or unloaded and the ship sent on its way.223 However, there are exceptions to this. Thus, for instance, the express terms of the charterparty224 or the custom of the port may provide that certain days, such as Sundays or public holidays, are not to count.225 Again, if the owner for his or her own purposes removes the vessel from the disposal of the charterer – say, for the purpose of taking on fuel – the charterer will not have to pay demurrage in respect of the period in question.226 On the other hand, the contract may provide for payment of demurrage or other such sums at an earlier stage, as where the charterparty provides that time spent waiting for a berth is to count as loading or discharging time.227 In these situations demurrage will have to be paid even though the ship is not technically at the disposal of the charterer.

(dd)  Who must pay the demurrage?

13.43  Normally it is the charterer who is liable to pay the demurrage.228 However, there are cases where other parties may have to pay it either instead or as well. In particular, a charterer who is loading cargo for the benefit of others, for instance the consignors and consignees under a contract (p. 386) for the sale of goods, may very well issue bills of lading incorporating the terms of the relevant charterparty.229 Where this happens, demurrage may become payable by others, including the consignors230 and also by anyone else who may demand delivery on the bill of lading.231

(ee)  The effect of demurrage

13.44  Where a contract provides for the payment of demurrage, the effect is the same as for any other kind of liquidated damages clause. Thus in the event of the ship being detained beyond the agreed lay days, the owner may claim the set rate of demurrage, no less and no more.232 It does not matter that the owner may have suffered loss in excess of that amount,233 nor that the charterer’s breach was a deliberate one, designed to cut down the number of voyages that could be performed under the charter.234 However, the owner will be able to recover for extra losses incurred which are not within the scope of the demurrage clause.235

(ii)  Liquidated damages in building contracts

13.45  Another context in which liquidated damages provisions are often found is in building and construction contracts, where the contractor agrees to pay compensation for delay at a certain rate.236 Such provisions have a number of advantages.237 First of all, they can be operated with reasonable clarity and certainty. Next, they save the court from having to conduct an expensive and complicated enquiry into the amount of loss suffered by the employer as a result of the delay. Last but not least, they can act as a valuable incentive to contractors to keep up to schedule. Liquidated damages provisions of this sort are enforceable in principle, but their application can give rise to a number of technical difficulties which we can do no more than outline in the present context.

(aa)  When are liquidated damages payable?

13.46  Obviously the situations for which liquidated damages may be payable will vary from contract to contract, but clauses of this type often provide that if the contractor fails to complete by the date stipulated in the contract, or by such date as varied by an extension of time, the employer may sue for or deduct liquidated damages at the rate of so many pounds for any day or week during which the works remain incomplete.238 This means that the liquidated damages are payable as from the date set either by the original contract or by a proper (p. 387) extension.239 They then remain payable until the date of practical completion,240 unless the contract is terminated before that time.241

(bb)  Prevention by employer

13.47  There is, however, an important exception to this, in that an employer cannot claim liquidated damages in respect of a delay for which he or she is wholly or partly responsible.242 This can happen in two cases, the first being where delay is caused by the employer’s own breach of contract,243 and the second where delay is caused by extra works ordered by the employer.244 In neither case can the employer claim liquidated damages, the principle being that he or she cannot insist on timely completion when it is his or her own fault that this was not done.245 It does not matter that the contractor also may have contributed to the delay.246 The effect of this rule is to render the liquidated damages provision inoperable, since there is now no set date from which those damages can accrue.247 Rather, time is said to be ‘at large’,248 the contractor now being under an obligation to complete the works within a reasonable time.249

(cc)  Extensions of time

13.48  The solution for the problem just stated is for the contractor to be given an extension of time, whereby a later date is set for completion.250 Such extensions are generally given by the architect, and may be subject to review by the arbitrator.251 They can of course be for the benefit of the contractor, in that there is now more time allowed for completion, but they can also work to the benefit of the employer by providing a fresh date from which liquidated (p. 388) damages can begin to run.252 For this reason the courts have traditionally regarded extension of time clauses with grave suspicion, and have subjected them to very strict canons of construction.253 Thus, for instance, it has been held that extensions of time can only be granted if the contract so provides,254 that they must be granted strictly in accordance with the contract255 and that in the absence of clear words they will not be allowed to apply to acts of prevention or breaches of contract by the employer.256

(b)  Penalties

13.49  The legitimate function of a liquidated damages clause is to save time and effort by allowing the parties to make a genuine pre-estimate of the loss likely to be caused by the breach. However, such clauses can also be used for a more sinister purpose, in terrorem of the party in breach,257 that is to say in order to terrorise the promisor into performing the contract. Such provisions are categorised as penalties, and will not be enforced by the court. Where a clause is construed as a penalty, it is completely disregarded, and the promisee will have to claim for unliquidated damages in the usual way.258 The courts are frequently confronted with the question whether a liquidated damages clause can be struck out as a penalty. This is not an easy question to decide, since the terminology used to describe the clause in the contract is not conclusive.259 Rather, such clauses can be struck down in two ways, by common law and by statute.

(i)  Penalties at common law

13.50  Whether a clause is construed as a penalty at common law depends on its construction and on the surrounding circumstances at the time of the breach.260 The mere fact that the clause yields a figure greater than the loss actually suffered is not enough to make it a penalty; something more must (p. 389) be shown.261 Until recently the key guideline case on penalties was the decision of the House of Lords in Dunlop Pneumatic Tyre Co v New Garage and Motor Co,262 where Lord Dunedin laid down a number of principles for the guidance of the courts. However, these must now be used with caution in the light of the decision of the Supreme Court in Cavendish Square Holding BV v Makdessi,263 where it was pointed out that these principles formed no part of the ratio of the case.264 Rather, the court should apply a two-stage test.265 The first question to ask was whether the stipulation in question was a secondary stipulation engaged on breach of a primary obligation under the contract.266 If so, the court had then to identify the extent and nature of the legitimate interest of the promisee in having that primary obligation performed, and then determine whether, having regard to that legitimate interest, the secondary obligation was exorbitant or unconscionable in amount or effect.267 What this means is that the four rules cannot be read as if they were a statute; rather, they are no more than a guide, and must be read against the overriding test set out by the Supreme Court.

(aa)  Sum extravagant and unconscionable

13.51  First of all, Lord Dunedin says that a clause will be held to be a penalty if the sum stipulated for is extravagant and unconscionable in amount in comparison to the greatest loss that could conceivably be proved to have followed from the breach.268 It has been said that a provision in a minor building contract for the payment of £1 million liquidated damages for failure to complete the work on time would clearly be a penalty on this test.269 This example has been described as rather far-fetched,270 but a more realistic illustration is provided by Jeancharm (T/A Beaver International) v Barnet Football Club Ltd271 where a clause in a contract provided for 5 per cent interest a week in the event of late payment for goods supplied. Pointing out that this amounted to a rate of 260 per cent a year, the Court of Appeal had no hesitation (p. 390) in striking the provision down as a penalty. Such a provision would seem to fall well within the scope of the test set out in the Makdessi case.

(bb)  Delay in paying a sum of money

13.52  Lord Dunedin’s second principle is that it will be held to be a penalty if the breach consists only in paying a sum of money, and the sum stipulated is a sum greater than the sum which ought to have been paid.272 Given that this rule is capable of striking down provisions that on their merits are perfectly fair, it must now be regarded as suspect in the light of Makdessi. Indeed, the courts have always been reluctant to apply the penalty doctrine in the absence of evidence of oppression.273 Thus, for instance, it does not apply to an acceleration clause in a contract for payment by instalments, where the whole sum becomes due on default of a single payment.274 Nor does it apply to clauses increasing the rate of interest payable by a borrower in default,275 it being said that there is a good commercial reason for the increase, and that therefore the provision is not penal in character so long as the increase is not an extravagant one.276

(cc)  Lump sum payable for variety of breaches

13.53  There is a presumption, though no more than a presumption, that a clause is penal when a single lump sum is payable on the occurrence of one or more of several events, some of which may occasion serious and others but trifling damage.277 In the past, the courts have used this rule to strike out a clause providing for the payment of a flat sum for failure to complete on time.278 In Public Works Commissioner v Hills279 the defendant agreed to construct a railway line for the claimants, it being provided that £10,000 liquidated damages should be paid if the works were not finished within the specified time. It was held that the claimants were not entitled to recover this sum; given that the same sum applied whether the delay was long or short, it could not be a genuine pre-estimate of the loss suffered. However, this rule, unlike the first two, is no more than a presumption, and it has been said that a clause of this nature should not be struck down merely because it might be possible to conceive of hypothetical circumstances in which the stipulated sum might greatly exceed the (p. 391) claimant’s loss.280 All in all, this presumption, to the extent that it is still part of the law in the light of Makdessi, is not by any means a strong one.

(dd)  Precise pre-estimate of damage impossible

13.54  The fourth rule adds a qualification to the other three, it being no obstacle to the sum stipulated being a genuine pre-estimate of damage that the consequences of breach are such as to make precise pre-estimation an impossibility.281 On the contrary, this is the whole point of having liquidated damages in the first place.282 Delay is exactly the sort of breach for which it may be difficult or impossible to estimate the loss in advance, and there is therefore nothing wrong with having liquidated damages for delay provided they are not extravagant and that they are in proportion to the delay.283 Thus in Re Newman284 the court upheld a provision in a building contract providing for the payment of £10 per week liquidated damages for delay.285 A similar approach can be seen in Parking Eye Ltd v Beavis, a case decided in the Supreme Court along with Makdessi.286 There the court upheld a charge for £85 levied on the defendant for leaving his car in a supermarket car park for longer than the two hours specified. The charge was clearly indicated on a number of signs around the car park, and though it could not be shown that the claimants had suffered loss of that amount, that was not enough to make the charge penal. The charge was neither unconscionable nor extravagant, and the claimants had a legitimate interest in imposing the charge which went beyond the recovery of any loss sustained.287

(ii)  Statutory provisions

13.55  As well as being invalid as a penalty under the common law rules, an unfair liquidated damages clause may also fall foul of Part 2 of the Consumer Rights Act 2015, which limits the effectiveness of unfair terms in contracts concluded between a seller or supplier and a consumer.288 A term is defined as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations under the contract, to the (p. 392) detriment of the consumer.289 Such terms do not bind the consumer,290 though the rest of the contract remains binding if it is capable of continuing in existence without the disputed term.291 The Act gives a list of examples of terms which may be considered unfair,292 one of these being a term requiring ‘any consumer who fails to fulfil his obligation to pay a disproportionately high sum in compensation’.293 Given that such terms would generally fall foul of the common law test as well, and that the scope of the Act is narrower than that of the common law test in a number of respects,294 the Act would not seem to add very much protection in this respect.295

(c)  Options

13.56  Sometimes the contract provides for a sum of money to be paid for delay, not by way of liquidated damages, but as payment for the exercise of an option. One homely example of this is money paid to a taxi driver for waiting time. Another example is a provision in a contract for the sale of goods giving the buyer the right to take late delivery in return for the payment of ‘carrying charges’.296 Though provisions of this sort cause no problems in the majority of cases, they can be very oppressive in their effect,297 and the question therefore arises whether these too can be struck down by the court. The general answer is that they cannot, but we need to look once again at the position at common law and by statute.

(i)  Common law

13.57  As Cavendish Square Holding BV v Makdessi itself affirms,298 the jurisdiction of the courts to strike down penalty clauses only applies where the sum in question is payable on a breach. This means that where the sum is payable for the exercise of an option, the law of penalties can have no application. In Associated Distributors Ltd v Hall299 the defendant signed a hire-purchase agreement for a bicycle. The agreement provided for the payment of a deposit (p. 393) and fifty-three weekly instalments. The hirer was given the right to terminate the agreement, but in that event was bound by a ‘minimum payment’ clause which obliged him to pay all sums outstanding under the agreement, and also a further sum ‘by way of compensation for depreciation’ so as to bring the total sum paid up to half the total hire-purchase price. The defendant terminated the agreement at a very early stage, and sought to argue that the minimum payment clause was unenforceable as a penalty. This argument was accepted by the County Court judge, but the Court of Appeal held that the claimants could recover the full sum due under the clause. Though the clause in question was subjected to unfavourable comment by members of the court,300 it was pointed out that the agreement had been terminated by the hirer and not the owner, so the issue whether the minimum payment clause was a penalty did not arise.

13.58  The paradox with Associated Distributors Ltd v Hall is that if it had been the owner who had terminated for breach, the clause would have been struck down. In Bridge v Campbell Discount Co,301 which involved a contract term very similar to the one in Associated Distributors Ltd v Hall, the hirer of a Dormobile van found that he could not keep up the payments and wrote to the owners in very apologetic terms saying that he would have to return it. The question then arose whether the owners were entitled to claim under the minimum payment clause. Lords Devlin and Denning held for the hirer on the broad ground that Associated Distributors Ltd v Hall was wrongly decided, but the other members of the House of Lords were unable to concur in this conclusion. However, it was held that the minimum payment clause was still caught by the rules as to penalties, on the ground that this was a case of breach rather than of the exercise of an option. Two reasons were given for this conclusion, the one being the lack of any reference to the option in the hirer’s letter to the owners, and the other the apologetic terms in which it was written.302 Whatever the merits of this decision, it left the law in an unsatisfactory state. In the graphic words of Lord Denning:303

Let no one mistake the injustice of this. It means that equity commits itself to this absurd paradox: it will give relief to a man who breaks his contract but will penalise the man who keeps it.

13.59  Not all courts have been happy to accept this paradox. In particular, in Andrews v ANZ Banking Group the High Court of Australia,304 drawing on the ancient equitable origins of the penalty doctrine, decided that it should not be confined to sums payable on breach. In England and Wales, to some extent, the matter (p. 394) has been remedied by statute,305 but despite the strictures of Lord Denning the difference drawn in this context between breaches and exercises of an option to terminate still holds good in the law today.

(ii)  Statute

13.60  To what extent can statute help out the defendant in this kind of case? In a case of hire purchase, the hirer now has a statutory right to terminate the agreement under the Consumer Credit Act.306 As well as this, as we have seen, a term requiring any consumer who fails to fulfil his obligation to pay a disproportionately high sum in compensation can be struck down under the Consumer Rights Act 2015.307 Strictly speaking, it is hard to say that a person who exercises an option of this sort can be said to have failed to fulfil an obligation under the contract, but it may be that the Act can cover this sort of case. In Bairstow Eves London Central Ltd v Smith308 a clause in an estate agency agreement provided for payment of commission at a ‘discounted’ rate of 1.5 per cent if paid within ten days, and at a ‘standard’ rate of 3 per cent thereafter. Looking at the substance of the agreement rather than the form, the High Court struck the provision down as unfair under the equivalent provision in the old Unfair Terms in Consumer Contracts Regulations 1999,309 which have now been superseded by the 2015 Act. Doubtless the court was anxious to avoid extending to the 1999 Regulations the paradox in Bridge v Campbell Discount Co Ltd, whereby the person who breaks the contract is better off than the one who keeps it.310

(d)  Deposits and part payments

13.61  So far we have been looking at the situation where the contract provides for a fixed sum to be paid by the promisor after and in consequence of the breach. However, contracts may also provide for a deposit or for some other sum to be paid in advance. The question then arises whether, in a situation where the contract has been terminated on account of the promisor’s breach, the promisee can forfeit the sum in question, and whether he or she can sue for it if it has not yet been paid. The answer to this depends on a number of factors, and in particular: (1) whether the sum in question is a deposit or a part payment of the price; (2) whether the contract provides for forfeiture or not; (3) whether the promisor is still ready and willing to perform; and (4) whether forfeiture would involve a total failure of consideration.

(i)  Deposits

13.62  A deposit by its very nature is intended as an earnest for the performance of the contract,311 and can therefore not as a general rule be recovered (p. 395) by a defaulting promisor in the event of termination.312 Indeed, since termination of the contract for breach does not affect accrued rights, there is nothing in principle to prevent the promisee both exercising the right to terminate and suing for an unpaid deposit.313 However, these general rules are subject to exceptions both at common law and by statute.

(aa)  Common law

13.63  Given that a deposit was payable in advance of the contract, it used to be thought that the jurisdiction of the courts to relieve against penalties had no application in this context. However, relief of this sort was granted by the Privy Council in the case of Worker’s Trust and Merchant Bank Ltd v Dojap Investments Ltd.314 The facts here involved a contract for the sale of land which provided for a deposit of 25 per cent and for payment of the purchase price within 14 days of the date of the auction. The price was not paid on time, and the vendors sought to terminate the contract and forfeit the deposit. However, it was held that a deposit could only be forfeited by the vendors in this sort of situation where it was reasonable in its scale; given that the normal deposit in a sale of land was 10 per cent, a deposit of 25 per cent was to be regarded as penal unless the vendors could show good reason for setting it at such a high level. In the event, the purchasers were allowed to recover their deposit in full.

(bb)  Statutory provisions

13.64  Where the contract is one for the sale of land, a limited degree of statutory protection against the unjust forfeiture of a deposit is given by section 49(2) of the Law of Property Act 1925, which gives the courts a general discretion to order the return of the deposit where it thinks fit. The way in which the courts have used this provision has varied considerably over the years.315 At first it was said that the section only applied where there had been unconscionable conduct or where special circumstances arose making it unfair that the deposit should be forfeited.316 In later years, the courts adopted a wider view, saying that it should be applied where necessary to do justice between vendor and purchaser.317 However, in more recent years it has been said that, given that the courts now have the power to order the return of the deposit anyway where it is thought to be penal in its effects, section 49(2) should be used only in exceptional cases,318 and this seems to be the current position.319

(p. 396) 13.65  On a more general note we have Part 2 of the Consumer Rights Act 2015, which allows the courts to strike out unfair terms in consumer contracts.320 One example given of a term which will generally be regarded as unfair is one which permits the seller or supplier to retain sums paid by the consumer where the latter decides not to perform the contract, without providing for the consumer to receive compensation of an equivalent amount from the seller or supplier where the latter is the party cancelling the contract.321 Given that there is nothing to prevent these provisions from applying to contracts for the sale of land,322 this provision would probably cover the forfeiture of a deposit. However, the Act as we have seen only applies to consumer contracts.323 As well as this, the provision in question only applies where the right to forfeit is conferred by the contract, and while this may apply to some cases of deposits it does not apply where the forfeiture is governed by the general law rather than by any specific term of the contract.324

(ii)  Part payments of the price

13.66  An analogous problem arises when the contract provides for payment of the price in advance or for payment in instalments, and the promisee terminates the contract for breach by the promisor. Such breach may often consist of failure to pay instalments on time. Can the promisee forfeit the instalments that have been paid, and can he or she recover in respect of arrears outstanding at the date of termination? Once again the answer depends on a number of different factors, the principal one being whether or not the contract expressly provides for forfeiture in these cases.

(aa)  Contractual provision for forfeiture

13.67  Sometimes the contract will provide in so many words that in the event of termination the promisee may retain or recover, as the case may be, instalments of the price which fell due before termination. Where this is the case, the promisor cannot as a general rule recover any past instalments and can be sued for any that remain outstanding,325 subject to three possible restrictions.

13.68  Extra time to pay. First of all, equity will relieve a purchaser against forfeiture in such cases to the extent of giving him or her extra time to pay, provided that he or she is able and willing to do so.326

(p. 397) 13.69  Relief against forfeiture generally. Even where the promisor is no longer able or willing to perform, there is authority for a broader degree of equitable relief against forfeiture in this sort of case. The leading case here is Stockloser v Johnson,327 a case involving the sale of machinery for a price payable in instalments. The contract provided that in the event of termination the seller could retain any instalments paid. In the event, the seller was held to be entitled to do this by the Court of Appeal, but it was said by Romer LJ that it would have been different if the seller had been guilty of fraud, sharp practice or other unconscionable conduct.328 The other two judges, Sellers and Denning LJJ, went even further, saying that equity could relieve against forfeiture in any case where it would be unconscionable to allow the money to be kept.329 Whether one adopts the wider or the narrower view of its scope and extent, the existence of an equitable jurisdiction to grant relief in this sort of case would not seem to be in doubt.330

13.70  Consumer Rights Act 2015. Finally, we have once again the ‘grey list’ from the Consumer Rights Act 2015.331 One example of a term which will generally be regarded as unfair under the Act is one which permits the seller or supplier to retain sums paid by the consumer where the latter decides not to perform the contract, without providing for the consumer to receive compensation of an equivalent amount from the seller or supplier where the latter is the party cancelling the contract.332 In principle this would certainly apply to a term allowing a seller to forfeit instalments of the purchase price, but the Act does not apply except to consumer contracts.333

(bb)  No contractual provision for forfeiture

13.71  Where there is no contractual provision for forfeiture in cases of this sort, the approach of the law differs depending on whether the promisee can be restored to his or her original position. In Dies v British and International Mining and Finance Corporation Ltd334 the buyers of a consignment of rifles paid some £100,000 in advance, but subsequently refused to take delivery (p. 398) of the rifles or to pay the balance of the purchase price. The sellers elected to accept the repudiation, and the question then arose whether they were entitled to retain the advance payment. It was held that the money should be returned, on the ground that it would be clearly unfair to allow the sellers to retain both the goods and part of the price, quite irrespective of the loss caused; rather, they should be confined to their remedy in damages. Though this case seems to go contrary to the general doctrine that accrued rights survive termination, three points are worth noting: (1) the £100,000 was not intended as a deposit, but as an advance on the purchase price; (2) the contract made no express provision for forfeiture; and (3) by allowing the sellers to terminate the contract and the buyers to recover their advance payment, the parties were put (subject to any claim for damages the sellers might have) back into their original position.

13.72  The position is different where the promisor has already incurred a benefit from the performance of the contract prior to termination. In Hyundai Heavy Industries Co Ltd v Papadopoulos335 a shipbuilding contract provided for a number of ‘stage payments’ to be made during the work. The shipbuilders eventually terminated the contract, and the question arose whether they could recover from the buyers in respect of arrears. It was argued that the shipbuilders should be confined to their remedy in damages, but it was held that this would be no substitute for that which they already had, namely a vested and indubitable right to prompt payment on a specified date of a specified sum.336 This case differs from Dies v British and International Mining and Finance Corporation Ltd in that merely terminating the contract and allowing the buyers their money back would not have restored the parties to their original positions, the buyers having had the benefit of the work done by the builders prior to termination.337 In the same way, instalments due under a hire purchase agreement can be recovered even after the agreement has been terminated, since these relate to the hire of the goods, of which the hirer has already had the benefit.338

(4)  Withholding performance

13.73  We have seen that the right to withhold performance has an important function in dealing with delay, most especially in contracts which call for some degree of co-operation between the parties in carrying out their respective obligations,339 such as voyage charterparties340 and construction contracts.341 Given that whether (p. 399) that right exists in any given case is essentially a matter of construction,342 all terms providing for the order of performance might in some sense be categorised as express terms relating to delay. However, the law does not, as it does in relation to the recovery of compensation, make special provision for this. Instead, the right to withhold performance is governed by the general principles discussed above,343 the question being decided largely by the intended order of performance in the contract,344 subject to the doctrine of substantial performance345 and other devices to prevent unjust enrichment.

(5)  Termination

13.74  Last but not least, we have express contractual provisions for termination. Once again, these play an important role in the law.346 Such provisions have often come before the courts in recent years. The relevant legal principles are of general application, and have been covered in detail by the present author in another context,347 but five basic issues arise for consideration: (1) the relationship between express provisions for termination and the general law relating to breach of condition; (2) the construction of express termination rights; (3) the rules relating to the exercise of such rights; (4) the legal consequences of such exercise; and (5) the problem of multiple termination rights.

(a)  Express termination rights and breach of condition

13.75  Saying that time is of the essence is, as noted above, equivalent to saying that timely performance is a condition of the contract.348 Given that the essence of a condition is that the promisee may terminate in the event of breach, it is difficult to see how allowing a contractual right of termination in this context differs from making timely performance a condition, but some distinction there must be, since as we shall see the two types of provision differ in their legal effect.349 The issue has not been much considered in the courts, no doubt because in most cases both types of term boil down to the same thing, but it has been suggested that for a term to be a condition it is not enough to spell out the consequences of breach; (p. 400) rather, there must be something essential about the term itself.350 However, though this description can be applied to some conditions, it clearly cannot be applied to all; in particular, it has no application to cases where a term is classified as a condition, not on the ground of its intrinsic importance, but for considerations of commercial certainty.351 All in all, though the question is potentially an important one, the law at present provides no satisfactory answer to it.

(b)  Construction of termination rights

13.76  Contracts occasionally contain provisions allowing termination for any and every breach,352 but the courts for obvious reasons tend not to take such provisions at their face value. In The Athos353 the Court of Appeal was confronted with a standard form clause in a time charterparty allowing the owner to terminate for late payment of hire ‘or on any breach of this charterparty’, but held that the clause could not be applied as it stood; in the words of Stephenson LJ, such a mode of construction would be ‘arbitrary, capricious or fantastic’.354 The words in question were subsequently interpreted by the House of Lords in The Antaios355 as referring only to repudiatory breaches, this being the occasion of Lord Diplock’s famous aphorism that if detailed semantic and syntactical analysis of words was going to lead to a conclusion that flouts business common sense, it must be made to yield to business common sense.356 In practice most such clauses either restrict their application to serious breaches,357 or provide for a procedure whereby the party in default can be warned of the breach and given an opportunity to remedy it.358

(c)  Exercise of express termination rights

13.77  As a general rule, express termination rights of this sort must be exercised strictly according to their terms. One consequence of this is that the notion of anticipatory breach has no application in this context; an express termination right cannot be exercised in advance, no matter how obvious it may be that the requirements for that exercise are going to be met.359 In The Mihalis Angelos360 the charterers of a ship wrongly purported to invoke a cancellation clause in the charterparty on the grounds of force majeure, claiming that there was no cargo available. This was then (p. 401) accepted as a repudiation by the owners, who terminated the contract. It was subsequently found by the arbitrators that at the relevant time there was no prospect of the ship being ready to load at the agreed date, and that if there had been no premature repudiation the charterers would inevitably have exercised their rights under the cancellation clause.361 However, it was held by the Court of Appeal that this made no difference to the legal position; at the relevant time, the right of the charterers to invoke the clause had not yet arisen, and their decision to do so was premature.362 In the same way, where a clause of this nature provides, as it often does, for the defaulting party to be served with a notice giving the opportunity to remedy the breach, such notice must meet the requirements specified in the contract, otherwise it will be ineffective.363

(d)  Effect of termination under express provision

13.78  The consequences of termination under an express provision of this sort are not the same as those which arise under the normal rule of termination for breach. There, in the classic words of Lord Diplock, both parties are released from their primary obligations under the contract, in so far as they remain unperformed, but in the case of the promisor these primary obligations are replaced by a secondary obligation to pay damages, such damages being calculated on the basis that the contract has been repudiated in its entirety.364 However, in the case of termination under an express provision this secondary obligation does not arise, at least in relation to the primary obligation in question; if the defaulting promisor has any liability in damages at all, it is merely in respect of any breaches that have occurred up to the time of termination.365 In most cases this will not matter, as the promisee will be content with the bare termination, but where there is a lot of money at stake, it is better for the promisee to terminate for breach of condition under the general law, as this will afford damages on the footing that the contract has been totally repudiated – that is to say, damages for ‘loss of bargain’.366

(e)  Multiple termination rights

13.79  To what extent do express rights of this sort displace the right to terminate at common law? It has been said that while in principle there is nothing to stop the parties to a contract providing their own complete code for termination, there is (p. 402) a presumption that neither party intends to abandon any remedies for its breach arising by operation of law, and that clear words will be needed to rebut that presumption.367 Indeed, in Dalkia Utilities Services plc v Celtech International Ltd it was held that the claimants were entitled to terminate the contract for repudiation at common law, despite a clause in the contract which appeared to state in clear words that the rights of termination provided in the contract should be exhaustive.368 This would seem to suggest that in most cases of this sort the termination rights provided by the contract will exist alongside those provided by the general law.369

13.80  This, however, gives rise to an even more tricky question: to what extent can the exercise of one set of rights exclude another? In this connection it has been said that a lot depends on the nature of the rights concerned, and on how they relate to one another; for instance: (1) the rights may arise against the same promisor, or against different promisors; (2) they may arise in relation to the same event, or in relation to different events; (3) they may exist at the same time, or at different times; (4) they may be exercised in the same way, or in different ways; and (5) such exercise may give rise to the same consequences, or to different consequences.370 Clearly the exploration of all of these possibilities is beyond the scope of the present work, but three principles seem to emerge. The first is that a party will clearly not be allowed to exercise multiple rights of termination where that would lead to multiple compensation for the same loss; so where a contractual right of termination is accompanied by a right to claim liquidated damages, the promisor cannot exercise that right and also claim ‘loss of bargain’ damages at common law.371 The second is the corollary that in a case of this sort, where the two rights lead to different consequences, exercise of the one will necessarily exclude the other.372 The third is that where the consequences are not inconsistent, the courts will normally be willing to allow a certain amount of latitude to the promisee, provided that at the end of the day the compensation recovered does not exceed the loss incurred as a result of the breach.373


1  This insight goes back over fifty years, to Stewart Macaulay’s seminal article ‘Non-contractual relations in business’ (1963) 28 American Sociological Review 45. For a critical review of the relevant field and its literature see Gava, John, ‘Taking Stewart Macaulay and Hugh Collins seriously’ (2016) 33 J Contract Law 108.

2  Davis, Mark, Bareboat Charters (2nd edn, 2005) (‘Davis’).

3  Sea and Land Securities v William Dickinson (1942) 72 Lloyd’s Rep 159 at 163 (MacKinnon LJ) (‘hiring a boat in which to row yourself around’); Davis, above n 2, para 1.4.

4  Davis, above n 2, para 1.9; More OG Romsdal Fylkesbatar AS v The Demise Charterers of the Ship ‘Jotunheim’ [2005] 1 Lloyd’s Rep 181.

5  Davis, above n 2, para 1.2; The Giuseppe di Vittorio [1998] 1 Lloyd’s Rep 136 (CA) at 156 (Evans LJ).

6  Sea and Land Securities v William Dickinson (above n 3) at 69 (MacKinnon LJ); Davis, above n 2, para 1.6.

7  Davis, above n 2, para 1.6.

8  Bennett, Howard (ed), Carver on Charterparties (2017) (‘Carver’), para 6-034.

9  Ibid, para 6-035.

10  Bimco Barecon 2001 Form (Davis, above n 2, Appendix A).

11  Ibid, clause 4.

12  Ibid, clause 5.

13  Ibid, clause 3.

14  Ibid, clause 11.

15  Clause 11(a) makes time of the essence here.

16  Clause 28(a)(i). However, where this is due to an oversight, the owner is obliged to serve a notice giving the charterer an opportunity to remedy matters – what is known as an ‘anti-technicality’ clause. For the relationship between this express right of withdrawal and the common law right to terminate arising under clause 11(a), see below, paras 13.79–13.80.

17  Clause 15.

18  As well as this, the charterers warrant that they will not allow the ship to commence a final voyage which cannot reasonably be expected to be completed in time for the ship to be redelivered as required by the charter.

19  Normally this is for a fixed period of time, but it is possible to have a ‘trip charter’ where the period is specified by reference to a certain voyage. Such charters are, however, still classified as time charters: see Carver, above n 8, para 7-002.

20  Ibid, para 1-013; Scandinavian Tanker Trading Co AB v Flota Petrolera Ecuatoriana (The Scaptrade) [1983] 2 AC 694 at 700 (Lord Diplock).

21  Carver, above n 8, para 1-011.

22  Sea and Land Securities v William Dickinson (1942) 72 Lloyd’s Rep 159 at 163 (MacKinnon LJ) (‘contracting with a man on the beach that he will take you for a row’).

23  Carver, above n 8, para 7-169.

24  Ibid, para 1-011.

25  Ibid, para 1-013.

26  Ibid, para 7-129.

27  Ibid, paras 7-105–7.108. However, the owner may also be given a range of possible dates; this is known as ‘laycan’.

28  Ibid, paras 7-109–7-124. Again, this may be at a fixed place or at a place to be selected by the charterer or the owner.

29  Ibid, para 7-023.

30  Ibid, para 7-014.

31  Ibid, para 7-031.

32  Ibid, para 7-169.

33  Ibid, para 7-417.

34  Ibid, para 7-056. These will generally include bunkers and fuel, and other expenses such as port dues.

35  Ibid, paras 7-197–7-221. Examples of this would include loading a dangerous cargo or some other cargo not permitted by the charter, or ordering the captain to sail into a war zone or some other place outside the agreed range of ports.

36  Ibid, para 7-226.

37  Ibid, paras 7-342–7-392. Once again this can be at a fixed time or subject to a ‘laycan’ spread of dates.

38  Ibid, para 7-405. Again, a range of options may be specified in the charter.

39  Ibid, paras 7-407–7-416.

40  See Coghlin, Terence and ors (eds), Time Charters (6th edn, 2008), Appendix F2.

41  NYPE 92, clause 2.

42  Ibid, clause 16.

43  Ibid, Description of Vessel.

44  Ibid, clause 2.

45  Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha (The Hongkong Fir) [1962] 2 QB 26 (CA); above, para 6.24.

46  NYPE 92, clause 11.

47  Clause 11(a). Once again, this is subject to an anti-technicality clause (clause 11(b)) providing for situations where the late payment is due to an oversight; see above, n 16.

48  Clause 17.

49  Clause 10.

50  Carver, above n 8, para 1-024.

51  Whistler International Ltd v Kawasaki Kisen Kaisha Ltd (The Hill Harmony) [2001] 1 AC 638 at 652; Carver, above n 8, para 1-024.

52  Oldendorff (EL) & Co GmbH v Tradax Export SA (The Johanna Oldendorff) [1974] AC 479 at 556 (Lord Diplock); Carver, above n 8, para 1-028.

53  At this point the ship counts as an ‘arrived ship’, and the laytime clock now begins to run: Carboex SA v Louis Dreyfus Commodities Suisse SA [2012] EWCA Civ 838, [2013] QB 789 at [13].

54  Carver, above n 8, para 3-084.

55  Ibid, para 8-023.

56  Ibid, para 8-035.

57  Ibid, para 8-031.

58  In a charterparty of this sort both parties will generally have duties to perform with regard to loading and unloading. Traditionally the ship’s rail provided the dividing line in respect of these, but nowadays most voyage charters make specific provision for the matter: Carver, above n 8, para 8-042.

59  Ibid, para 8-045. For deviation see above, para 5.14.

60  See above, n 58.

61  Carver, above n 8, para 8-004.

62  Ibid, para 8-036.

63  See above, n 58.

64  Carver, above n 8, para 8-053.

65  Above, Chapter 3.

66  Thus where the contract requires the charterer to nominate a loading port, the owner cannot sail to the port until the nomination has been made; similarly, the charterer cannot be expected to commence loading until the owner has provided proper notice of readiness: see above, para 3.13.

67  Carver, above n 8, para 1-027.

68  That is to say, within the specified laytime or ‘lay days’; Ibid, paras 8-051 and 8-052.

69  Cooke, J H S, Voyage Charters (14th edn, 2014), Appendix 5.1.

70  AMWELSH 93, Clause 1.

71  Clause 1.

72  Clause 3.

73  Clause 5.

74  Clause 5.

75  Clause 7(a).

76  Clause 7(b).

77  Clauses 8 and 9.

78  Clause 10.

79  Clause 20.

80  Dennys, Nicholas and Clay, Robert (eds), Hudson’s Building and Engineering Contracts (13th edn, 2015) (‘Hudson’), para 1-001.

81  Ibid.

82  Particular problems arise where there are many concurrent causes of delay: see Castle Inns (Stirling) Ltd v Clark Contracts Ltd [2009] CSOH 174; Walter Lilly & Co Ltd v Mackay [2012] EWHC 1773 (TCC), [2012] BLR 503.

83  See for instance Lidl UK GmbH v RG Carter (Colchester) Ltd [2012] EWHC 3138 (TCC), 146 Con LR 133; R & C Electrical Engineers v Shaylor Construction Ltd [2012] EWHC 1254 (TCC), [2012] BLR 373; Bluewater Energy Services BV v Mercon Steel Structures BV [2014] EWHC 2132 (TCC).

84  That is to say, to complete the work by the set day if a time is set for performance, and in other cases to complete it within a reasonable time: above, para 1.02; Hudson, above n 80, paras 3-064, 6-006 and 6-008.

85  Ibid, para 3-083.

86  Ibid, para 3-084.

87  Ibid, para 3-132.

88  Ibid, para 3-127. This at least extends to the obligation not to hinder the contractors in the carrying out of the works (the so-called ‘prevention principle’ (see above, para 5.85) and may extend further than that: see Mackay v Dick (1881) 6 AC 251 at 263 (Lord Blackburn); Mona Oil Equipment & Supply Co Ltd v Rhodesia Railways Ltd [1949] 2 All ER 1014 at 1018 (Devlin J).

89  Hudson, above n 80, para 3-145.

90  Ibid, para 3-132.

91  JCT 2005 Intermediate Building Contract (‘JCT 2005 IBC’), section 1.1.

92  Ibid, section 1.5.

93  See above, paras 4.10–4.17.

94  JCT 2005 IBC, section 1.19.

95  Ibid, section 2.20.

96  This clause protects the contractor against a claim for liquidated damages, and also protects the employer against the possibility of time being set ‘at large’ by the operation of the prevention principle: see above, para 5.85.

97  JCT 2005 IBC, sections 2.21–2.23.

98  Ibid, section 2.21.

99  Ibid, section 2.22.

100  Construction contracts may often provide for ‘stage’ payments, where payment is due after completing a specified portion of the work: see Sea Cargo Skips AS v State Bank of India [2013] EWHC 177 (Comm), [2013] 2 Lloyd’s Rep 477; RWE NPower Renewables Ltd v JN Bentley Ltd [2014] EWCA Civ 150, [2014] CILL 3488.

101  Above, para 3.01.

102  JCT 2005 IBC, section 2.21.2.

103  Ibid, section 2.21.1.

104  Ibid, section 2.22.

105  Ibid, section 2.23.

106  Ibid, section 4.11.

107  Ibid, section 8.4.1.

108  Ibid, section 8.9.1.

109  Ibid, section 8.11.1.

110  Abbey, Robert and Richards, Mark, A Practical Approach to Conveyancing (17th edn, 2015) (‘Abbey and Richards’), para 1.04.

111  Ibid.

112  Ibid, paras 2.40, 8.04, and 8.42.

113  Ibid, Fig 1.1.

114  This includes a duty to disclose all latent defects in the title: Faruqi v English Real Estates Ltd [1979] 1 WLR 963; Abbey and Richards, above n 110, para 3.27.

115  Abbey and Richards, above n 110, para 3.71. If no date is set, the rule is that completion must take place within a reasonable time; see Johnson v Humphrey [1946] 1 All ER 460; Abbey and Richards, above n 110, para 371; above, para 1.11.

116  Thompson, Mark, Barnsley’s Law of Conveyancing (4th edn, 1996), pp 434–441. Until the price is paid in full, the vendor retains a lien over the property as security: Abbey and Richards, above n 110, para 9.128.

117  Lysaght v Edwards (1876) 2 Ch D 499; Abbey and Richards, above n 110, para 6.61.

118  Abbey and Richards, above n 110, para 3.27.

119  Standard Conditions of Sale (5th edition) (National Conditions of Sale, 25th edition, Law Society’s Conditions of Sale 2011), reproduced in Abbey and Richards, above n 110, Appendix 4.

120  Standard Conditions of Sale, clause 2.1.

121  Clause 2.2.

122  Clause 7.4.2(a)(i).

123  Clause 4.2.2.

124  Clause 4.3.1.

125  Clause 4.3.2.

126  Clause 6.1.1.

127  Clause 6.1.2.

128  Clause 6.1.1.

129  Clause 6.8.1.

130  Clause 6.8.2.

131  Clause 7.4.

132  Clause 7.5.

133  Clause 7.2.1.

134  Clause 7.2.2.

135  See generally Lorenzon, Filippo and Baatz, Yvonne, Sassoon: CIF and FOB Contracts (6th edn, 2017) (‘Sassoon’).

136  Ibid, para 3-001.

137  Ibid.

138  These will generally include the bill of lading or delivery order, the relevant insurance certificate and an invoice for the price: Sassoon, above n 135, para 3-001.

139  Ibid.

140  In this context the other party may be the owner of the ship, or a time charterer. The contract itself may be a voyage charterparty, or a simple contract of carriage.

141  Sassoon, above n 135, para 3-008; Johnson v Taylor Bros [1920] AC 144 (HL) at 155–156 (Lord Atkinson).

142  Alternatively the seller may acquire the goods after shipment: Ross T Smyth & Co v TD Bailey, Son & Co [1940] 3 All ER 60 (HL) at 67–68 (Lord Wright); Sassoon, above n 135, para 3-009.

143  If no place for tender is named in the contract, they must be tendered at the residence or place of business of the buyer: Johnson v Taylor Bros [1920] AC 144 (HL) at 156 (Lord Atkinson).

144  Sassoon, above n 135, para 7-021.

145  Kwei Tek Chao v British Traders and Shippers Ltd [1954] 2 QB 459 at 480–481 (Devlin J); Sassoon, above n 135, para 3-010.

146  This is often done through a letter of credit; Sassoon, above n 135, para 8-023.

147  Ibid, para 8-004. Since the price is payable against the documents rather than the goods, this can cause problems if the goods then turn out to be not in conformity with the contract, or indeed if they do not arrive at all.

148  Ibid, para 8-039.

149  Ibid, para 8-031.

150  Grain and Feed Trade Association, Contract No 100: Contract for Shipment of Feeding Stuffs in Bulk (‘GAFTA 100’): see Sassoon, above n 135, Appendix XIII.

151  GAFTA 100, Clause 6. This is a condition of the contract under the rule in Bowes v Shand (1877) 2 App Cas 455 (HL).

152  GAFTA 100, Clause 10.

153  Clause 11.

154  Clause 11(b).

155  Clause 12(a).

156  Clause 12(i).

157  Clause 19.

158  Clause 23.

159  Clause 23(a).

160  Clause 23(b).

161  Clause 23(c).

162  Sassoon, above n 135, para 9-002.

163  Ibid.

164  However, the use of f.o.b. terms is not unknown in relation to other contracts of carriage: see Sassoon, above n 135, para 9-002 at n 2.

165  Ibid, para 11-001.

166  Ibid, paras 9-018–9-029.

167  Ibid, para 10-001.

168  Ibid, para 10-021.

169  Ibid, para 10-002.

170  Ibid, para 10-026.

171  Ibid, para 10-011.

172  Ibid, para 10-040.

173  Ibid, para 11-002.

174  Ibid, para 11-042.

175  This will include any necessary paperwork, including the obtaining of export and import licences: Sassoon, above n 135, paras 11-033–11-035.

176  Grain and Feed Trade Association, Contract No 64: General Contract for Grain in Bulk: FOB Terms (‘GAFTA 64’): see Sassoon, above n 135, Appendix XIII.

177  GAFTA 64, clause 6.

178  Ibid. Late nomination is a breach of condition: Bunge Corp v Tradax Export SA [1981] 1 WLR 711 (HL).

179  GAFTA 64, clause 6.

180  Clause 8.

181  Clause 10(a).

182  Clause 10(d).

183  Clause 19.

184  See above at n 157.

185  GAFTA 64, clause 23.

186  See above at n 158.

187  [1937] 1 KB 209 (Branson J).

188  (1996) 47 CPC (3d) 91 (Ontario General Division).

189  In the end the court refused the injunction on the grounds that the parties could not contract out of the court’s discretion in this way, and said that in the event damages were an adequate remedy for the landlord. It might have been different if the lease had involved an ‘anchor’ tenant in the centre: Carroll, Robyn, ‘Agreements to specifically perform contractual obligations’ (2012) 29 J Contract Law 155 at 169.

190  Carroll, Robyn, ‘Agreements to specifically perform contractual obligations’ (2012) 29 J Contract Law 155.

191  Quadrant Visual Communications Ltd v Hutchinson Telephone UK Ltd [1993] BCLC 442 (CA).

192  As indeed was admitted by Branson J in the Warner Bros case: see [1937] 1 KB 209 at 219–220. In the end the injunction was granted, on the grounds that it would not be tantamount to compelling the defendant to perform the contract; after all the defendant, being a person of no mean talent, could easily earn her living in some other way, though her salary might not be as generous!

193  See above at nn 107 (construction contract) and 128 (conveyance).

194  [1951] Ch 174.

195  In accordance with clause 21 of the National Conditions of Sale (15th edn).

196  [1951] Ch 174 at 181.

197  [1956] Ch 551.

198  In accordance with clause 23(1) of the National Conditions of Sale (16th edn).

199  [1956] Ch 551 at 558 (Danckwerts J). On the other hand, it was held in Caleo Bros Pty Ltd v Lyons Bros (Aust) Pty Ltd (1980) 1 BPR 9496 that the period of time stipulated for in the contract was merely a maximum, and that a shorter period of notice was warranted by the circumstances of the case.

200  In accordance with clause 22 of the National Conditions of Sale (17th edn).

201  [1964] Ch 29 at 38 (Ungoed-Thomas J).

202  The extent to which the courts should generally be bound by the express words of the contract as opposed to the context in which they are used is of course a much bigger question: see above, para 3.22. The argument here is merely that the ordinary principles of contract construction should apply to clauses of this sort.

203  Raineri v Miles [1981] AC 1050; above, paras 1.04–1.08.

204  Smith v Hamilton (above n 194) (overruled in Behzadi v Shaftesbury Hotels Ltd [1992] Ch 1(CA)).

205  Re Barr’s Contract (above n 197) (disapproved of in British and Commonwealth Holdings plc v Quadrex Holdings Inc [1989] QB 842 (CA)).

206  McGregor on Damages (19th edn, 2014) (‘McGregor’), para 15-022.

207  Abrahams v Performing Right Society [1995] ICR 1028 (CA).

208  [1905] AC 6 (HL(Sc)); compare Associated Portland Cement Manufacturers (1900) Ltd v Houlder Bros & Co Ltd (1917) 86 LJKB 1495: above, para 9.12.

209  Cellulose Acetate Silk Co Ltd v Widnes Foundry (1925) Ltd [1933] AC 20 (HL). However, it has been held that a liquidated damages clause is not an exceptions clause in the strict sense: Suisse Atlantique Societe d’Armement SA v NV Rotterdamsche Kolen Centrale [1967] 1 AC 361 (HL): above, para 5.06.

210  Diestal v Stevenson [1906] 2 KB 345; McGregor, above n 206, para 15-023.

211  Talley v Wosley-Neech (1978) 38 P & CR 45 (CA); McGregor, above n 206, para 15-023.

212  [1927] 1 KB 352; Total Transport Corp v Amoco Trading Co (The Altus) [1985] 1 Lloyd’s Rep 423; McGregor, above n 206, para 15-024.

213  Below, paras 13.39–13.44.

214  Above, n 78. In some circumstances other parties too may be liable to pay demurrage: below, para 13.43.

215  Eder, Sir Bernard and ors (eds), Scrutton on Charterparties (23rd edn, 2015) (‘Scrutton’), chapter 15.

216  Aktieselskabet Reidar v Arcos Ltd [1927] 1 KB 352 (CA) at 359 (Atkin LJ); President of India v Lips Maritime Corp [1988] AC 395 (HL) at 422 (Lord Brandon).

217  The scale of the demurrage can be set at a certain amount per day, or as a proportion of the value of the cargo: The Altus [1985] 1 Lloyd’s Rep 423.

218  See more generally Schofield, John A, Laytime and Demurrage (6th edn, 2011); Tiberg, Hugo, Law of Demurrage (5th edn, 2013); Baughen, Simon (ed), Summerskill on Laytime (5th edn, 2013).

219  Universal Cargo Carriers Corp v Citati [1957] 2 QB 401.

220  Above, para 13.39.

221  McGregor, above n 206, para 15-073; Gay, Robert, ‘Damages in addition to demurrage’ [2004] LMCLQ 27. For options see below, paras 13.56–13.60.

222  Scrutton, above n 215, Article 170, para 15-003.

223  Ibid, Article 171, para 15-008; Triton Navigation Ltd v Vitoil SA (The Nikmary) [2003] EWCA Civ 1715, [2004] 1 Lloyd’s Rep 55. In the absence of clear words in the contract, there is no obligation to pay demurrage if the ship is still waiting for a berth: Établissements Soules et Cie v Intertradex SA [1991] 1 Lloyd’s Rep 378 (CA).

224  Portolana Cia Naviera Ltd v Vitoil SA Inc (The Afrapearl) [2004] EWCA Civ 864, [2004] 2 Lloyd’s Rep 305 (demurrage payable at half rate in case of breakdown of machinery).

225  Ibid; Neilsen v Wait, James & Co (1885) 16 QBD 67 (CA).

226  Re Ropner Shipping Co Ltd & Cleeves Western Valleys Anthracite Collieries Ltd [1927] 1 KB 879 (CA); Stolt Tankers Inc v Landmark Chemicals SA [2002] 1 Lloyd’s Rep 786.

227  Scrutton, above n 215, Article 93, para 9-088. In the same way liability for demurrage may be extended by the custom of the port: Dickinson v Martini (1874) 1 Rettie 1185 (Ct of Session).

228  Scrutton, above n 215, Article 175, para 15-050. But the charterer may escape liability if there is a ‘cesser clause’ in the charterparty and liability has been transferred under the bill of lading: Hick v Rodocanachi and ors [1891] 2 QB 626 (CA); Gullischen v Stewart Bros (1884) 13 QBD 317 (CA).

229  Scrutton, above n 215, Article 54, para 6-016.

230  Scrutton, above n 215, Article 176, para 15-055; Cawthron v Trickett (1864) 15 CB (NS) 754, 143 ER 981.

231  Scrutton, above n 215, Article 176, para 15-055.

232  Ibid, para 15-006.

233  Chandris v Isbrandtsen-Moller Co Inc [1951] 1 KB 240 (Devlin J and CA).

234  Suisse Atlantique Societe d’Armement SA v NV Rotterdamsche Kolen Centrale [1967] 1 AC 361 (HL). Such conduct may, however, justify the owner in cancelling the charter.

235  Aktieselskabet Reidar v Arcos Ltd [1927] 1 KB 352 (CA); The Altus [1985] 1 Lloyd’s Rep 423.

236  Furst, Stephen and Ramsey, Vivian (eds), Keating on Building Contracts (10th edn, 2016) (‘Keating’), chapter 10; Hudson, above n 80, chapter 6.

237  Hudson, above n 80, para 6-022.

238  Keating, above n 236, para 10-001.

239  Below, para 13.48.

240  Normally this is marked by the issue of a certificate by the architect: see above at n 98.

241  Hudson, above n 80, para 6-040; Re Yeadon Waterworks Co and Binns and Wright (1875) 72 LT 538 at 540 (Kennedy J).

242  Above, paras 5.82–5.85.

243  Holme v Guppy (1838) 3 M & W 387, 150 ER 1195; Russell v Sa da Bandiera (1862) 13 CB (NS) 149, 143 ER 59; Felton v Wharrie (1906) HBC (4th edn), vol 2 p 398 (CA); Rapid Building Housing Group Ltd v Ealing Family Housing Assn Ltd (1984) 29 BLR 5 (CA).

244  Westwood and anor v Secretary of State for India (1863) 1 New Rep 262; Dodd v Churton [1897] 1 QB 562 (CA); Wells v Army and Navy Co-operative Society (1902) 86 LT 764; Astilleros Canarios SA v Cape Hatteras Shipping Co SA (The Cape Hatteras) [1982] 1 Lloyd’s Rep 518; Percy Bilton Ltd v Greater London Council (1982) 20 Build LR 1 (HL). It is different if the contract specifically provides that completion should take place on the due day notwithstanding the extra works: Jones v St John’s College, Oxford (1870) LR 5 CP 310.

245  Amalgamated Building Contractors Ltd v Waltham Holy Cross UDC [1952] 2 All ER 452 (CA) at 455 (Denning LJ); Roberts v Bury Improvement Commrs (1870) LR 5 CP 310.

246  Holme v Guppy (1838) 3 M & W 387, 150 ER 1195; Thornhill v Neats (1860) 8 CB (NS) 831, 141 ER 1392; Courtnay v Waterford Railway (1878) 4 LR Ir 11; SMK Cabinets v Hili Modern Electrics [1984] VR 391 (Supreme Ct of Victoria).

247  Peak Construction (Liverpool) Ltd v McKinney Foundations Ltd (1970) 1 BLR 111 (CA).

248  Shawton Engineering Ltd v DGP International Ltd [2005] EWCA Civ 1359, [2006] BLR 1; Gaymark Investments Pty Ltd v Walter Construction Group Ltd (2005) 21 Const LJ 71 (Supreme Ct of Northern Territories).

249  Above, paras 1.11–1.34.

250  Keating, above n 236, para 8-017; above, para 5.83.

251  Hudson, above n 80, paras 6-050–6-052.

252  Ibid.

253  Peak Construction (Liverpool) Ltd v McKinney Foundations Ltd (1970) 1 BLR 111 (CA) at 121–122 (Salmon LJ); Multiplex Constructions Ltd v Honeywell Control Systems Ltd [2007] EWHC 447 (TCC), [2007] BLR 195; above, para 5.83.

254  Dodd v Churton [1897] 1 QB 562 (CA).

255  Thus, for instance, where the contract provides that extensions of time must be given in writing, an oral extension will not be valid: Murdoch v Luckie (1897) 15 NZLR 296 (Supreme Ct of New Zealand); Meyer v Gilmer (1899) 18 NZLR 129 (Supreme Ct of New Zealand).

256  Roberts v Bury Improvement Commrs (1870) LR 5 CP 310 at 327 (Kelly CB); Miller v London County Council (1934) 50 TLR 479 (du Parcq J); Peak Construction (Liverpool) Ltd v McKinney Foundations Ltd (1970) 1 BLR 111 (CA) at 121 (Salmon LJ).

257  Dunlop Pneumatic Tyre Co v New Garage and Motor Co [1915] AC 79 (HL) at 86 (Lord Dunedin).

258  Jobson v Johnson [1989] 1 WLR 1026 (CA). If in the event the promisee’s loss is greater than the penalty, it seems that the promisee is entitled to disregard the penalty and sue for the full amount: Wall v Rederiaktiebolaget Luggude [1915] 3 KB 66; Watts, Watts & Co Ltd v Mitsui & Co Ltd [1917] AC 227 (HL).

259  Kemble v Farren (1829) 6 Bing 141, 130 ER 1234; Elphinstone v Monkland Iron & Coal Co Ltd (1886) 11 App Cas 332 (HL(Sc)).

260  Wallis v Smith (1882) 21 Ch D 245 (Fry J and CA); Philips Hong Kong Ltd v Attorney-General of Hong Kong (1993) 61 Build LR 41 (PC).

261  Turner & Sons Ltd v Mathind Ltd (1989) 5 Const LJ 273 (CA).

262  [1915] AC 79 (HL).

263  [2015] UKSC 67, [2016] AC 1172. Though the effect of this case was to narrow the scope of the penalty doctrine to a considerable degree, the Supreme Court declined, contrary to the arguments of the claimants, to abolish it in its entirety: see Lord Hope, ‘The law on penalties – a wasted opportunity?’ (2016) 33 J Contract Law 93; Summers, Andrew, ‘Unresolved issues in the law on penalties’ [2017] LMCLQ 95.

264  [2015] UKSC 67, [2016] AC 1172 at [22] (Lord Neuberger PSC).

265  Vivienne Westwood Ltd v Conduit Street Development Ltd [2017] EWHC 350 (Ch), [2017] L & TR 23.

266  [2015] UKSC 67, [2016] AC 1172 at [12] (Lord Neuberger PSC).

267  Ibid at [23]. In this Lord Neuberger drew on the reasoning of other members of the House of Lords in the Dunlop case, most notably Lord Atkinson: see [1915] AC 79 (HL) at 92–93.

268  [1915] AC 79 (HL) at 87.

269  Clydebank Engineering Co Ltd v Don Jose Ramos Yzquierdo y Castaneda [1905] AC 6 (HL(Sc)) at 10 (Lord Halsbury LC).

270  Peel, Edwin (ed), Treitel: Law of Contract (14th edn, 2015) (‘Treitel (Contract)’), para 20-031.

271  [2003] EWCA Civ 58, 92 Con LR 26; Vivienne Westwood Ltd v Conduit Street Development Ltd [2017] EWHC 350 (Ch), [2017] L & TR 23.

272  [1915] AC 79 (HL) at 87.

273  Robophone Facilities Ltd v Blank [1966] 1 WLR 1428 at 1447 (Diplock LJ); Philips Hong Kong Ltd v Attorney-General of Hong Kong (1993) 61 BLR 49 at 58 (Lord Woolf).

274  Protector Endowment Loan Co v Grice (1880) 5 QBD 121; Wallingford v Mutual Society (1880) 5 App Cas 685 (HL); Oresundvarvet Aktiebolag v Marcos Diamantis Lemos (The Angelic Star) [1988] 1 Lloyd’s Rep 122 (CA).

275  Lordsvale Finance plc v Bank of Zambia [1996] QB 752.

276  [1996] QB 752 at 767 (Colman J).

277  [1915] AC 79 (HL) at 87.

278  Kemble v Farren (1829) 6 Bing 141, 130 ER 1234; Harrison v Wright (1811) 13 East 343, 104 ER 402; Godard v Gray (1870) LR 6 QB 139; Ströms Bruks Aktie Bolag v Hutchinson [1905] AC 515 (HL(Sc)); contrast Law v Local Board of Redditch [1892] 1 QB 127 (CA) (£100 plus £5 per week for failure to complete on time).

279  [1906] AC 368 (PC).

280  Philips Hong Kong Ltd v Attorney-General of Hong Kong (1993) 61 Build LR 41 (PC).

281  [1915] AC 79 (HL) at 87–88.

282  [1915] AC 79 (HL) at 88.

283  Fletcher v Dyche (1727) 2 TR 32, 100 ER 8; Crux v Aldred (1866) 14 WR 656; Re White and Arthur (1901) 17 TLR 461; Alfred McAlpine Capital Projects Ltd v Tilebox Ltd [2005] 1 BLR 271. Such provisions are likely to be considered penal if there is no mechanism in the contract for grading the damages in proportion to the delay: Arnhold & Co v Attorney-General of Hong Kong (1989) 5 Const LJ 263 (High Ct of Hong Kong). But where a statute provides for the payment of liquidated damages at a certain rate for delay, there can be no question of striking it down as penal: Golden Bay Realty Pte Ltd v Orchard Twelve Investments Pte Ltd [1991] 1 WLR 981 (PC).

284  (1876) 4 Ch D 724 (CA).

285  However, a provision for a further £1,000 to be payable if in any respect the contract was not duly performed was struck down, as it covered any and every possible breach, whether great or small.

286  [2015] UKSC 67, [2016] AC 1172.

287  Ibid at [99] (Lords Neuberger, Sumption and Carnwath), [199] (Lord Mance) and [288] (Lord Hodge).

288  Above, paras 5.34–5.46.

289  Consumer Rights Act 2015 (‘CRA’), s 62(4); above, para 5.38.

290  Ibid, s 62(1); above, para 5.43.

291  Ibid, s 67.

292  Ibid, Schedule 2 Part 1; above, para 5.43.

293  Ibid, Schedule 2 Part 1, para 5.

294  Thus, for instance, the Act only applies to consumer contracts, and certain types of contract and certain types of term are excluded from its scope: above, paras 5.42 and 5.46.

295  See, however, the opinion of Lord Toulson in Parking Eye v Beavis [2015] UKSC 67, [2016] AC 1172 at [315].

296  Fratelli Moretti SpA v Nidera Handelscompagnie BV [1980] 1 Lloyd’s Rep 534; Gonzalez Corp v Waring (International)(Pty) Ltd [1980] 2 Lloyd’s Rep 160 (CA); Lusograin Comercio Internacional de Cereas Ltda v Bunge AG [1986] 2 Lloyd’s Rep 654; Richco International Ltd v Alfred C Toepfer International GmbH (The Bonde) [1991] 1 Lloyd’s Rep 136; Kurt A Becher GmbH & Co v Voest Alpine Intertrading GmbH (The Rio Apa) [1992] 2 Lloyd’s Rep 586.

297  See Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd [1988] QB 433 (CA).

298  [2015] UKSC 67, [2016] AC 1172; above, para 13.50.

299  [1938] 2 KB 83 (CA); Re Apex Supply Co Ltd [1942] Ch 108; Export Credits Guarantee Department v Universal Oil Products Co [1983] 1 WLR 399 (HL); Edgeworth Capital (Luxembourg) Sarl v Ramblas Investments BV [2016] EWCA Civ 412, [2017] 1 All ER (Comm) 577.

300  [1938] 2 KB 83 at 88 (Slesser LJ) and 89 (Clawson LJ).

301  Bridge v Campbell Discount Co Ltd [1962] AC 600 (HL).

302  Ibid at 615 (Lord Morton), 621 (Lord Radcliffe) and 632 (Lord Devlin).

303  Ibid at 629.

304  [2012] HCA 30, (2012) 290 CLR 595; Carter, J W and ors, ‘Contractual penalties: resurrecting the equitable jurisdiction’ (2013) 30 J Contract Law 99.

305  See below, para 13.60.

306  Consumer Credit Act 1974, s 100.

307  Above, para 13.55.

308  [2004] EWHC 263, [2004] 2 EGLR 25.

309  Reg 5(1).

310  Above, para 13.57.

311  Howe v Smith (1884) 27 Ch D 89 (CA).

312  Ibid.

313  Hinton v Sparkes (1868) LR 3 CP 161; Dewar v Mintoft [1912] 2 KB 373; Damon Cia Naviera SA v Hapag-Lloyd International SA (The Blankenstein) [1985] 1 WLR 435 (CA).

314  [1993] AC 573 (PC).

315  Treitel (Contract), above n 270, para 20-150.

316  Hunt (Charles) Ltd v Palmer [1931] 2 Ch 287; James Macara Ltd v Barclay [1944] 1 All ER 31; Cole v Rose [1978] 3 All ER 1121.

317  Schindler v Pigault (1975) 30 P & CR 328; Universal Corporation v Five Ways Properties Ltd [1979] 1 All ER 552 (CA).

318  Omar v El-Wakil [2001] EWCA Civ 1090, [2002] 2 P & CR 3.

319  Midill (97PL) Ltd v Park Lane Estates Ltd [2008] EWCA Civ 1227, [2009] 1 WLR 2460.

320  Treitel (Contract), above n 270, para 20-155; above, paras 5.35–5.46.

321  Consumer Rights Act 2015, Schedule 2 Part 1, para 4.

322  R (Khatun) v Newham LBC [2004] EWCA Civ 55, [2005] QB 37. This was a case involving the Unfair Terms in Consumer Contracts Regulations 1999, but the same reasoning certainly applies to the 2015 Act.

323  Consumer Rights Act 2015, s 61(1); above, para 5.36.

324  Treitel (Contract), above n 270, para 20-155.

325  Mussen v Van Diemen’s Land Co [1938] Ch 253.

326  Re Dagenham (Thames) Dock Co ex p Hulse (1873) 8 Ch App 1022; Kilmer v British Columbia Orchard Lands Ltd [1913] AC 319 (PC); Steedman v Drinkle [1916] 1 AC 275 (PC); Starside Properties Ltd v Mustapha [1974] 1 WLR 816 (CA); BICC plc v Burndy Corp [1985] Ch 232 (CA).

327  [1954] 1 QB 476 (CA).

328  Ibid at 501; Galbraith v Mitchenall Estates Ltd [1965] 2 QB 473.

329  [1954] 1 QB 476 at 483, 485 and 489–490. In Barton Thompson & Co Ltd v Stapling Machines Co [1966] Ch 499 at 509 Pennycuick J at least regarded the point as arguable.

330  But it only applies to the protection of proprietary or possessory rights: Sport Internationaal Bussum BV v Inter-Footwear Ltd [1984] 1 WLR 776 (CA and HL); BICC plc v Burndy Corp [1985] Ch 232. Thus it applies to a charterparty by demise but not to a time charterparty, since the latter is no more than a contract for services: compare Scandinavian Trading Tanker Co A/B v Flota Petrolera Ecuatoriana (The Scaptrade) [1983] 2 AC 694 (HL) with More Og Romsdal Fylkesbatar AS v Demise Charterers of the Ship ‘Jotunheim’ [2004] EWHC 671 (Comm), [2005] 1 Lloyd’s Rep 181. For a fuller discussion of the equitable jurisdiction to relieve against forfeiture see above, paras 11.52–11.67.

331  Above, para 5.45.

332  Consumer Rights Act 2015, Schedule 2 Part 1, para 4.

333  Ibid, s 61(1).

334  [1939] 1 KB 724; Rover International Ltd v Cannon Film Sales Ltd [1989] 1 WLR 912 (CA); Treitel (Contract), above n 270, para 20-147.

335  [1980] 1 WLR 1129 (HL); Stocznia Gdanska SA v Latvian Shipping Co [1998] 1 WLR 574 (HL).

336  [1980] 1 WLR 1129 at 1141 (Lord Edmund-Davies).

337  Treitel (Contract), above n 270, para 20-154.

338  Brooks v Beirnstein [1909] 1 KB 98; Chatterton v Maclean [1951] 1 All ER 761.

339  Above, para 3.13.

340  Above, para 13.16.

341  Above, para 13.20.

342  Above, para 3.11.

343  Above, Chapter 10.

344  Above, para 10.06.

345  Above, paras 10.10–10.12.

346  Indeed, as will be seen, all of the contracts dealt with in the first part of this chapter contain express termination provisions of some sort.

347  Stannard, John and Capper, David, Termination for Breach of Contract (2013), chapter 8.

348  Above, para 11.06. Indeed, it was held by Palmer J in the Supreme Court of New South Wales in Hewitt v Debus [2004] NSWSC 54 that a clause of this sort could not be enforced unless time was already of the essence. However, this was said to be based on a misunderstanding of the equitable principles involved, and the decision was reversed on appeal: see Stone, ‘Hewitt v Debus – untangling law and equity’s view of the right to terminate’ (2004) 20 J Contract Law 255; [2004] NSWCA 54.

349  Below, para 13.78.

350  Legione v Hateley (1983) 152 CLR 406 (HCA) at 445 (Mason and Deane JJ).

351  As in Bunge Corp v Tradax Export SA [1981] 1 WLR 711.

352  See Rice (T/A The Garden Guardian) v Great Yarmouth Borough Council [2003] TCLR 1 and Dominion Corporate Trustees Ltd v Debenhams Properties Ltd [2010] EWHC 1193 (Ch).

353  Telfair Shipping Corp v Athos Shipping Co SA [1983] 1 Lloyd’s Rep 127 (CA).

354  Ibid at 145.

355  Antaios Compania Naviera SA v Salen Rederiana AB [1985] AC 191 (HL).

356  Ibid at 201.

357  As in Shuler AG v Wickman Machine Tool Sales Ltd [1974] AC 235 (HL) (‘material’ breach).

358  As in the standard ‘anti-technicality’ clause used in time charterparties: see above at n 16.

359  Cheikh Boutros Selim El-Khoury v Ceylon Shipping Lines (The Madeleine) [1967] 2 Lloyd’s Rep 224 (QBD).

360  Maredelanto Compania Naviera SA v Bergbau-Handel GmbH [1971] 1 QB 164.

361  Ibid at 171.

362  However, termination was held to be justified on an alternative ground, namely that the owners were in breach of the ‘expected ready to load’ clause in the charterparty: see above, para 11.46.

363  Schelde Delta Shipping BV v Astarte Shipping BV (The Pamela) [1995] CLC 1011; Afovos Shipping Co v R Pagnan & Flli [1982] 1 Lloyd’s Rep 562 (CA); Western Bulk Carriers K/S v Li Hai Maritime Inc (The Li Hai) [2005] EWHC 735 (Comm), [2005] 1 CLC 704.

364  Moschi v Lep Air Services Ltd [1973] AC 331 (HL) at 349-350; above, para 11.02.

365  Financings Ltd v Baldock [1963] 2 QB 104 (CA); Spar Shipping AS v Grand China Logistics Holding (Group) Co Ltd [2015] EWHC 718 (Comm), [2015] 2 Lloyd’s Rep 407 (aff’d [2016] EWCA Civ 982, [2016] 2 Lloyd’s Rep 447).

366  Lombard North Central plc v Butterworth [1987] 2 QB 527 (CA).

367  Gilbert-Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd [1974] AC (HL) at 717 (Lord Diplock).

368  [2006] EWHC 63 (Comm), [2006] 1 Lloyd’s Rep 599.

369  As in Newland Shipping and Forwarding Ltd v Toba Trading FZC [2014] EWHC 661 (Comm).

370  Carter, J W and Goh, Y, ‘Concurrent and independent rights to terminate for breach of contract’ (2010) 26 J Contract Law 103; Stannard and Capper, above n 347, paras 8-17–8-26.

371  Stannard and Capper, above n 347, para 8-24.

372  So if in the example given above the promisor claims liquidated damages and is paid them, then it will be too late to turn round and claim loss of bargain damages instead. However, it is by no means clear in cases of this sort when the promisor can be said to have passed the point of no return: Stannard and Capper, above n 347, para 8-24.

373  See Stocznia Gdanska SA v Latvian Shipping Co (No 2) [2002] EWCA Civ 889, [2002] 2 Lloyd’s Rep 436; Stocznia Gdynia SA v Gearbulk Holdings Ltd [2009] EWCA Civ 75, [2009] QB 27; Stannard and Capper, above n 347, para 8-26.