Keep calm and carry on: contractual performance after a wrongful repudiation

Customer says contract over

The dispute arose from a Covid-era agreement for the supply of 80 million medical-grade face masks. While obligations were still outstanding, the customer, Uniserve, asserted that the contract was over. Up to that point, deliveries had been made in full and on time. The supplier, Hitex, continued production but did not meet the contractual quotas. The supplier complained that the customer was not paying for the masks. The customer reiterated that the contract had ended. The supplier claimed damages for non-payment.

Repudiation not accepted

The Court of Appeal agreed that the customer had repudiated the contract when it asserted that it was over. However, it held, the supplier had not sufficiently communicated acceptance of that repudiation. A production slowdown, without more, was not enough to convey acceptance to the customer. Because the supplier did not accept the repudiation, the contract remained alive, and the supplier was obliged to meet the agreed quotas. The supplier’s failure to do so constituted a breach that entitled the customer to terminate. The supplier’s damages claim was therefore dismissed.

Judgment: Advanced Multi-Technology v Uniserve