Cases - Dalkia Utilities Services Plc v Celtech International Ltd
Record details
- Name
- Dalkia Utilities Services Plc v Celtech International Ltd
- Date
- [2006]
- Citation
- EWCH 63 (Comm)
- Legislation
- Keywords
- Contract - termination - repudiation - contract providing that 'In the event of the CLIENT being in material breach of its obligations to pay the CHARGES the COMPANY shall have the right to terminate this Agreement immediately.'- whether the claimant was entitled to terminate the contract
- Summary
-
A contract for the provision of services over 15 years contained a clause, upon which the claimant relied to terminate the agreement, which stated: 'In the event of the CLIENT being in material breach of its obligations to pay the CHARGES the COMPANY shall have the right to terminate this Agreement immediately.' It was held that as at the date of the claimant's valid termination letter, the defendant was in material breach of its obligation to pay the charges. The question arose whether the letter of termination could have amounted to acceptance of a common law repudiatory breach and thus a different basis for determining the sums payable from one party to the other.
The Court held that an innocent party can exercise either his contractual or his common law right of termination, or, prima facie, both. He is not disentitled to rely on the common law on the ground that recourse to a contractual right constitutes an affirmation of the contract since in both cases he is electing to terminate the contract for the future (i.e. to bring to an end the primary obligations of the parties remaining unperformed) in accordance with rights that are either given to him expressly by contract or arise in his favour by implication of law. However, the Court concluded it does not follow that in all cases a contractual notice will amount to an acceptance of a repudiatory breach. If the notice makes explicit reference to a particular contractual clause, and nothing else, that may, in context, show that the giver of the notice was not intending to accept the repudiation and was only relying on the contractual clause; for instance if the claim made under the notice of termination is inconsistent with, and not simply less than, that which arises on acceptance of a repudiation. On the facts, in light of the markedly different consequences that would follow from the contractual or common law determination, the notice was construed as taking effect in, and only in, accordance with the express terms of the contract.