Cases - Laing & Morrison Knudsen v Aegon
Record details
- Name
- Laing & Morrison Knudsen v Aegon
- Date
- (1997)
- Citation
- 86 BLR 70
- Legislation
- Keywords
- Contract - termination - repudiatory breach - subcontractor providing a bond - termination provision expressed to be without prejudice to any other legal or equitable remedy - whether the contractor could, having terminated the subcontract works at a time when the subcontractor was in repudiatory breach of the subcontract, recover the additional cost of completing the subcontract works under the bond.
- Summary
-
LMK, as contractor, entered into a subcontract with a mechanical works supplier. The subcontractor provided a bond. The subcontractor ran into financial difficulties before completing the works. LMK gave notice of termination, and LML requested payment from the defendant bondsman. Clause 20, the termination provision within the contract, was expressed to be without prejudice to any other legal or equitable right or remedy.
The question arose whether LMK could, having terminated the subcontract works at a time when the subcontractor was in repudiatory breach of the subcontract, recover the additional cost of completing the subcontract works under the bond. This depended, in part, upon whether the act of terminating the contract in purported pursuance of clause 20, was itself an affirmation of the contract such that LMK could not longer rely upon the repudiatory breaches.
The Court held that an election to affirm the contract or to accept the repudiation must be clear and unequivocal.
The letter of termination pursuant to clause 20 was not an election not to repudiate the contract and therefore an affirmation of it because clause 20 under which the right was purported to be exercised was expressed to be without prejudice to any other legal or equitable right or remedy. In this case, it was also material that the ground for termination was the appointment of an administrative receiver, and not therefore a ground that of itself was repudiatory in nature.