Buyer entitled to terminate supply contract for seller’s repudiatory breach (Hitex v Uniserve Ltd)
Commercial analysis: The Court of Appeal has held that the initial purported termination by the buyer under a supply contract was unlawful so that the seller could have treated the buyer’s conduct as a repudiatory breach of contract, entitling the seller to terminate and claim damages. As the seller did not do so, the contract remained alive for performance and the seller was obliged to comply with its contractual delivery obligations. When it failed to do so, the buyer became entitled lawfully to terminate the supply contract. The seller’s claim for damages for non-acceptance of goods failed as a result. A related claim for commission on the uncollected goods brought by intermediaries also failed. The Court of Appeal did, however, agree with the seller that the buyer had not entered into the supply contract on the basis of a third-party misrepresentation as to the production capabilities of the seller’s factory, but had instead relied on its own due diligence. Therefore, the buyer’s alternative case of rescission for misrepresentation failed. Written by Andrew Meads, partner at Hill Dickinson LLP, and Reema Shour, legal director and Professional Support Lawyer at Hill Dickinson LLP.