In a recent case, Sanderson Ltd v Simtom Food Products Ltd (February 2019) the parties entered into an agreement in November 2014 for a project involving the supply of software and support. There was to be a review of the client’s business and its requirements with a view to the preparation of an implementation plan.
The dispute concerned the parties’ competing allegations of the repudiation of the contract. The performance of the project required the co-operation of both parties, and the court had no difficulty in implying a contractual term to that effect. There were delays and excuses, mainly on the part of Simtom, together with changes in timescales, finally leading to an understanding reached between the parties in 2016 that the project would be suspended for a further year.
Sanderson alleged that Simtom was in repudiatory breach after failing to cooperate in efforts to restart the project by 1 February 2017 (after an agreed 12 month suspension).Sanderson accepted this alleged repudiation and terminated the contract. In turn, Simtom alleged that Sanderson’s purported termination was wrong and itself a repudiation of the contract, which Simtom had accepted. It was a classic case of the Mexican stand-off that results when each party to a contract alleges the other wrongfully terminated.
And Brexit also became an issue. Simtom referred to “the fall-out from Brexit” alleging that as a result “the landscape appears to have changed quite dramatically”.
Sanderson was successful in its claim that Simtom’s failure to co-operate in the performance of the contract entitled Sanderson to terminate the contract and to claim damages for Simtom’s non-co-operation.
The lesson is that clarity is paramount and there is no substitute for a clear understanding of what exactly the parties have both agreed to do and a willingness to co-operate. Also, Brexit is not an excuse for breach of contract.
If you have any questions regarding contracts or potential breaches of contract then please contact Justin Sadler or Chris Miller in the Dispute Resolution department on 0118 958 9711 or email [email protected]. Justin and Chris offer a one hour fixed fee meeting at our Reading office for £95 including VAT.