UK: Repudiatory Breach Of Contract Revisited

Last Updated: 24 October 2011
Article by Wai Yue Loh and Reema Shour

DRL Limited v. Wincanton Group Limited [2011] EWCA Civ 839

The issue of repudiatory breach of contract is a notoriously difficult one because it is often not easy to establish which contractual party is in repudiatory breach and which has accepted the other's repudiation and thereafter ceased to perform its own contractual obligations. This case demonstrates that there can be a very fine line between imposing improper commercial pressure on a counterparty and repudiating one's own contractual obligations.

The background facts

Wincanton supplied logistics services to DRL under an agreement concluded in 2005 and which was subsequently varied in 2007. Under the agreement, Wincanton would invoice DRL weekly for amounts owed less certain deductions, including any damage and stock loss liability, and the invoices were to be agreed and signed off by both parties. Under the agreement, DRL was obliged to pay the invoices without deduction, set-off or counterclaim although it could withhold payment of any sum subject to a bona fide dispute provided all sums that were not disputed were paid.

A dispute arose between the parties as to amounts due and payable to Wincanton and cross-claims were asserted by DRL. In order to avoid untimely termination of the original agreement and to allow DRL time to find a replacement service provider, the parties entered into an agreement in 2008, whereby the 2007 agreement was varied to the extent that the parties' respective positions would be temporarily suspended. Under the 2008 agreement, DRL would pay Wincanton £1 million immediately and Wincanton would continue supplying logistics services against prompt payment of invoices for deliveries made as of 19 January 2008.

On 26 February 2008, Wincanton stated that it would suspend future deliveries unless DRL paid certain significant sums relating to the disputed pre-2008 invoices. On 28 February, Wincanton repeated this threat and said that it would stop deliveries unless it was paid the sums it was demanding on that same day. As a result, DRL refused to pay an invoice dated 26 February 2008 and Wincanton thereafter made no further deliveries. Each party alleged that the other was in repudiatory breach.

At first instance, the Judge held that although Wincanton's conduct had been improper and unjustified, it had not been repudiatory and DRL had not been entitled to treat the 2008 contract as discharged. Rather, DRL's refusal to pay Wincanton under the 26 February 2008 invoice was itself repudiatory and Wincanton had accepted the repudiation.

Court of Appeal decision


Lord Justice Lloyd, giving the leading judgment in the Court of Appeal, disagreed with the first instance Judge on the repudiation issue. He stated that Wincanton's demand for additional payments in respect of the old invoices was plainly a flagrant breach of the 2008 agreement, particularly as Wincanton had already received £1 million as part of the price for continuing to deliver. The Appeal Judge cited further examples of Wincanton's repudiatory behaviour, namely asserting a lien over goods held by them and diverting goods destined for delivery to DRL's new logistics services supplier on 26 February 2008, goods that were to be used to fulfil deliveries to customers due on or after 3 March. His view was that Wincanton was already in breach of contract in highly material respects before DRL refused to pay the 26 February invoice, even though it continued to deliver goods to customers day by day for the time being. Furthermore, Wincanton's stance on 28 February to make no further deliveries at all the next day if it was not paid amounted to a repudiation of all its obligations under the 2008 contract and that repudiatory breach was accepted by DRL when it stated that it would not be making any further payments to Wincanton under the agreement.

From that point on, the Appeal Judge held, the agreement as a whole and as varied was discharged and the temporary suspension of claims under the 2007 agreement came to an end. DRL was consequently discharged from its obligations to pay the latest 2008 invoices free from set-off or deduction and could assert cross-claims as a reason for not paying them, something which it had not been able to do while the 2008 agreement subsisted. It followed that DRL's refusal to pay the 26 February invoice was not a breach of contract.

Applicable time limits

DRL had a number of claims against Wincanton under the 2007 agreement, including for damaged and lost products. The 2007 agreement incorporated the 1998 terms and conditions of the Road Haulage Association (RHA). An issue arose as to applicable time limits under these terms and conditions.

Condition 13(1) of the RHA terms and conditions provided that the carrier would not be liable for loss of or damage to the goods unless it was advised of the loss or damage within a certain number of days and a written claim made thereafter within a specific period of time. There was however a proviso allowing later notification if it was not reasonably possible to notify within the times laid down. Condition 13(2) provided for a limitation period of one year after delivery.

The Court of Appeal held, in agreement with the first instance Judge, that the bespoke provisions of the 2007 agreement were incompatible with and overrode the application of condition 13(1). The point of 13(1) was to put the carrier on early notice of potential claims relating to loss of or damage to consignments that it was facing from the consignor. In this case, however, Wincanton was the party responsible for "self-certifying" claims against itself in the sense that it informed DRL on a weekly basis of any damage or stock loss liability and deducted those amounts from the invoices. There was therefore no need to notify or make a written claim within the time periods set out in condition 13(1) to Wincanton because it was already aware of any such claims.

However, Lord Justice Lloyd held that the one year time limit under condition 13(2) remained applicable because it imposed a time limit for bringing suit i.e. commencing legal proceedings. This was distinct from a time limit for notification of a claim to the carrier and did not conflict with the express provisions of the bespoke agreement.


The Court of Appeal decision in this case highlights two common bases for contractual disputes: repudiatory breach of contract and applicable time limits. Parties incorporating standard terms and conditions into their individually drafted contracts, particularly those containing provisions dealing with applicable time limits, should aim to ensure that there is no conflict or incompatibility between the two regimes.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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