CA-2024-001949 & CA-2024-001935 - [2025] EWCA Civ 1212

If, as I would hold, Uniserve was entitled to terminate the supply contract, Hitex’s claim for damages for non-acceptance of 77 million masks does not arise. However, on the footing that Uniserve was not entitled to terminate the contract, which therefore remained alive for performance, the question arises whether Hitex is entitled to damages under section 50 of the Sale of Goods Act 1979 when it was not in a position to perform its obligations by delivering the cumulative total quantities set out in the revised delivery schedule. Hitex’s case was summarised by the judge as follows:

‘376. Mr Lewis and Mr Knight support their argument that Hitex continued at all times to meet its obligations under the Supply Contract with the proposition that Hitex could “recycle” or as they preferred to put it “retender” deliveries. If 3 million masks are due on one date and Uniserve does not collect them on that date, Hitex can proffer the same 3 million masks to meet a requirement to provide 3 million masks at a later date.’

The judge rejected this argument, saying that if Hitex was seeking to continue to perform the supply contract after Uniserve’s renunciation of the contract, it would have been required to continue accumulating stock to meet the cumulative totals outstanding according to the revised schedule, but that (as was common ground) Hitex had not done that. (I note, incidentally, that although Mr Lewis described this as ‘re-tendering’ the same masks for successive deliveries, he accepted that nothing was actually tendered by Hitex).

I agree with that conclusion. If the contract was kept alive for performance, Hitex was obliged to fulfil its own obligations. There is no challenge to the judge’s conclusion that the supply contract was not severable. Hitex’s obligations, therefore, were to have available for supply to Uniserve the cumulative total set out in the revised delivery schedule. The submission that Hitex was somehow discharged from its obligation in respect of any particular shipment is a variant of the submission firmly rejected by the House of Lords in The Simona in the passage cited above. I would reject it here.

Moreover, the submission takes no account of the fact that the time for collection of the goods by Uniserve was not of the essence of the contract. It follows that, in the absence of any notice making time for collection of the essence, Uniserve was entitled to collect and Hitex continued to be under an obligation to deliver each shipment notwithstanding that it was not collected on the date stated for delivery in the revised delivery schedule. That is fatal to any notion that Hitex was entitled to ‘retender’ the same masks for each succeeding shipment. Put shortly, and as a matter of common sense, Hitex cannot recover damages for Uniserve’s failure to accept 77 million masks when it never had 77 million masks available for delivery in the first place.

Mr Lewis submitted that stopping manufacture was a form of mitigation, but that analysis does not work. Stopping manufacture could not mitigate losses arising from past breaches, and there could be no question of Hitex mitigating future breaches by disabling itself from performing before those breaches had even occurred.

Mr Lewis sought also to rely on an estoppel, but no such case was pleaded or advanced at the trial and it is too late for such a case to be raised for the first time on appeal. It is in any event difficult to see what representation was made by Uniserve and there was no evidence of any reliance on any such representation.

Accordingly I consider that the judge was right to reject Hitex’s damages claim on the basis on which it was advanced and I conclude that the respondent’s notice does not provide a ground on which the damages ordered by the judge can be upheld.