Resource Recovery Solutions (Derbyshire) Limited (in administration) v Derbyshire County Council & Anor
[2023] EWHC 708 (TCC)
Sundorne Products (Llanidloes) Limited v Geminor UK Limited
27 June 2024
[2024] EWHC 1666 (Ch)
High Court
Two companies made a deal to handle trash. One company backed out, saying the trash was bad. The court said they had a deal and the company that backed out had to pay a lot of money for breaking the deal.
Key Facts
- •Sundorne Products (Potters) and Geminor UK Limited disputed a contract for refuse-derived fuel (RDF) treatment.
- •The dispute arose from a joint tender submitted to Isle of Anglesey County Council.
- •A Memorandum of Understanding (MoU) and subsequent communications formed the basis of the alleged contract.
- •Geminor refused to collect further RDF bales, citing poor quality.
- •Potters claimed damages for Geminor's alleged breach of contract.
Legal Principles
Contract formation requires agreement on essentials, intention to create legal relations, and consideration. An objective test is applied.
Mackie Motors (Brechin) Ltd v RCI Financial Services Ltd [2023] EWCA Civ 476
Acceptance of an offer can be communicated in writing, orally, or by conduct.
None explicitly cited, but discussed in context.
For a contract to be legally binding, it must be certain and complete. The phrase ‘subject to contract’ requires a formal contract or clear factual basis to expunge the qualification.
Tekdata Interconnections Ltd v Amphenol Ltd [2009] EWCA Civ 1209; Joanne Properties Ltd v Moneything Capital Ltd [2020] EWCA Civ 1541
To be repudiatory, a breach must go to the root of the contract, depriving the innocent party of substantially the whole benefit.
Federal Commerce & Navigation Co Ltd v Molena Alpha (‘The Nanfri’) [1979] AC 757
Damages are recoverable if the type of loss was reasonably contemplated by the defendant as a serious possibility at the time of contract formation.
Hadley v Baxendale (1854) 9 Exch 341
Outcomes
A binding contract existed between Potters and Geminor based on the MoU, offer letter, and letter of support.
The court found that Geminor's offer was accepted by Potters' conduct in submitting the tender and communicating it to Geminor. The parties' subsequent actions also confirmed the existence of a contract. The 'subject to contract' argument was rejected due to the existence of the MoU and the parties' actions.
Geminor was in repudiatory breach of contract by refusing to collect further waste.
The court found that Geminor's decision to reject the final nine lorry loads was not based on an independent assessment by DFDS but was made by Geminor itself and not justified. Even if justified, the breach was not repudiatory.
Potters awarded damages of £801,041.20.
The court accepted Potters' revised calculation of damages, which included both direct and indirect losses, finding them not too remote. The court rejected Geminor's defenses relating to Potters' liability to Gaskells, profit sharing, and limitation.