Aercap Partners 1 Ltd v Avia Asset Management AB

A buyer’s failure to pay a contractually required deposit may amount to repudiatory breach where the contract makes payment a condition of performance. A later agreement to release earlier deposits while discussions continue does not, without clear terms, waive the outstanding deposit or prevent termination once an alternative transaction proves unviable.

Loss of a chance concerns causation, not the quantification of damage. Where causation is proved on the balance of probabilities, the claimant is not required to discount damages merely because a third party’s hypothetical conduct was involved.

Under Sale of Goods Act 1979, the statutory market-price measure is prima facie, but the court may assess loss by reference to a later resale where no available market existed at the contractual delivery dates.

The claimant agreed to sell two aircraft to the defendant. The defendant paid two deposits but failed to pay the third deposit after its anticipated financing collapsed. Following discussions in Dublin, the deposits were released to the claimant while the parties explored alternative finance-lease arrangements. Those discussions failed, and the claimant accepted the defendant’s repudiatory and renunciatory breach, later reselling the aircraft.

The defendant disputed liability, relying on an alleged Dublin agreement, the contractual treatment of the aircraft engines, and a loss-of-chance argument. It also disputed compensation for early redelivery and the measure of damages. The central issues were whether the claimant validly terminated the agreement and the proper quantification of its loss.

1. Liability. The defendant’s failure to pay the third deposit was a repudiatory breach under the Agreement. The discussions at Dublin produced no agreement releasing the defendant from that obligation until delivery. They amounted only to an arrangement to release the first two deposits while further discussions took place. Once no viable alternative transaction remained, the claimant was entitled to terminate. The defendant’s conduct also clearly evinced an intention not to perform the Agreement, satisfying the renunciation test stated in Universal Cargo Carriers v Citati [1957] 2 QB 401.
2. Engines. The engines were not “specific goods” within section 61 of the Sale of Goods Act 1979. The Agreement identified the aircraft by serial number but described the engines principally by manufacture and model, and allowed substitution in specified circumstances. In any event, the claimant could and would have procured delivery of the engines. The point therefore did not justify the defendant’s repudiation or reduce the recoverable loss.
3. Loss of a chance. The doctrine applies to causation where a hypothetical past event depends on a third party’s conduct, but it is permissive. It does not require a discount where causation is proved on the balance of probabilities. The observations in Golden Strait Corpn v Nippon Yusen Kubishika Kaisha [2007] UKHL 12 concerned assessment of damages and were not applicable to causation.
4. Contractual compensation. The claimant’s late provision of a proposed side letter did not make the side letter a condition precedent to compensation under clause 5.1(iii). The clause required reasonable endeavours to confirm the delivery date and compensation. Failure to comply could sound in damages, but did not extinguish the substantive entitlement.
5. Damages. The claimant was not confined to a notional market price at the contractual delivery dates. On the evidence, no available market existed then despite reasonable re-marketing efforts. The later arm’s-length resale was the best evidence of market price, and the claimant recovered US$7,254,178.24 for loss of bargain, together with US$65,095.89 under clause 5 and US$112,972.47 for storage and insurance. The claim succeeded and the counterclaim was dismissed.

First-instance judgment in the High Court (Commercial Court). No earlier decision or appeal is stated in the judgment.