University of Wales v London College of Business Ltd

A contractual power must be found in the language of the agreement or be necessary to give it business efficacy. A power to terminate for quality or standards concerns does not ordinarily imply a lesser power to suspend performance pending investigation. Any implied suspension power would need reasonable grounds and would require the review to be conducted within a reasonable time.

Payment provisions requiring payment within 30 days may make time of the essence where the agreement separately provides for termination on non-payment. A no-set-off clause in standard written terms is subject to the Unfair Contract Terms Act 1977, but may be reasonable between commercial parties. A clause excluding loss of anticipated or future business, revenue or profit may concern losses outside the contract and need not exclude profits which would have been earned under the contract.

The University provided validation services for degree courses operated by London College of Business Ltd under a Validation Agreement. The University suspended the registration of new students twice in 2012, first pending an interim review following media allegations and later pending an investigation into allegedly false certificates. It subsequently terminated the agreement for non-payment of invoices.

The University claimed £42,900. LCB counterclaimed for breach of contract, alleging that the suspensions and termination were wrongful and that the University had failed to conduct its review expeditiously. The central issues concerned the existence and exercise of a contractual suspension power, waiver and estoppel, the validity of termination for non-payment, and the scope of contractual liability exclusions.

1. Suspension. The Validation Agreement contained no express power to suspend enrolment. Clauses 7.2 and 7.3 concerned compliance with quality-assurance procedures and participation in reviews. Clause 7.5 allowed the University either to require remedial action, with termination for non-compliance, or to terminate immediately. Those powers did not authorise suspension pending a decision about what problems existed or what action should be taken. Immediate termination did not imply a lesser suspension power, because suspension interrupted the parties’ continuing rights and obligations without terminating the agreement. No term was necessary to give the agreement commercial efficacy.
2. LCB’s conduct did not waive the breaches. Total waiver required a clear and unequivocal representation that strict contractual rights would not be relied on, together with conduct making it inequitable for LCB to resile from that representation. Neither requirement was pleaded or proved. Estoppel by convention likewise required an unambiguous and unequivocal shared assumption and circumstances making it inequitable to depart from it.
3. Although unnecessary to the decision, if a suspension power had existed it could have been exercised only on reasonable grounds and the review would necessarily have had to be completed within a reasonable time. The University’s first review was not conducted with reasonable expedition, particularly because of delays in publishing and approving the panel’s report.
4. Termination for non-payment. The payment obligation arose when an invoice was rendered after the required student information had been provided. LCB had to pay the amount properly due, even if an invoice later required adjustment. Clause 10.1.1 dealt with non-payment in distinct terms and made time of payment essential. The University was therefore entitled to terminate by its solicitors’ letter of 20 December 2012. LCB’s later purported termination was ineffective.
5. The no-set-off provision was within section 3 of the Unfair Contract Terms Act 1977, as extended by section 13, because LCB contracted on the University’s written standard terms. It was nevertheless reasonable in the circumstances. Clause 17.3.3 excluded losses from business outside the Validation Agreement, not profits that would have been earned under it. The counterclaim damages were subject to that limitation.
6. Judgment was entered for the University for £42,900. LCB succeeded on liability in respect of both suspensions and was entitled to damages to be assessed. The stay of execution was refused.

First-instance judgment in the High Court. Permission to appeal was refused.