Sanderson Limited v And

A contract requiring joint implementation of software and related services may carry an implied duty of co-operation where performance cannot occur without both parties’ participation. A party renounces the contract where, objectively, its words or conduct clearly show an intention to abandon performance, including an intention to perform only on substantially inconsistent terms or subject to conditions not required by the contract. The assessment is made from the perspective of a reasonable person in the position of the innocent party, considering all the circumstances. Failure to provide a necessary commitment to resume performance, coupled with demands for new conditions and a denial of an agreed restart obligation, may amount to repudiation.

The claimant supplied software, equipment and associated services under a contract with the defendant. The project was delayed at the defendant’s request and the parties discussed suspending it and restarting it by 1 February 2017. When the claimant sought arrangements for a restart, the defendant declined to provide a meeting date, demanded further information and conditions, attributed earlier problems to the claimant, and denied any commitment to a specific restart date.

The claimant accepted the defendant’s conduct as repudiatory and terminated the contract. The defendant contended that it had not repudiated the contract and that the claimant had instead committed repudiatory breaches. The central issues were whether the defendant had renounced the contract by failing to co-operate in restarting the project and when the contract was terminated.

1. Judgment for the claimant on liability. The defendant renounced the contract by declining to co-operate in restarting the project in February or March 2017. The contract was terminated when the claimant’s solicitors accepted that repudiatory breach by letter dated 28 April 2017. Damages were to be assessed and consequential directions and costs were reserved.
2. The contract required close collaboration to define requirements, implement the system and train employees. Since performance could not take place without both parties’ co-operation, a duty to co-operate was implied. The conclusion was consistent with the principle stated in Mackay v Dick (1881) 6 Ap Cas 251 and remained consistent with the guidance on implication of terms in Marks & Spencer v BNP Paribas [2016] AC 742.
3. The court applied the objective test for renunciation. A party may repudiate by evincing an intention to perform only in a manner substantially inconsistent with its obligations, or only if the other party accepts conditions not required by the contract. Conversely, reliance on the contract’s terms alone does not establish repudiation. The question is whether, looking at all the circumstances from the perspective of a reasonable person in the innocent party’s position, the contract-breaker clearly intended to abandon and altogether refuse performance.
4. The defendant’s conduct amounted to more than delay or requests for clarification. It failed to arrange the necessary kick-off meeting, demanded extensive written answers, sought to shift responsibility for the earlier delays, insisted that confidence had to be restored before performance, denied the agreed restart date, and allowed the relevant deadline to pass without co-operation. In context, that conduct objectively demonstrated that it did not intend to perform its contractual obligations.
5. The contractual obligations to provide services with reasonable skill and care and within a reasonable time were implied by sections 13 and 14 of the Supply of Goods and Services Act 1982. Those provisions applied because the contract pre-dated 1 October 2015. The alternative provisions in section 100(5) and Schedule 1 paragraph 38(c) of the Consumer Rights Act 2015 did not apply.
6. The defendant’s abandoned case that the claimant had committed earlier repudiatory breaches could not succeed. The judge added that, even if such breaches had existed, the defendant would have affirmed the contract by agreeing to the revised payment schedule and restart. That observation was hypothetical.