Digital Capital Limited v Genesis Mining Iceland E.H.F.

A contractual termination clause must be construed in the context of the agreement as a whole. A party may retain a common-law right to terminate for repudiatory breach where the contract preserves other rights and remedies. However, material breaches are not necessarily repudiatory. In a collaborative software project, incomplete functionality, remediable defects and delayed integration do not automatically show an intention or inability not to perform. The court must identify the contractual obligations, apply the agreed standard of reasonable skill and care, and allow for dependencies on information and cooperation from the other party.

Digital Capital provided regulatory, software and operational services to Genesis Mining Iceland under a detailed service agreement for a cryptocurrency wallet project. Genesis stopped paying monthly invoices and, by solicitors’ letter dated 3 June 2019, alleged that Digital Capital had substantially failed to provide the contracted services and purported to terminate for repudiatory breach.

The dispute concerned implied terms, payment obligations, alleged breaches by both parties, the effect of the contractual termination clause, and whether Digital Capital’s software and information failures justified termination at common law. The trial determined liability and payment issues, leaving damages for a later trial.

1. Implied terms. The agreement’s entire-agreement clause excluded the proposed implied terms concerning entitlement to operational and maintenance fees. No such terms formed part of the contract.
2. Contractual and common-law termination rights. The relationship between the contractual termination mechanism and the common-law right to terminate depends on construction of the individual agreement. Clause 16.5 preserved other rights and remedies. Accordingly, an independently repudiatory breach could be relied on without first using the 30-day notice procedure in clause 16.1. A material breach was not necessarily repudiatory, although failure to remedy a remediable material breach within the contractual period was contractually treated as repudiatory.
3. Contractual obligations. After the contractual target date had passed, Digital Capital was required to exercise reasonable skill and care to make available within a reasonable time an adequate structure supporting the required functionalities, sufficiently developed for user acceptance testing and integration. Further refinement could be required where it depended on Genesis’s specifications, collaboration or integration requirements.
4. Repudiatory breach. Digital Capital was in breach in respect of certain missing functionalities, but the breaches were not repudiatory. The system supplied core payment and currency functions, the deficiencies were capable of remedy, and the parties’ project necessarily required collaboration. Digital Capital’s repeated requests for technical and functional specifications, and Genesis’s own delays and changes to its platform, supported the conclusion that Digital Capital had not evinced an intention not to perform.
5. The alleged failure to provide financial information or proof of development was not repudiatory. The principal information request related to potential investors rather than contractual performance, and the agreement’s allocation of shares was irrelevant to performance.
6. Genesis was not entitled to terminate by its letter of 3 June 2019. Its purported termination was itself repudiatory. Digital Capital succeeded on its claim for £2,484,046 in unpaid invoices. Interest and costs were reserved, and damages for Genesis’s repudiation were left for the second trial.