URE Energy Limited v Notting Hill Genesis

Waiver by election requires the electing party to know both the facts giving rise to the choice and that it has the relevant right. This requirement applies equally to an express contractual right to terminate. A party is not deemed as a matter of law to know every right contained in its contract.

Conduct which objectively affirms a contract cannot amount to an election without that knowledge, although the same conduct may found an estoppel if the other party has relied on it to its detriment. A contractual termination payment expressed as 50% of the contract’s remaining value was, in its context, 50% of anticipated future income rather than 50% of anticipated profit.

URE supplied electricity to Genesis under a four-year contract. The contract entitled URE to terminate if Genesis passed a resolution for an amalgamation not approved in advance by URE, and provided for a termination payment of 50% of the remaining value of the contract.

Genesis amalgamated with another housing association. URE continued performance for several months, unaware that the amalgamation gave it a contractual termination right. After the parties’ commercial relationship deteriorated, URE gave notice terminating on that ground. The Commercial Court held that URE had not waived the right by election and awarded the contractual termination payment: [2024] EWHC 2537 (Comm).

NHG appealed, contending that URE was deemed to know its express contractual right, had elected to affirm by continued performance, and was entitled only to a payment based on profit.

1. Appeal dismissed. The court permitted NHG to advance its new legal argument on appeal. It was a pure point of law, required neither further evidence nor further factual findings, and caused no irremediable prejudice to URE.

2. The court was bound by Peyman v Lanjani, [1985] Ch 457. Waiver by election requires actual knowledge of both the facts giving rise to the right and the right to elect. That general rule is not confined to rights arising under the general law. It applies where the right is an express contractual right to terminate.

3. There is no rule deeming a contracting party, for this purpose, to know all contractual terms or rights. Knowledge is a factual question. On the unchallenged findings, URE did not know of its termination right until 5 November 2018 and had no blind-eye knowledge. Its prior continued supply, invoicing, efforts to install meters and negotiations would objectively have affirmed the contract had it possessed the requisite knowledge, but could not amount to an election without it. Estoppel could have protected NHG despite URE’s ignorance, but the earlier ruling that NHG had not detrimentally relied on URE’s conduct was binding.

4. Clause 10.5 was a negotiated, readily calculable termination mechanism. Its reference to 50% of the contract’s remaining value meant 50% of URE’s anticipated future income for the affected premises, not 50% of its anticipated profit. The clause avoided complex and potentially distorted allocations of future costs and required prompt payment. URE was therefore entitled to £3,946,861.56.

The court further observed that, had URE known of the right, its positive conduct would not have been mere delay protected by clause 13.1, and the words “at any time” in clause 10.2 would not have preserved the right after an election to affirm.

• Court of Appeal (Civil Division)—dismissed NHG’s appeal and upheld URE’s entitlement to the contractual termination payment: [2025] EWCA Civ 1407.
• Commercial Court—Mrs Justice Dias held that URE had not waived its contractual termination right by election and awarded the termination payment: [2024] EWHC 2537 (Comm).