CIT Group Finance (Ireland) Unlimited Company v Spicejet Limited

A contractual power allowing a party to render an early termination agreement null and void and revert to earlier contractual rights is construed in its full contractual context. It may restore remedies and indemnities which existed before the agreement, including losses arising from earlier defaults, unless the contract clearly limits that consequence.

Whether a Braganza duty is implied is a question of construction, business efficacy and contractual purpose. The use of the word discretion is not decisive. No such duty arose where the power merely enabled the lessor to end its forbearance and restore pre-existing rights.

A contractual estoppel created by an acceptance certificate is confined to the transaction for which it was given. It does not survive annulment of that transaction where the contract provides for reversion to the earlier agreement.

CIT, an aircraft lessor, sought summary judgment against SpiceJet in claims arising from unpaid rent, early termination agreements and the redelivery condition for two aircraft. The parties had agreed that SpiceJet could return the aircraft under a less onerous redelivery condition, but that CIT could render the early termination agreements null and void if SpiceJet failed to comply and revert to the original leases.

SpiceJet admitted liability for certain sums but disputed whether they were payable under the early termination agreements or the leases. It also argued that CIT’s contractual power was subject to a Braganza duty and that redelivery certificates created estoppel or waiver preventing claims based on the more onerous lease redelivery condition.

The central issues were whether summary judgment should be given on the admitted sums and liability in principle for the remaining heads of loss.

1. Summary judgment. The court may determine a short point of law or construction summarily where the evidence is sufficient and the parties have had a fair opportunity to address it. Complexity alone is not a bar. Here, early determination would narrow the issues and promote settlement.
2. Construction of clause 13.14. The clause entitled CIT, following SpiceJet’s failure to comply with the early termination agreements, to render them null and void and revert to the leases. That restored CIT’s pre-existing claims for losses flowing from the 2023 Events of Default, including losses associated with the aircraft failing to meet the Lease Redelivery Condition. The claim was not retrospective enforcement of a redelivery obligation that applied on 9 February 2024; it was a claim to resurrect an existing indemnity for loss.
3. Braganza duty. Whether a contractual choice is absolute or subject to an implied duty of rationality and good faith depends on construction, taking account of the parties, the contract as a whole and the contractual context. The label discretion is not determinative. No Braganza duty was necessary here. The contractual purpose was to incentivise payment and redelivery by offering forbearance, while preserving CIT’s ability to revert to its earlier rights if SpiceJet defaulted. There was no contractual target, conflict of interest or need to balance SpiceJet’s interests against CIT’s.
4. Redelivery certificates and estoppel. The certificates conclusively established compliance with the ETA Redelivery Condition for the purposes of the early termination agreements. They had no wider effect. Once clause 13.14 was exercised, the early termination agreements and the contractual estoppel connected with them ceased to have operative relevance. The certificates did not prevent CIT pursuing losses calculated by reference to the Lease Redelivery Condition.
5. Promissory estoppel and waiver failed because the documents did not contain the alleged unqualified promise and SpiceJet had not shown reliance to its detriment. Summary judgment was therefore ordered for the Undisputed Sums, with contractual interest and credit for security deposits, and on liability in principle for the other heads of loss, subject to causation and quantum.