International Trade Law

Breach (Shipping) Cases

Contract Law

Remedies for Breach CasesTerms of Contract Cases

The Mihalis Angelos [1971] 1 Q.B. 164

Key Points

• Certain contractual terms, such as expected readiness clauses in charterparties, are invariably conditions in the interests of ensuring commercial certainty.
• Obiter: Where a party repudiates a contract (including by premature exercise of a termination clause), it is liable for damages. However, if the charterer would have validly exercised the termination clause later due to supervening events, the shipowner is only entitled to reduced or nominal damages.

Facts

• Under a charterparty, the Mihalis Angelos was chartered to transport mineral ore from Haiphong to Europe
• The charterparty had a "expected readiness clause", under which the ship was described as "expected ready to load under this charter about 1st July, 1965"
• There was also a "cancelling clause" that should the vessel not be ready to load on or before July 20, the charterers can cancel the contract at least 48 hrs before the vessel reaches Haiphong
• The ship was still in Hong Kong on 17 July and it was impossible to reach Haiphong by 20 July
• The charterers (D) cancelled the contract
• Shipowners (C) treated the cancellation as a breach of contract and claimed for damages

Issue

• Was the expected readiness clause a condition whose breach would entitle the innocent party to terminate the contract?