The Mihalis Angelos [1971] 1 QB 164

Key point

  • Certain contractual terms, such as expected readiness clauses in charterparties, are invariably conditions in the interests of ensuring commercial certainty

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?

Held (Court of Appeal)

  • The expected readiness clause was a condition and it was breached
  • D was entitled to terminate the contract and is thus not liable for breach of contract

Megaw LJ

  • There is an advantage to having a clause in common use being categorised, rather than having to determine whether the breach went to the root of the contract
  • There is no injustice in allowing the charterer to terminate
  • It is clearly established by authority that such a clause is a condition

Commentary

  • D committed was known an anticipatory repudiation/breach of contract, whereby one party makes a declaration that it does not intend to perform its obligations under the contract, before the performance is due