ANTICIPATORY BREACH

Ocean Marine Navigation Ltd v Koch Carbon Inc (The ‘Dynamic’) [2003] EWHC 1936 (Comm); [2003] 2 Lloyd’s Rep 69

One of the difficult issues in the law of anticipatory breach relates to the scope of the decision of the House of Lords in White & Carter (Councils) Ltd v McGregor [1962] AC 413. The House of Lords there affirmed that an innocent party is not obliged to accept an anticipatory breach by the other party and is entitled to continue with performance and claim the contract price from the party in breach. However, the innocent party can only do so where it can continue with performance without the cooperation of the other party to the contract. A further restriction on the entitlement of the innocent party to continue with performance of the contract is to be found in the proposition that the innocent party cannot continue with performance where it has no ‘legitimate interest’ in performance or where it would be ‘wholly unreasonable’ for it to continue with performance. The scope of the latter exception has given rise to some difficulty in the case law (see, for example, The Puerto Buitrago [1976] 1 Lloyd’s Rep 250, The Odenfield [1978] 2 Lloyd’s Rep 357 and The Alaskan Trader [1984] 1 All ER 128). This line of authority was recently re-considered by Mr Justice Simon in Ocean Marine Navigation Ltd v Koch Carbon Inc (The ‘Dynamic’) [2003] EWHC 1936 (Comm); [2003] 2 Lloyd’s Rep 693.