Acceptance certificate defeats claim

Acceptance of goods will often mean that the buyer has lost the right to reject, whether the goods concerned are a tin of beans, a truck, or a Boeing 737. In consumer contracts other factors come into play, but in the general law of contract once you have accepted something you are stuck with it.


In ACG Acquisition XX LLC v Olympic Airlines [2012] EWHC 1070 (Comm) (30 April 2012) the airline leased a new plane and signed an acceptance certificate. Later it turned out to have defects, and the airline served termination and redelivery notices. The lessor argued that the aircraft was airworthy when it was delivered, but  in any case the airline was estopped from asserting that it did not comply with the certificate of airworthiness because of the acceptance. The Commercial Court, unsurprisingly, held that this was indeed the position. The airline had a chance before delivery to inspect the aircraft and have any defects remedied, and it would be inequitable to allow them to argue later that the plane did not comply at the time of delivery.


The case does not make new law, but it does serve to show that you should not sign an acceptance certificate (or anything to the same effect, whatever it's called) unless you are absolutely sure the goods are OK. If you have a chance to inspect the goods, you must take it before you accept the goods and sign to say that you have done so.

When a contract has been repudiated

The doctrine of repudiatory breach in contract law is notoriously difficult. It is not always clear which party is in breach and which has accepted the other's breach, which means it is then released from its obligations under the contract. The end result is that both parties are not doing what they agreed to do: which one started it?

The Court of Appeal considered just such a difficult case earlier this year, in DRLLimited v Wincaton Group Limited [2011] EWCA Civ 839. Wincanton provided logistics services to DRL and would invoice them weekly, deducting certain matters such as damage and stock loss liability. The invoices were to be agreed and signed off by both parties, and the agreement required DRL to pay without deduction, set-off or counterclaim although it was entitled to withhold payment of any sum subject to a bona fide dispute, provided it paid any sums not in dispute. A dispute did arise, and the parties agreed to suspend their respective positions to enable DRL to find another supplier. They would pay a lump sum to Wincanton, who would continue to perform the services, but shortly afterwards Wincanton threatened to stop deliveries unless sums relating to some old disputed invoices were paid. Later the threat was repeated and payment of one invoice demanded the same day. DRL refused to pay a current invoice, Wincanton stopped deliveries, and both parties claimed the other was in repudiatory breach.

The judge held that Wincanton's conduct had been improper and unjustified, but not repudiatory. DRL had committed the repudiatory breach by refusing to pay the current invoice, and Wincanton had accepted the repudiation when they stopped deliveries. The Court of Appeal disagreed.

Lloyd LJ, giving the leading judgment, said that Wincanton's demand for payment of the old invoices was a flagrant breach of the compromise that the parties had reached, especially given that under that agreement DRL had paid them a cool million pounds. He also referred to other things Wincanton had done: asserting a lien over goods held by them and diverting goods that were supposed to have gone to the new logistics company. He took the view that Wincanton were already

in breach before DRL's refusal to pay the invoice, notwithstanding that it was still delivering goods to customers day-to-day. Finally, its ultimatum to make no further deliveries unless payments were received the same day amounted to a repudiation of all its obligations under the compromise, and DRL accepted the repudiation when it said that it would not make any more payments.

Once this happened, the original agreement as a whole and the variations agreed in the compromise came to an end. DRL was not prevented from setting off amounts against the latest invoices, and it could assert cross-claims as reasons for not paying them: that meant that its refusal to pay the latest invoice was not a breach.

EU contract law threatens English legal profession

Here's an interesting take on the proposed EU contract law, from Alex Aldridge in The Guardian: English law's hegemony in international contracting would be compromised if the civil law-common law hybrid came into operation. Civil lawyers - that's lawyers from civil law countries, not simply well-mannered ones, though they are probably that too, most of them at least - appear to be rubbing their hands with glee.Should we be worried, or will this only hit a few large City firms who can take it? I think we should be worried, for the impact on Britain's balance of payments and standing in the legal world: fewer disputes would come to England for resolution in the courts or before arbitrators as well as lawyers being consulted yet. English law, and English legal education, remains a gold standard internationally, which is how I find myself tutoring Russian students reading for external London University law degrees.

The advantages of an EU contract law seem pretty nebulous. I rather like Ken Clarke's comment that the best solution to the problems of dealing with 27 different national laws is unlikely to be to create a 28th system. As for the interests of small businesses trying to trade across national boundaries, this will often be dealt with by appointing agents or distributors - although that tends to negate the advantages of Internet trading. But even if they could make their contracts under a single pan-EU law they'd still face the more troublesome problem of having to engage in litigation in foreign courts if things went wrong. Perhaps the rest of the EU should follow our lead (if they haven't done this already) and make litigation so expensive that it's beyond the reach of ordinary consumers.