Manx Electricity Authority v J P Morgan Chase Bank [2003] EWCA Civ 1324 (03 October 2003)

Manx Electricity Authority v J P Morgan Chase Bank [2003] EWCA Civ 1324 (03 October 2003)

The Court of Appeal held that the judge's reasoning for striking out MEA's claim based on the second demand was unsustainable. The effect of the settlement agreement on accrued breaches and the construction of the guarantee were issues too closely linked to the question of waiver or discharge to be determined summarily. The appeal was allowed, and the matter was remitted for trial.

Citation
[2003] EWCA Civ 1324
Parties
Claimant/appellant: Manx Electricity Authority; Defendant/respondent: J P Morgan Chase Bank
Jurisdiction
England and Wales
Judgment Date
03 October 2003
Procedural Posture
Appeal From Commercial Court (queen's Bench Division) / Appeal Against Summary Judgment/strike Out Under CPR Part 24
Outcome
Appeal allowed
Legal Topics
Performance Guarantees, Demand Bonds, Repudiatory Breach, Summary Judgment, Settlement Agreements
Commercial Law Banking Law Contract Law Performance Guarantees Demand Bonds Repudiatory Breach Summary Judgment Settlement Agreements

Case Brief

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Parties

Manx Electricity Authority

Claimant/appellant

J P Morgan Chase Bank

Defendant/respondent

Procedural Posture

Appeal From Commercial Court (queen's Bench Division) / Appeal Against Summary Judgment/strike Out Under CPR Part 24

Legal Issues

  1. 1 Whether a demand under a performance guarantee can be made after a settlement agreement has terminated the underlying contract
  2. 2 Whether an accrued breach prior to a settlement agreement remains actionable for the purposes of a demand guarantee
  3. 3 Whether the guarantee requires an actionable breach at the time of demand

Ratio Decidendi

The Court of Appeal held that the judge's reasoning for striking out MEA's claim based on the second demand was unsustainable. The effect of the settlement agreement on accrued breaches and the construction of the guarantee were issues too closely linked to the question of waiver or discharge to be determined summarily. The appeal was allowed, and the matter was remitted for trial.

Court Disposition

Appeal allowed

Orders

  • Strike-out of MEA's claim based on the second demand set aside
  • Matter remitted for trial on the remaining issues