CRIMOND ESTATES LTD AGAINST MILE END DEVELOPMENTS LTD [2021] ScotCS CSOH_26 (12 March 2021)

CRIMOND ESTATES LTD AGAINST MILE END DEVELOPMENTS LTD [2021] ScotCS CSOH_26 (12 March 2021)

MEDL was not entitled to terminate the agreement under clause 6.2.7 because, by their conduct, the parties had dispensed with the requirement for written approval of excess costs. MEDL's termination was therefore a breach of contract. The requirement for written approval was varied by the parties' consistent practice of approving costs through meetings and correspondence, and it would be contrary to commercial sense to allow MEDL to rely on costs they had agreed to as a ground for termination.

Citation
[2021] ScotCS CSOH_26
Parties
Pursuer: Crimond Estates Limited; Defender: Mile End Developments Limited
Jurisdiction
Scotland
Judgment Date
12 March 2021
Procedural Posture
Commercial Action (breach of Contract) / Proof Before Answer (judgment)
Outcome
For the pursuer (CEL); MEDL's termination was unlawful and CEL is entitled to damages for breach of contract.
Legal Topics
Breach of Contract, Project Management Agreements, Termination Clauses, Waiver, Damages Assessment
Contract Law Commercial Law Breach of Contract Project Management Agreements Termination Clauses Waiver Damages Assessment

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Parties

Crimond Estates Limited

Pursuer

Mile End Developments Limited

Defender

Procedural Posture

Commercial Action (breach of Contract) / Proof Before Answer (judgment)

Legal Issues

  1. 1 Whether MEDL was entitled to terminate the project management agreement under clause 6.2.7
  2. 2 Whether excess costs were approved in writing or by conduct
  3. 3 Whether MEDL waived its right to terminate

Ratio Decidendi

MEDL was not entitled to terminate the agreement under clause 6.2.7 because, by their conduct, the parties had dispensed with the requirement for written approval of excess costs. MEDL's termination was therefore a breach of contract. The requirement for written approval was varied by the parties' consistent practice of approving costs through meetings and correspondence, and it would be contrary to commercial sense to allow MEDL to rely on costs they had agreed to as a ground for termination.

Court Disposition

For the pursuer (CEL); MEDL's termination was unlawful and CEL is entitled to damages for breach of contract.

Orders

  • Declaration that MEDL was in breach of contract by terminating the agreement on 18 November 2016.
  • CEL entitled to damages to be assessed based on actual sales and costs, not projections as at breach date.