In Clea Shipping Corpn v Bulk Oil International Ltd, the charterers of a ship repudiated the charterparty. The owners rejected the repudiation and kept the vessel at the disposal of the charterers until the expiry of the period of hire. Although the charterers paid the full cost of hire, they sought to recover it on the ground that the owner should have been restricted to damages and should have accepted the repudiation. It was held that the owners’ conduct in refusing to accept the repudiation was wholly unreasonable, and they should be entitled to damages only: Clea Shipping Corpn v Bulk Oil International Ltd [1984] 1 All ER 129, p 132

doi:10.4324/9781843141518-244

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In Clea Shipping Corpn v Bulk Oil International Ltd, the charterers of a ship repudiated the charterparty. The owners rejected the repudiation and kept the vessel at the disposal of the charterers until the expiry of the period of hire. Although the charterers paid the full cost of hire, they sought to recover it on the ground that the owner should have been restricted to damages and should have accepted the repudiation. It was held that the owners’ conduct in refusing to accept the repudiation was wholly unreasonable, and they should be entitled to damages only: Clea Shipping Corpn v Bulk Oil International Ltd [1984] 1 All ER 129, p 132

ABSTRACT

The second observation which Lord Reid made as to the law was that a party might well be unable to enforce his contractual remedy if ‘he had no legitimate interest, financial or otherwise, in performing the contract rather than claiming damages’. Lord Reid did not go far in explaining what he meant by legitimate interest except to say that the de minimis principle would apply. Obviously it would not be sufficient to establish that the innocent party was acting unreasonably. Otherwise Lord Reid would not have rejected the formulation of the Lord President (Cooper) in Langford & Co Ltd v Dutch (1952) SC 15, p 18 that ‘the only reasonable and proper course’ was for the pursuers to accept the repudiation.