Key takeaways
Termination clauses require precise drafting and clarity
Ambiguity can lead to costly disputes and litigation.
Court reinforces strict interpretation of contract terms
Parties cannot rely on implied flexibility or assumptions.
Early legal review prevents operational and financial risk
Proactive checks safeguard business continuity and compliance.
Advanced Multi-Technology for Medical Industry (t/a Hitex) & Ors -v- Uniserve Ltd [2025] EWCA Civ 1212
The dispute concerned claims brought by Advanced Multi-Technology for Medical Industry (Hitex) and their agents Caramel Ltd (Caramel) and David Popeck against Uniserve Ltd (Uniserve).
The claims were brought under two contracts: (1) a supply contract for the manufacture by Hitex of 80 million PPE masks during the Covid-19 pandemic and their supply to Uniserve; and (2) a commission contract for payment of commission on shipments made under the supply contract. The claims were brought for breach on grounds of non-acceptance and unpaid commission.
At first instance, the Court rejected the claims as put but awarded Hitex damages in the sum of US$ 16.1 million based on a case that had not been pleaded. Our article on that decision can be found here.
Uniserve appealed the decision to the Court of Appeal and was successful. The Court of Appeal dismissed Hitex’s claim on all grounds, as well as Caramel and David Popeck’s appeal with respect to the commission claim.
The background facts
Hitex and Uniserve entered into a contract in April 2020, for the supply of 80 million PPE masks by Hitex to Uniserve during the Covid-19 pandemic.
Prior to agreeing the contract, Uniserve had been informed by an individual that Hitex had sufficient stock and manufacturing capacity to fulfil its contractual obligations and would be able to deliver the volume of masks that Uniserve required. Uniserve also carried out its own due diligence into Hitex’s production capacity, following which the supply contract was concluded.
As part of the supply contract, the parties had agreed to a delivery schedule over a four-month period, which was revised at a later date. The scheduled dates by which the goods were to be ready for collection ex-works were of the essence.
At the same time as the supply contract, a commission contract was concluded between Uniserve, Caramel and David Popeck for payment of commission on shipments made under the supply contract.
By 7 June 2020, Hitex had delivered, and Uniserve had accepted, three million masks in accordance with the contract. Subsequently however, Hitex failed to comply with the delivery schedule. Despite Hitex initially having two million of the remaining masks available on 14 June 2020, it did not notify Uniserve accordingly, and Uniserve terminated the contract.
The Chancery Court decision
Hitex brought a claim against Uniserve for wrongfully terminating the contract and sought damages in the amount of US$ 23.1 million.
Uniserve’s defences and the Court’s findings in relation to the supply contract were as follows:
Misrepresentation: Uniserve stated that it had entered into the supply contract on the basis of false representations made by an individual on Hitex’s behalf. The Court dismissed that case on two grounds: first, that the individual had not been authorised to make the relevant statements on Hitex’s behalf (even though it was common ground that he did have authority), and second that Uniserve had also carried out its own due diligence before concluding the contract.
Delivery schedule: Uniserve argued that the revised schedule had not been effectively agreed and that Hitex had failed to carry out the deliveries in accordance with the schedule. The Court dismissed those claims on the basis that Hitex had complied with the schedule at least until 14 June 2020, so that Uniserve had not been entitled to terminate the supply contract.
Performance of the contract: the Court found that Hitex had accepted Uniserve’s repudiation of the contract as bringing the contract to an end, even though that was contrary to Hitex’s own pleaded case, and that Hitex had therefore validly terminated the contract. The decision was based on grounds that had not been pleaded and which emerged for the first time in the draft judgment that was circulated prior to the hand-down of final judgment. Based on that reasoning, the Court found that Hitex was entitled to US$ 16.94 million in damages calculated by reference to the available market at the time it considered Hitex had accepted Uniserve’s repudiation.
In relation to the commission contract, the Court dismissed Caramel and David Popeck’s claims on the basis that commission was only due on masks that had been delivered. Once the supply contract ended, no commission was payable.
Uniserve appealed on a number of grounds.
The Court of Appeal decision
The Court of Appeal agreed with Uniserve that it had been procedurally unfair for the lower Court to make any findings on a case that had not been pleaded by the parties. While a judge can invite submissions and evidence on a new point, that must be done at a time when the parties will have a fair and proper opportunity to address the point and to lead evidence on it.
As to the misrepresentation claim, this was a question of fact. The Court of Appeal agreed with the first instance ruling that Uniserve had not entered into the supply contract as a result of the individual’s representations but instead following its own due diligence. On the facts, Uniserve had not relied on the representations.
As to whether Uniserve had been entitled to terminate the supply contract on 14 June 2020, the Court of Appeal found that Hitex had not expressly accepted the repudiation and therefore the contract had not ended then. As a result, the contract remained alive for performance by both parties so that Hitex remained obliged to fulfil its delivery obligations. The Court of Appeal made it clear that it is not possible for a party to follow a “middle way” by which it does not accept a breach as discharging the contract but nonetheless ceases to perform its own contractual obligations.
On the evidence as to whether Hitex had sufficient masks in stock to continue fulfilling its cumulative obligations, the first instance judge had concluded that it did not. Since the time for readiness of the goods ex-works was of the essence, Uniserve had been entitled to terminate the contract on 11 July 2020. Hitex’s claim for damages for non-acceptance of the balance of the masks did not, therefore, arise.
Finally, given that the Court of Appeal had concluded that Uniserve had been entitled to terminate the supply contract, the commission claim did not arise and was dismissed.
Comment
The case is a useful reminder to parties who choose not to accept a breach as bringing a contract to an end that they must continue performing their own obligations under the contract. Failure to do so exposes that party to the risk that its counterpart, having previously been in breach, might have a new opportunity to terminate the contract lawfully.
The case also reinforces the fundamental point that a court ruling cannot be made on grounds that have not been pleaded, particularly where the judge has given no warning to the parties prior to giving judgment so that they can address the point prior to final judgment. The same principle applies to arbitration.
