King Crude Carriers SA and others (Appellants) v Ridgebury November LLC and others (Respondents) [2025] UKSC 39 On appeal from: [2024] EWCA Civ 719

Introduction

King Crude Carriers SA and others (Appellants) v Ridgebury November LLC and others is a Supreme Court decision, handed down on 12th November 2025, which considered whether there is a principle in English law of deemed fulfilment of a pre-condition in a contract, which gives rise to a debt rather than damages, being owed by a party if fulfilled, where that party wrongfully prevents the pre-condition from being satisfied. This is referred to as the Mackay v Dick principle of law, or the principle of ‘deemed fulfilment’. In the present case, the Supreme Court unanimously determined that there is no principle of deemed fulfilment in English Law.

For more information regarding the issues discussed in this article, contact Benjamin Middleton (bmiddleton@m-f-b.co.uk) or your usual contact at MFB.

Background

The matter arises from three Memoranda of Agreement (“MOAs”) for the sale of three vessels (on an amended Norwegian Saleform 2012). The sellers, and respondents, under each of the three MOAs, were, respectively, Ridgebury November LLC, Ridgebury Sierra LLC, and Makronissos Special Maritime Enterprise (the “Sellers”). The buyers, who were the appellants, were King Crude Carriers SA, Prince Crude Carriers SA, and Zenon Crude Carriers SA (the “Buyers”).

Under the MOAs, the Buyers were to submit a deposit of 10% of the sale price with a deposit holder, within three banking days of the deposit holder confirming that an account had been opened for the purpose. The Buyers, in breach of contract, failed to provide all necessary documentation to the deposit holder, preventing the deposit holder from opening the account. The Sellers terminated the contracts, pursuant to clause 13, and claimed the unpaid deposits in debt, in reliance on Mackay v Dick, commencing arbitration to do so. The Buyers disputed this on the basis that the Sellers’ only remedy was in damages and that, as the market price for each of the vessels was higher on the termination dates than the purchase prices, the Sellers had suffered no loss.

The Sellers were successful in arbitration, which was reversed in the Commercial Court, but succeeded before the Court of Appeal, which reformulated the Mackay v Dick principle of law. The Buyers then appealed to the Supreme Court arguing, inter alia, that there is no Mackay v Dick principle of law in England and Wales. It was further argued that no contractual interpretation or implied term could support the Seller’s claim in debt.

Mackay v Dick (1881) 6 App Cas 251

It is worth first summarising the facts behind the Scottish House of Lords decision in Mackay v Dick, in which it was found, in Lord Watson’s speech, that where a party to a contract wrongfully prevents a condition precedent to a debt obligation owed to the other party from being fulfilled, such condition is deemed to have been fulfilled and the other party has a claim in debt. Lord Blackburn stipulated that when a written contract provides obligations which are dependent on both parties “each agrees to do all that is necessary to be done on his part for the carrying out of that thing, though there may be no express words to that effect”; in other words, an implied duty of cooperation.

In Mackay v Dick, the sellers, Dick and Stevenson, agreed to sell a steam excavation machine to Mackay, the buyer, for the excavation of a railway cutting between Garriongill and Carfin for £1,115. It was agreed that for this price, the machine was to be able, in a 10-hour day, to excavate and load 350 cubic metres of the material at the Carfin end of the cutting and it was to be erected and tested there. The buyer failed to make Carfin available for the test and so the machine was erected and tested at the Garriongill end, where it failed to extract the required material there at the specified rate. It was found, in the Court of Session, that the parties had not agreed to substitute Garriongill for Carfin and that the buyer was not entitled to say that the capacity/rate failure at Garriongill meant that there was no obligation on the buyer to give the machine another trial at Carfin.

The House of Lords held that the sellers were entitled to the price, which was payable on condition that the machine should be trialled at Carfin and satisfied the capacity requirements. The buyer had failed to allow a test at Carfin to take place, and, in such circumstances, the contractual condition was deemed to have been fulfilled, and the price was payable as a debt rather than in damages, where a loss had to be proven.

The Arbitration

Several issues were considered by the tribunal, but the key finding of the majority of the tribunal was that:

"where (i) a party breaches his contract and (ii) as a result of that breach, a pre-condition to the accrual of a debt that he would otherwise owe to his counterparty is left unsatisfied, then the relevant pre-condition is deemed to be either waived or satisfied".

That meant that the Sellers’ claim could be in debt rather than damages.

Commercial Court - [2024] 2 Lloyd's Rep 115, Dias J allowed the buyer's appeal,

The Buyers sought permission to appeal under section 69 of the Arbitration Act 1996 and were given leave to appeal, by Foxton J, in relation to the following question of law:

"Where an obligation for payment within a contract is contingent upon the fulfilment by one party of a condition, and that party fails, in breach of contract, to fulfil that condition, is the condition deemed to be fulfilled with the result that the payment sum can be claimed by the other party in debt? Or must the claim be in damages?"

Dias J, in her judgment dated 15th December 2023, allowed the appeal and held that the Sellers’ claim must be in damages and that the principal of deemed fulfilment therefore did not form part of the law of England and Wales.

Court of Appeal - [2024] EWCA Civ 719

The Court of Appeal reversed the Commercial Court decision, ruling that the Mackay v Dick principle was good law. The basis on which this was determined was that a contracting party cannot take advantage of their own wrongdoing and Popplewell LJ summarised at (7) as:

“The legal basis of the rule was that it represented the presumed contractual intention of the parties. It applied where there was an agreement: capable of giving rise to a debt rather than damages; that the debt would accrue or be payable subject to fulfilment of a condition precedent; and, expressly or by implication, that the obligor would not do the thing that prevented the condition precedent being fulfilled so as to prevent the debt accruing or becoming payable”

Buyers obtained leave to appeal from the Court of Appeal’s decision.

Supreme Court [2025] UKSC 39

The question formulated for appeal was:

"Where a party: (i) has an obligation to make a payment when a pre-condition is fulfilled; (ii) has an obligation to fulfil the pre-condition; but (iii) in breach of contract, fails to do so, is the pre-condition deemed to be fulfilled - or otherwise treated as inapplicable or dispensed with - so that the other party can claim the payment as a debt? Or must the other party's claim be for damages only?"

The Supreme Court began by analysing Mackay v Dick and noted that there was a significant difference between the two main speeches of Lord Watson and Lord Blackburn. The former focussed on the deemed fulfilment of a condition by reason of a party’s default, whereas the latter recognised an implied duty of cooperation. This was a significant difference, and it was therefore Lord Watson’s decision that was focussed on, Lord Blackburn’s reasoning containing “nothing controversial”.

The Supreme Court determined that Mackay v Dick is not a principle of English law for six main reasons:

1. “Lord Watson… did not cite or rely upon any English law authorities in support of the principle stated by him. Rather he relied upon what he understood to be “a doctrine borrowed from the civil law” … Lord Blackburn’s reasoning was different”

2. Subsequent English legal authorities are inconsistent. Some support the principle of deemed fulfilment while others clearly oppose it. In addition, in the main authorities relied on by the Sellers, used in support of the principle, the same result could have been achieved by the application of the law on damages for breach of contract, rather than a claim in debt.

3. A principle of deemed fulfilment, straightforwardly applied, would fundamentally undermine the law on contracts and certainty of the consequences of those contracts. It was noted that the Court of Appeal below recognised that in order to avoid “extraordinary and far reaching consequences”, limitations and exceptions to the principle would need to be applied, but that the application and rationale for those exceptions was uncertain.

4. The various formulations and explanations of the Mackay v Dick principle of law are fictional which undermines transparent reasoning. Such fictions should, wherever possible, be removed.

5. “…the English law of contract in this area proceeds on the basis of the terms of the contract, express and implied, and their proper interpretation rather than by way of fictional fulfilment of a condition precedent. This is consistent with the importance which English law attaches to freedom of contract, and to the application and enforcement of the terms of the bargain which the parties have made. This promotes certainty and predictability, which are important considerations, especially in the commercial law context.”

6. The consequences of rejecting the principle do not lead to an injustice. Subject to terms to the contrary (which the parties are at liberty to include), where a condition precedent has not been fulfilled due to the debtor’s breach of contract, the breach is adequately dealt with in damages. It was noted that there is “no good reason to strain to uphold a claim for debt where, as illustrated by this case, this involves disregarding the terms of the contract and where, in contrast to damages, allowing the debt claim may exceed the claimant’s net loss”.

The Court then went on to consider whether a contractual interpretation or any implied term could be applied to support the Sellers’ claim in debt and determined that they could not.

Comment

The Supreme Court’s decision draws to a close the much-discussed question of the English legal status of the principle of deemed fulfilment recognised in Scottish law by Mackay v Dick (1881) 6 App Cas 251.

There are a number of interesting points arising out of the decision. Perhaps though, the fundamental point is that parties are free to agree on the consequences of any breach of any term of a contract, including conditions precedent giving rise to a debt.

In the present case, in theory, the Sellers could have agreed that the debt would have become due and payable, notwithstanding the debtor’s failure to satisfy the condition precedent.

It was noted by the Court of Appeal that the Sellers had been “messed around” by the Buyers and that they would be entitled to compensatory damages for loss of bargain. However, given that damages would be nominal or non-existent and that therefore, the Buyers were effectively profiting from their breach, given the increase in the market, but the Supreme Court recognised that authorities did “not support any wider presumption that a party may not take advantage of its own wrong. There are many contractual circumstances in which a party may do so.”

Similarly, had the principle of deemed fulfilment applied here, or been contracted for, the Sellers would have benefitted from a windfall far exceeding their loss.

This decision should therefore be at the forefront of parties’ minds, when negotiating the terms of similar contracts. The lacuna in this contract allowed the Buyers to avoid their obligation on a rising market, with minimal consequences, but parties remain at liberty to decide between them how a condition precedent operates.

This material is provided for general information only. It does not constitute legal or other professional advice.