Update on Contract Law Disputes – King Crude Carriers SA v Ridgebury November LLC and Kulkarni v Gwent Holdings Ltd

The Supreme Court and Court of Appeal have recently issued two judgments that impact how English law treats conditional obligations and contractual breach.

If your organisation is involved in asset sales, joint ventures, shareholder arrangements, and other high-value transactions, you need to understand what these decisions entail and how to adjust your commercial contract policies and procedures to mitigate the risk of an expensive legal dispute.

The End of Deemed Fulfilment

In King Crude Carriers SA v Ridgebury November LLC [2025] UKSC 39, the issue for the Supreme Court was whether there is a principle in English law that a condition in a contract, which would give rise to a debt being owed by a party if fulfilled, should be treated as fulfilled (or dispensed with or waived) where that party improperly stops the condition from being satisfied.

The sellers of crude oil tankers required the buyers to provide Know Your Client (KYC) compliance documentation so that escrow accounts could be opened for deposits totalling US$5.94 million. The buyers failed to produce the documents, which meant the escrow accounts were never created. Vessel values rose, and the sellers had no practical remedy. Damages were available in principle, but there was no quantifiable loss. They attempted to claim the deposits as debts by arguing that the condition precedent should be treated as satisfied (the Mackey v Dick principle).

The sellers prevailed in arbitration but lost in the Commercial Court. The Court of Appeal reversed course, confirming the Mackay v Dick principle and restoring the sellers' position. The buyers appealed to the Supreme Court. They argued that the Mackay v Dick principle did not exist under English law and that neither interpretation nor implication could vindicate the sellers' debt claim.

What is the Mackay v Dick" legal principle?
The "Mackay v Dick" principle provides that where a party voluntarily prevents fulfilment of a condition precedent to a contractual debt obligation, that condition is treated as fulfilled, and the innocent party can claim the debt in full.

In giving the judgment, Lord Hamblen explained that English law relies on the terms of the contract, not artificial doctrines that override clear wording. The prevention principle still operates, but only within defined limits. It does not entitle courts to deem conditions satisfied where the parties have not agreed that this should happen.

In light of the decision in King Crude Carriers SA v Ridgebury November LLC, companies should review all agreements containing conditions precedent. If a counterparty fails to cooperate, the innocent party may be left with damages alone, and damages require real, provable loss. The assumption that a court will fill the gaps has gone.

Commercial parties can build protection into their agreements by inserting express deemed fulfilment clauses. These should state that if a party's breach prevents a condition from being met, the condition will be treated as satisfied. Without this, the protection does not exist.

Also, firm deadlines must be set as soft cooperation obligations create risk. Many shipping agreements now require the deposit holder to confirm the buyer's KYC compliance within a set period, typically seven to 14 days. Failure to comply gives the seller a clear right to cancel that does not depend on the creation of an escrow account.

Finally, parties should model the effect of conditions failing. Rising asset values may leave an innocent party with no recoverable loss, as happened in King Crude. An early risk assessment can influence deal structure and pricing.

Repudiatory Breach Is Not Automatically Irremediable

Kulkarni v Gwent Holdings Ltd [2025] EWCA Civ 1206 dealt with the status of serious breaches and whether they can be fixed. The case concerned a shareholders' agreement that required a compulsory share transfer if a shareholder committed a material or persistent breach that remained unremedied for ten business days after service of a notice to remedy.

Gwent Holdings admitted conduct amounting to repudiatory breach, including improper share allotments and attempted terminations. Mr Kulkarni argued that repudiatory breaches cannot be remedied. The Court of Appeal disagreed.

Lord Justice Popplewell held that the test is a practical one. A breach may be serious enough to allow termination at common law yet still be remediable under the contract. The question is whether the underlying problem can be fixed so that future performance is restored.

Mr Kulkarni's case failed not because Gwent fixed its breaches, but because he never served a notice to remedy. Without a notice, the cure period never began. Without a cure period, the compulsory transfer mechanism was never activated.

What is a "cure period?"
A cure period is a specified timeframe granted to a party to remedy a breach or default of a contract or agreement. It typically begins after one party formally notifies the other of a breach, detailing the nature of the non-compliance. The contract usually defines the duration of the cure period. It can vary depending on the agreement type and the nature of the breach.

Many agreements require notice before the exercise of termination rights or other remedies. Businesses should review their procedures and ensure that notices are served correctly and documented in full. Teams must recognise breach situations and involve legal advisers quickly.

In addition, where parties intend certain breaches to be incapable of remedy, this must be spelt out. Clear wording can confirm that conduct amounting to repudiation at common law is automatically irremediable for the purpose of contractual clauses.

Definitions of remedy also need careful attention. Some breaches may be fixed by stopping the offending conduct. Others may require compensation. Breaches involving confidential information may raise questions about whether full restoration is possible. These decisions belong in the contract.

Wrapping up

Both decisions point in the same direction. Courts will enforce the contract the parties agreed to. They will not supply missing terms, soften the effect of poor drafting, or create new protections because an outcome appears harsh.

Businesses engaged in high-value transactions should review existing terms, tighten conditions precedent, update cure provisions, and ensure procedural steps are followed throughout the duration of the contract. Early legal advice from an experienced Contract Disputes Solicitor is essential when breaches arise, as legal rights can be swiftly lost.

FAQs

What is the significance of the King Crude decision?
It confirms that English law does not accept deemed fulfilment of conditions precedent. If a counterparty prevents a condition from being satisfied, the innocent party cannot assume the condition is treated as met unless the contract expressly provides that outcome.

Can serious breaches still be remedied under a contract?
Yes. Kulkarni confirms that even repudiatory breaches can be remediated if the underlying issue is fixed, thereby restoring future performance. The seriousness of the breach does not determine whether it can be remedied.

How can businesses protect themselves when conditions depend on third-party actions?
Protective clauses should specify what happens if third-party processes fail. Contracts can include fallback payment routes and firm deadlines that create enforceable rights even if the primary mechanisms fail.

Why are notices to remedy so important?
Notice requirements must be followed precisely before certain remedies become available. Failure to serve a notice can mean a contractual mechanism never activates, even if the breach is serious.

Should existing contracts be updated in light of these decisions?
A review is advisable. Clarifying cure provisions, tightening conditions precedent, and including clear procedural steps can reduce risk and provide clearer outcomes if disputes arise.