Comau UK Ltd v Lotus Lightweight Structures Ltd
2014
COMMERCIAL COURT
United Kingdom
CORAM
- MR. ROBIN KNOWLES CBE QC
Areas of Law
- Contract Law
2014
COMMERCIAL COURT
United Kingdom
CORAM
AI Generated Summary
Comau sought a summary judgment against Lotus for failure to pay invoices under a contract. The agreement contained provisions for termination on non-payment. Comau suspended its obligations and eventually terminated the contract, alleging repudiatory breach. Lotus argued it intended to fulfill its obligations. The court refused Comau's application for summary judgment and an interim payment, noting that the contract allowed for various lawful performances and that damages should be assessed on the basis least burdensome to Lotus.
Judgment
Introduction
The Claimant (“Comau”) is part of the Fiat group. It seeks summary judgment on liability against the Defendant (“Lotus”), part of the Lotus group, with damages to be assessed, and an interim payment.
The claim arises from a written contract between the parties dated 30 November 2011 (“the Agreement”). By the Agreement Comau (replacing Comau Estil) agreed to supply to Lotus goods and services relating to the installation of a new production line for the manufacture of the chassis for a new model of car at Lotus’ factory.
The Agreement and events following
The Agreement provided for Lotus to pay the contract price in accordance with a staged payment schedule. Lotus failed to pay sums due on two invoices rendered by Comau in accordance with the schedule. The invoices were in the sums of £293,061.18 and £586,122.36 and were due for payment by 30 December 2011.
On 14 February 2012, Comau sent a letter to Lotus stating that the invoices were overdue for payment and giving 7 days’ notice of its intention to suspend the performance of its own obligations as it was entitled to do under a clause of the Agreement. On or about 12 March 2012, the first invoice for £293,061.18 was paid by Lotus. Lotus paid a further £50,000 on 24 April 2012. Thus at that point £536,122.36 remained outstanding from Lotus under the second invoice. Comau’s performance of its own obligations remained suspended in accordance with the Agreement.
Clauses 12 of the Agreement includes these terms:
“12.TERM AND TERMINATION
12.1 This Contract shall commence on the Effective Date and shall (subject to the provisions of this Contract) continue in force unless and until terminated in accordance with this Clause 12.
12.2 This Contract may be terminated by either Party giving the other not less than 12 months notice in writing.
12.3 Either Party may terminate this Contract forthwith by notice in writing to the other Party if:
12.3.1 the other Party commits any material breach of any condition of this Contract and fails to remedy the same (assuming that the breach is capable of remedy) within thirty (30) days of service of a written notice by the non-defaulting Party specifying the breach and requiring it to be remedied …
…
12.4 …
12.5 In addition to any other rights of Lotus to terminate the Contract Lotus may, at its option, and provided it is not then in breach of any payment obligation to [Comau] under the Contract immediately terminate the whole of the Contrac