Case Name: Woodar Investment Development Ltd v Wimpey Construction UK Ltd
- Court: United Kingdom House of Lords
- Decision Date: 14 February 1980
- Citations: [1980] WLR 277, [1980] 1 All ER 571, [1980] 1 WLR 277, [1980] UKHL 11
- Judges: Lord Wilberforce, Lord Salmon, Lord Russell of Killowen, Lord Keith of Kinkel and Lord Scarman
- Area of law: Repudiation, breach of contract, rescission
This case was a legal dispute between Woodar Investment Development Ltd (Woodar) and Wimpey Construction UK Ltd (Wimpey) over a contract for the sale of land.
Background of the Case (Woodar Investment Development Ltd v Wimpey Construction UK Ltd)
In February 1973, Woodar agreed to sell 14 acres of land in Cobham, Surrey to Wimpey for £850,000. The contract included a special condition that upon completion, Wimpey would pay £150,000 to a third-party company, Transworld Trade Ltd.
The contract also allowed Wimpey to cancel (rescind) the agreement if certain conditions were met. One of these conditions (Condition E) allowed rescission if a government authority initiated compulsory acquisition of any part of the land.
In March 1974, Wimpey attempted to cancel the contract, claiming that the UK government had started compulsory acquisition of 2.3 acres of the land.
However, Woodar argued that the government’s acquisition process had already begun before the contract was signed, making Wimpey’s cancellation invalid.
Woodar claimed that Wimpey’s attempt to rescind was a breach of contract and a wrongful repudiation (refusal to fulfill the agreement).
Legal Questions
• Did Wimpey’s attempt to cancel the contract amount to a wrongful repudiation?
• Was Woodar entitled to damages for the unpaid £150,000 intended for Transworld?
Court’s Decision in Woodar Investment Development Ltd v Wimpey Construction UK Ltd
The House of Lords ruled in favour of Wimpey.
It was decided that Wimpey did not repudiate the contract because they genuinely believed they had a legal right to cancel (rescind) it.
The court stated that a mistaken attempt to rely on a contractual term does not necessarily amount to repudiation unless it is made in bad faith or with an intention to abandon the contract entirely.
The case also examined whether Woodar could recover damages for Wimpey’s failure to pay £150,000 to Transworld.
On the issue of damages, the court expressed doubts and suggested that Woodar could not claim the £150,000 on behalf of Transworld because Transworld was not a direct party to the contract.
Impact of the Case
This case clarified that wrongly invoking a contract clause does not automatically amount to a breach or repudiation if done in good faith.
It also reinforced the doctrine of privity of contract, meaning that only parties to a contract can enforce its terms, not third parties (like Transworld in this case).
References:
https://www.bailii.org/uk/cases/UKHL/1980/11.html
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