On 12 November 2025, the UK Supreme Court handed its judgment in the case of King Crude Carriers, and ruled in favour of the appellant buyers. The significance of the judgment was that the Supreme Court decided there was no “deemed fulfilment” principle in English law.

Citations for the judgments below:‍

• Commercial Court: King Crude Carriers SA & Ors v Ridgebury November LLC & Ors [2023] EWHC 3220 (Comm).
• Court of Appeal: King Crude Carriers SA & Ors v Ridgebury November LLC & Ors [2024] EWCA Civ 719.

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Summary

The Supreme Court resolved a long-debated point in English law, and decided that there is no “Mackay v Dick^[1] principle of law”.^[2] The purported principle was that, ‘where a party wrongfully prevents the fulfilment of a condition precedent (ie a pre-condition) to that party’s debt obligation …, that condition is treated as being fulfilled.’^[3]

The implication of this “Mackay v Dick principle” is that, if it is applied, the innocent party can claim the debt stipulated in the contract, notwithstanding the breaching party’s failure to fulfil the condition precedent. Whereas, if this principle does not exist in English law, as decided by the Supreme Court, the innocent party’s claim lies only in damages. This can have a significant impact on the outcome of a claim, especially in cases similar to this one, where the conventional calculation of damages would be zero or nominal, while the contractual debt obligation is a significant sum.

Because, in this case between the sellers and the buyers, the tankers’ market price had actually gone up since the parties entered into the sale contracts. Thus, the sellers did not incur any loss (or did so on a nominal scale) due to the failure to complete the tankers’ sale — the sellers could now sell the tankers for a higher price. This meant that they would not be able to recover any meaningful sum of money from the buyers if they could claim only the damages. However, if their claim for debt had succeeded, they would be able to recover approximately US$ 5 million, representing the 10% deposits of the purchase price.

Following this judgment, even if a party wilfully prevents a contractual condition for a debt obligation from being fulfilled, it will still remain an unfulfilled condition, and will not be deemed satisfied for the purposes of claiming the ensuing debt obligation. Lord Hamblen and Lord Burrows reiterate the longstanding understanding under English law that ‘[c]ontract law permits efficient breach and the defendant may therefore profit from its wrong.’^[4]

Since the sale of the tankers was based on the Norwegian Saleform 2012 (Norwegian Shipbrokers’ Association), the judgment carries an important consideration for the business community using this or similar standard documents in entering into transactions. Parties now should be (even more) careful to identify where and how liability lies in case of failure to satisfy the conditions precedent to a debt obligation stipulated in the contract.

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Case History

The dispute arose from the intended sale between the buyers and sellers for tankers on identical Memoranda of Agreement (MOAs) based on the Norwegian Saleform 2012. According to clause 2 of the MOAs, 10% of the purchase price was to be paid by the buyers into a deposit account with a third-party escrow within three business days of the escrow account “being ready to accept deposits”.

In order for the escrow account to be ready to accept deposits, the parties needed to provide some KYC (know your client) documents to the third-party escrow, which the buyer never provided. Thus, the escrow account was never opened, and was never ready to accept the deposit payments. In other words, due to the failure of the buyers, the condition for the obligation to pay the deposits was never fulfilled.

The sellers commenced LMAA (London Maritime Arbitrators Association) arbitration proceedings, claiming that since it was the buyers’ fault that the condition precedent remained unsatisfied, the precondition should be “deemed” satisfied for the purposes of claiming the deposit payments, relying on Mackay v Dick. The arbitral tribunal rendered its award in favour of the sellers, holding that they were entitled to the deposits as debt. The buyers then appealed to the Commercial Court.

In the Commercial Court, Dias J allowed the buyers’ appeal, and held that the sellers’ claim only laid in damages.^[5] She also granted leave to appeal, following which the Court of Appeal held that the sellers could claim the deposits as debt, relying on ‘the presumed contractual intention of the parties’,^[6] and ‘the maxim that a party should not be entitled to take advantage of their own wrong’.^[7] In October 2024, the Supreme Court granted permission to appeal to the Buyers.

The primary issue before the Supreme Court was formulated as follows:

‘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?’ ^[8]

The Court took a twofold approach to the issue. First, it considered whether the first question can be answered in the affirmative relying on the Mackay v Dick principle of law. Second, it considered whether the same can be done under the rules and principles of contractual interpretation.

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Mackay v Dick

Mackay v Dick was a Scottish case about the manufacture and sale of a digging machine. In the contract, a term stipulated that the machine should be capable of digging a certain amount of material in a day, and that this requirement should be tested in a suitable railway cutting belonging to the buyer. However, the buyer failed to provide a suitable railway cutting, and the test was never conducted. The House of Lords held that the seller was entitled to the contract price.

Although they reached the same outcome, the speeches of Lord Blackburn and Lord Watson differed in their reasoning. Specifically, they differed regarding the default position. While Lord Blackburn formulated it as “the sellers were entitled to the price unless the machine failed the test” (condition subsequent),^[9] Lord Watson formulated it as “the sellers were entitled to the price if the machine passed the test” (condition precedent).^[10]

Curiously, the correspondence between the parties does support both formulations. As per the seller’s letters:^[11]

‘should [the machine] fall short … after it is fairly tried …, [the buyer is] not to be bound to keep the machine’ (supporting Lord Blackburn’s condition subsequent); and

‘[Buyer] will accept of the machine if it performs the stipulated work’ (supporting Lord Watson’s condition precedent).

Lord Blackburn’s formulation made it easier to rule in favour of the seller because it did not need, whether actually or fictitiously, the test to be successful — the default position was that the seller was entitled to the price. Whereas Lord Watson’s formulation required the machine to pass the test, whether actually, or as in this case, fictitiously by deeming the condition fulfilled.

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Supreme Court’s Judgment

‍Mackay v Dick principle of law

The Supreme Court rejected that Lord Watson’s speech established a “deemed fulfilment” principle in English law. The reasons given for their rejection were that:

• No authorities were relied upon by Lord Watson, but rather, ‘he relied upon … “a doctrine borrowed from the civil law”’;^[12]
• The inconsistency of previous authorities,^[13] especially between Hotham,^[14] Panamena,^[15] Cory,^[16]and Abacha^[17] on the one side, and Thompson^[18] and Little v Courage^[19] on the other;
• Expanding on Colley,^[20] the principle, if applied, is too wide and requires too many uncertain exceptions that ‘it does not make for a robust principle of law’;^[21]
• Fictional nature of the explanations of the Mackay v Dick principle,^[22] and the support in favour of proper interpretation of contractual terms rather than ‘fictional fulfilment of a condition precedent’;^[23] and finally,
• Damages being an “appropriate and adequate” remedy to overcome any injustice which may follow from rejecting the Mackay v Dick principle.^[24]

‍Contractual interpretation

Popplewell LJ’s judgment in the Court of Appeal relied on the ‘presumed contractual intention and the maxim that a party should not be entitled to take advantage of its own wrong’.^[25] After a careful examination of the authorities relied on by the sellers, the Supreme Court agreed with Chitty on Contracts^[26] regarding what those authorities supported. Accordingly,

‘as a matter of construction, unless the contract clearly provides to the contrary it will be presumed that it was not the intention of the parties that either should be entitled to rely on their own breach of duty to avoid the contract or bring it to an end or to obtain a benefit under it’.^[27]

While agreeing to the above remarks in Chitty, the Supreme Court also clarified what the authorities do not support:

‘as a matter of authority, the cases on the presumption are all concerned with a claimed entitlement to treat the contract as being at an end or to obtain a benefit under it. They do not support any wider presumption that a party may not take advantage of its own wrong’.^[28]

Thus, the Supreme Court made a distinction between “claiming a benefit under a contract” and “taking advantage”. While one’s own wrong can prevent the former, it does not do so for the latter. The Supreme Court referred to the longstanding understanding that an efficient breach was allowed in English law, which ‘is most obviously illustrated by the principle that damages for breach of contract are to compensate the claimant and not to punish the defendant’.^[29]

Given that the buyers ‘are not relying on their own breach of contract to treat the contract as being at an end or to claim a benefit under it’, the Supreme Court decided that ‘the maxim that a party cannot take advantage of its own wrong is of no assistance in interpreting the contracts in this case’.^[30]

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‍Conclusion

In conclusion, the Supreme Court clearly rejected the Mackay v Dick principle as being a part of English law, and clarified the scope of the maxim “a man cannot be permitted to take advantage of his own wrong”.

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Footnotes

^[1] Mackay v Dick (1881) 6 App Cas 251.

^[2] As labelled by the Supreme Court to refer to the same principle of ‘deemed fulfilment’, ‘dispensed with’, ‘deemed waiver’, or ‘quasi-estoppel’: King Crude Carriers [1].

^[3] King Crude Carriers [1].

^[4] ibid [78].

^[5] King Crude Carriers SA & Ors v Ridgebury November LLC & Ors (Re An Arbitration Claim) [2023] EWHC 3220 (Comm).

^[6] King Crude Carriers SA & Ors v Ridgebury November LLC & Ors [2024] EWCA Civ 719 [81].

^[7] ibid [84].

^[8] King Crude Carriers [19].

^[9] Mackay v Dick (n 1), 264: ‘the Defender [was] to keep it, unless on a fair test [the Machine] failed to do the stipulated quantity of work’ (Lord Blackburn).

^[10] ibid, 270: ‘The Respondents were only entitled to receive payment of the price of the machine on the condition that … on trial it should [pass the test]’ (Lord Watson).

^[11] ibid, 252-53.

^[12] King Crude Carriers [23], [62].

^[13] ibid [63].

^[14] Hotham v East India Company (1787) 1 TR 639.

^[15] Panamena Europea Navigacion (Cia Ltda) v Frederick Leyland & Co Ltd [1947] AC 428.

^[16] Cory v London Residuary Body 1990 WL 753484.

^[17] Companie Noga d’Importation et d’Exportation SA v Abacha (No 3) [2002] CLC 207.

^[18] Thompson v ASDA-MFI Group plc [1988] 1 Ch 241.

^[19] Little v Courage Ltd (1994) 70 P & CR 469.

^[20] Colley v Overseas Exporters [1921] 3 KB 302.

^[21] King Crude Carriers [64]-[65].

^[22] ibid [66].

^[23] ibid [67].

^[24] ibid [68].

^[25] ibid [70].

^[26] Chitty on Contracts (35th Ed) (2024).

^[27] ibid [16-115].

^[28] King Crude Carriers [78].

^[29] ibid [78].

^[30] ibid [79].