A repudiatory breach of contract will not necessarily deprive the party in breach from obtaining a restitutionary remedy.
The seller had sold cargoes of gasoil and gasoline to the buyer and accepted significant advance payments. However, despite these advance payments, the seller never shipped the cargoes.
The parties then agreed new terms, under which the buyer would receive a 20% discount from the purchase price to take account of the advance payments under the previous deals.
The buyer subsequently failed to pay the balance due within the contractual timeframe, and, before the goods had been delivered, the seller terminated the contract and sued for repudiatory breach. The buyer, in turn, brought a counter-claim for the return of the advance payments made under the previous contracts.
The court held that the seller was, indeed, entitled to terminate the contract for the buyer’s failure to pay and that the defendant was liable for the losses which the claimant had suffered as a result.
As to the counterclaim, the seller argued that the buyer’s right to sue for a refund of the advance payments had been superseded by the new contract. In effect, the seller’s position was that - because it had been entitled to terminate the new contract - it could keep the advance payments (even although those advance payments had been made in respect of earlier contracts which the seller itself had not performed).
The court did not agree. The new contract had expressly provided that the buyer’s right to a refund of the advance payments was to be dealt with by way of a discount on the purchase price. It was implicit in that bargain that the buyer would not exercise its right to make a claim in unjust enrichment for as long as the new contract remained on foot. But there was no reason that the buyer should lose that right altogether if the new contract was terminated before the buyer had received credit for the full outstanding balance of the advance payments – it would be unjust for the seller simply to retain the advance payments in those circumstances. Further the fact that the buyer had committed a repudiatory breach should not mean that it be deprived of its right to a claim in restitution.
In the circumstances, and perhaps unsurprisingly, the buyer was accordingly entitled to recover the balance of the advance payments.