Advanced Multi-Technology for Medical Industry (trading as Hitex), Caramel Sales Ltd, David Popeck v. Uniserve Limited [2025] EWCA Civ 1212
Background
This dispute concerned claims brought by Advanced Multi-Technology for Medical Industry (trading as Hitex) and their agents Caramel Sales Limited and David Popeck against Uniserve Limited.
There were two contracts in issue: (1) a contract for the manufacture and supply by the first claimant (Hitex) of 80 million personal protective equipment (PPE) masks to the defendant (Uniserve), to be delivered between April and July 2020 (the Supply Contract); and (2) a parallel agreement under which the second claimant (Caramel) and the third claimant (Mr Popeck) were to be paid commission on shipments made under the Supply Contract (the Commission Contract).
The Supply Contract contained a delivery schedule, setting out that time was of the essence for Hitex’s delivery of the masks. After Hitex encountered initial supply difficulties, the parties varied the delivery schedule, which operated until June 2020, when Uniserve purported to terminate the Supply Contract and stopped collecting the masks (the First Termination).
Hitex did not accept the termination; however, it stopped notifying Uniserve of each delivery and eventually ceased production, leaving it unable to meet the cumulative total quantities required under the revised schedule. After Hitex raised complaints about Uniserve’s failure to collect the masks in July 2020, Uniserve again stated that the Supply Contract had been terminated (the Second Termination).
English High Court decision
In the High Court proceedings, Hitex, Caramel, and Mr Popeck claimed damages in excess of $40 million against Uniserve for non-acceptance of the masks and for unpaid commission. Despite the judge rejecting the claim pleaded and advanced by Hitex at trial, judgment was unexpectedly awarded in favour of Hitex for $16.94 million.
At first instance, the judge held that:
- Hitex had met its delivery obligations, and so Uniserve had wrongfully terminated the Supply Contract in June 2020, amounting to anticipatory breach; and
- Hitex had accepted Uniserve’s repudiation by ceasing production at the rate as agreed in the revised delivery schedule in July 2020, thereby terminating the contract. Interestingly, this point had not been pleaded by Hitex and was, in fact, inconsistent with its own case, which was that it had continued to perform the Supply Contract.
As to the Commission Contract, the High Court dismissed Caramel and Mr Popeck’s claims on the basis that commission was payable only on masks delivered.
English Court of Appeal decision
The Court of Appeal allowed Uniserve’s appeal and clarified important matters of procedure and the law on repudiation and the delivery of goods ex works:
- Procedural unfairness: The Court of Appeal held that the first instance court was incorrect to make findings on a case that had not been pleaded; a trial judge must stay within the boundaries of the parties’ formulation of the issues as set out in their pleadings.
- Acceptance of breach or affirmation: Contrary to the first instance court’s decision, the Court of Appeal found that Hitex had not accepted Uniserve’s repudiation, and, therefore, that the contract remained alive and Hitex’s obligations continued. Under the varied schedule, Hitex was obliged to have cumulative quantities available at each delivery date. Repeatedly offering the same stock was insufficient; adequate masks had to be held to satisfy each rolling instalment. The Court of Appeal reaffirmed that, following repudiation, the innocent party must elect either to accept the breach (ending the contract and claiming damages) or to affirm the contract and continue performance. It cannot keep the contract alive while being discharged from cumulative obligations. Hitex’s attempt to maintain performance while avoiding the cumulative readiness requirement was rejected.
- Ex works: The Court of Appeal noted that whether a seller under an ex works contract is obliged to give notice to the buyer that the goods are available for collection “must depend upon the terms of the contract and all the circumstances in the case”. The Court of Appeal determined that the parties’ conduct appeared to suggest that notification that the goods were ready was a necessary aspect of tender of performance by Hitex and that, on the facts, Hitex had not at any stage tendered performance of the three remaining shipments due under the Supply Contract. Uniserve was therefore entitled to terminate at the Second Termination, and the commission claim did not arise and was dismissed.
Implications for health care procurement under ex works contracts
The decision highlights various risks in health care procurement under high volume and time critical ex works arrangements, which require careful attention both at the negotiation stage and during performance:
- Public authority reservations: One of the Court of Appeal’s grounds for finding against Hitex was that Hitex’s evidence confirmed that it did not have sufficient stock to meet its delivery obligations on 21 June and 5 July 2020, as it was, at each instalment, required to reserve a 15% allocation for the Jordanian government. Health care buyers and suppliers should therefore expressly account for statutory or regulatory requisition risks, ring fence stock, document prioritisation rules, and evidence obligations within capacity representations and delivery schedules.
- Termination architecture: Making the seller’s readiness time critical, while allowing buyer collection to remain flexible unless notified, can give health care buyers usable exits if supply fails. Conversely, suppliers should guard against cumulative obligations they cannot meet and ensure variation mechanics reflect realistic production ramp up and public authority constraints.
- Mitigation: The Court of Appeal declined to treat ceasing manufacturing as mitigation for later breaches and rejected Hitex’s attempts to “retender” the same stock across instalments. Contractual remedies should therefore turn on demonstrable readiness and compliance, not theoretical recycling of stock that never existed in the required quantities or specifications.
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