Alfred Toepfer International v Itex

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Alfred Toepfer International GmbH v Itex Itagrani Export SA [1993] 1 Lloyd’s Rep 360

Repudiatory breach of a contract by inability to perform.

Facts

A buyer agreed to purchase a full cargo of 22,000 tonnes of maize from a seller in Argentina. The buyer nominated a sub-buyer to nominate a vessel to carry the shipment. The sub-buyer’s vessel had a limited capacity of 15,400 tonnes, and would thus be unable to carry the entirety of the agreed cargo. The seller claimed that the buyer was in repudiatory breach of the contract on the basis of its inability to perform its obligations.

Issue

The question arose as to whether the seller was in repudiatory breach of the contract for its inability to perform its obligations.

Held

The Court held that, as a general rule, repudiation by a failure to perform a contract arises if the breaching Party has acted so as to either renounce his obligations under the contract or acted so as to render himself unable to perform his obligations. Repudiatory breach by inability to perform requires the breaching party to have acted so as to entirely render it out of his power or abilities to perform the contractual obligations. The onus of proof is on the party claiming for a repudiatory breach to show that the other party has become unable to perform on the balance of probabilities. On the facts, the Court held that the buyer had, firstly, not renounced their obligations. Secondly, the fact that the sub-buyers had nominated a vessel that was unable to load the entirety of the cargo is not a sufficient indication that the buyer was unable to perform the contract. It is solely an indication that the buyer might not be able to perform, not that it was unable and powerless to perform. Thus, the seller had not satisfied its onus and standard of proof to show that the buyer was unable to perform its obligations under the contract.

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