Receiving a notice that the other party has terminated a contract does not necessarily mean the...
Receiving a notice that the other party has terminated a contract does not necessarily mean the contract has come to an end. The Court of Appeal’s decision in Advanced Multi-Technology for Medical Industry (trading as Hitex) v Uniserve Ltd [2025] EWCA Civ 1212 highlights why businesses must assess their legal position carefully before deciding how to respond.
What happened?
Hitex, a manufacturer of medical supplies, entered into a contract with Uniserve for the supply of 80 million face masks. The masks were to be made available for collection from Hitex’s factory in accordance with an agreed delivery schedule. The contract stated that time was of the essence for Hitex’s obligation to have the masks ready on the scheduled dates. However, Uniserve did not have to collect them on those precise dates.
Hitex experienced difficulties meeting the original delivery schedule, and the parties agreed a revised timetable. Subsequently, Uniserve alleged that Hitex had not complied with the revised delivery schedule and communicated that the contract was over.
It was determined that Hitex had in fact sufficient masks available to meet the cumulative quantity then outstanding under the revised schedule. However, it did not notify Uniserve that those masks were ready.
Hitex did not accept that the contract was at an end. It continued producing masks and complained that Uniserve had failed to collect further shipments. Uniserve responded by again making clear that it regarded the contract as finished.
The claim
Hitex brought a claim against Uniserve for failing to accept and pay for the remaining masks.
Uniserve argued that it had been entitled to terminate the contract.
Uniserve's alternative argument that it was entitled to set aside the contract on the basis of alleged misrepresentations regarding Hitex's production capacity ultimately failed. It was determined that Uniserve had relied on its own investigations into Hitex's production capacity, rather than on the earlier statements, when deciding to enter into the contract.
What did the Court of Appeal decide?
Uniserve’s first attempt to bring the contract to an end was treated as a repudiatory breach. A repudiatory breach is a breach which is sufficiently serious to give the other party the right to terminate the contract.
However, a repudiatory breach does not normally bring a contract to an end automatically. The innocent party must decide whether to accept the breach and terminate the contract or, where the law permits, affirm the contract and keep it alive. Acceptance must be communicated clearly and unequivocally.
Crucially, Hitex never communicated that it was accepting Uniserve’s repudiatory breach. As a result, the contract remained in force despite Uniserve’s wrongful attempt to terminate it.
That meant Hitex remained bound by its own contractual obligations. Because Uniserve was not required to collect each shipment on its scheduled date, Hitex had to keep the uncollected masks available while also producing the quantities required for later shipments. It could not treat the same masks as satisfying one scheduled delivery after another.
Hitex subsequently failed to maintain enough masks to meet those cumulative requirements. Hitex’s failures therefore gave Uniserve a fresh and valid right to terminate the contract, despite Uniserve’s earlier wrongful attempt to end it.
What does this mean for businesses?
If the other party says that your contract is over, do not assume that the contract has automatically ended.
You should promptly:
- check the contract and any termination provisions,
- establish whether the other party had a valid right to terminate,
- decide whether you wish to accept the breach and end the contract or, if legally and commercially possible, keep the contract alive,
- communicate that decision clearly,
- continue complying with any obligations that remain binding unless and until the contract comes to an end.
The choice is not always unrestricted. Whether a contract can practically and legally be kept alive may depend on its terms, whether continued performance requires the other party’s cooperation and whether there remains a legitimate reason to continue.
Stopping performance too soon may weaken an otherwise valuable claim or give the other party a new right to terminate. Equally, wrongly treating a contract as terminated may itself amount to a serious breach.
If you require advice or assistance with a contractual dispute, we can help. Our experienced lawyers can advise you on whether a termination is valid, the options available to you and the most appropriate steps to protect your position.