November, 2025: Supreme Court decision confirms Mackay v Dick principle is not part of English law

The Supreme Court recently gave judgment in King Crude Carriers SA and others v Ridgebury November LLC and others [2025] UKSC 39, holding that the principle of deemed fulfilment – also known as the Mackay v Dick[1] principle – is not part of English law.

The facts and previous decisions

The case concerned contracts for the sale of three tankers under the Saleform 2012 (the “MOAs”). The buyers, in breach of the MOAs, did not provide the KYC documents to allow for the escrow accounts to be opened, so they could not, and did not, lodge the deposits. The sellers purported to terminate the MOAs and commenced arbitration proceedings, seeking to claim the deposits in debt.

The sellers, however, sought to rely upon the House of Lords decision in the Scottish law case of Mackay v Dick, where it was decided that where a party wrongfully prevents the fulfilment of a condition precedent to that party’s debt obligation, that condition is deemed fulfilled with the result that the claim can only be brought in damages as opposed to in debt. The ships’ market price had increased by the date of the termination, so the sellers did not suffer a net loss, which would mean that only nominal damages would be awarded if the claim was brought in damages.

The sellers were successful before the arbitration tribunal and the buyers appealed to the High Court, where Dias J held that the sellers’ claim must be in damages and not in debt.

The sellers appealed to the Court of Appeal, which decided in their favour by allowing their claim in debt. The buyers appealed to the Supreme Court.

The Supreme Court decision

There were three main issues[2] for the Supreme Court to consider:

Issue 1: Is there a Mackay v Dick principle in English law or is a damages claim the only available remedy for the Sellers in this case?

Finding that there is no Mackay v Dick principle in English law, Lord Hamblen and Lord Burrows (with whom Lord Reed, Lord Hodge and Lord Stephens agreed), explained the reasoning of the leading judgments of Lord Blackburn and Lord Watson in Mackay v Dick: the former is the “uncontroversial authority” for the implied duty on contracting parties to co-operate to ensure performance of their contract; the latter (and the subject matter of this appeal) is the basis of the deemed fulfilment principle.

In no less than 48 paragraphs, the judgment goes on to clarify why the Mackay v Dick principle is not part of English law and why Lord Watson’s speech is “controversial”. The reasoning of the Supreme Court can be summarised as follows:

• Lord Watson did not cite any English law authority, but relied on “a doctrine borrowed from the civil law”.
• There is no uniformity in terms of case law on this point, and it is arguable that the judgments in favour of the sellers could have led to the same result via the application of the law of damages.
• The decision in Mackay v Dick was distinguished in Colley v Overseas Exporters,[3] where the claimant was only entitled to damages for the breach of the defendant buyers of goods to nominate an effective ship, resulting in the claimant being prevented from loading the goods. As the title to the goods had not passed to the buyer, it would be “extraordinary” for the claimant to be entitled to the price which would the outcome if Mackay v Dick was to be applied.
• Legal fictions are not a feature of English law.

• The terms of the contract, express or implied, and their proper interpretation is the basis of English law.
• Rejecting the Mackay v Dick principle does not lead to injustice, as the law of damages can provide adequate protection.

The judgment went on to analyse why in this case the contractual interpretation and the lack of an implied term meant that the pre-conditions of the buyers’ debt obligation cannot be considered fulfilled because of the buyers’ breach in respect of those pre-conditions.

The Supreme Court, agreeing with the reasoning of Dias J, allowed the appeal on this ground and held that the only remedy available to the sellers was a claim in damages.

Issue 2: Was the Court of Appeal decision in The Griffon,[4] which held that under the Saleform the deposit was forfeited when the seller terminated the MOA for non-payment of the deposit, wrong?

As the appeal was successful on issue 1, the Supreme Court did not have to consider this issue. It follows that The Griffon remains good law.

Issue 3: Did the right to the deposit under the Saleform accrue when the MOA was concluded?

The sellers argued that the buyers’ breach was “a mere failure in the machinery of payment” and did not prevent the accrual of the debt which occurred when the MOA was concluded. Following that logic, the sellers would have a claim in debt for the deposits despite the fact the contracts were terminated for the buyers’ breach.

The Supreme Court, noting that not all contracts contain a distinction between the time where a sum accrues and when it becomes payable, similar to the MOAs in this matter, rejected the sellers’ argument. It was held that opening of the accounts was a pre-condition of the sellers’ claim for the deposits in debt. As this pre-condition was not met, there was no claim in debt and the sellers had a claim in damages for the loss of their bargain.

In doing so, the Supreme Court approved the Court of Appeal’s decision in The Blankenstein,[5] which dealt with a contract for a ship sale where the only pre-condition of the deposit was the signing of the MOA. In that case, as the MOA was never signed, it was held that the claim for the deposit in debt failed.

Conclusion

The Supreme Court judgment contains a thorough analysis of the authorities relied upon by the parties and the decision in Mackay v Dick itself and serves as helpful guidance on the reasoning of other decided cases.

It is now clear that the Mackay v Dick principle is not part of English law, and that a claim in debt is likely to succeed only if the wording of the contract describes it as such. In that regard, the comment of Lord Denning in The Annefield[6] remains topical that if the market is not satisfied with a decision, the form can be revised.

It follows that the agreed terms, express or implied, will decide the outcome of a contractual claim. Therefore, the importance of obtaining accurate legal advice in drafting and negotiating contracts, such as MOAs, cannot be overstated.

 

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[1] (1881) 6 App Cas 251; House of Lords decision in a Scottish law case.

[2] This article does not deal with the procedural points.

[3] [1921] 3 KB 302.

[4] [2013] EWCA Civ 1567.

[5] Damon Compania Naviera SA v Hapag-Lloyd International SA (“The Blankenstein”) [1985] 1 WLR 435.

[6] [1971] P 168.