King Crude Carriers SA v Ridgebury November LLC [2025] UKSC 39

The Supreme Court has held that the principle derived from <span class="news-text_italic-underline">Mackay v Dick (1881) 6 App Cas 251</span>, that a party who wrongfully prevents the fulfilment of a condition precedent is treated as having satisfied it, is not part of English law. As a result, buyers who failed to provide documentation needed to open an escrow account were not liable in debt for deposits that never became due under the contract’s express conditions precedent. The sellers’ remedy lay only in damages, not a debt claim.

Background

The dispute concerned three identical sale contracts for vessels. Under clause 2, the buyers were required to:

• supply documentation necessary to open an escrow account; and
• pay a 10% deposit within three banking days of confirmation that the account had been opened.

The buyers did not provide the required documentation. The escrow holder never confirmed that the account was open and the deposits were never paid. The sellers terminated the contracts and commenced arbitration, claiming the deposits as debts on the basis of the <span class="news-text_italic-underline">Mackay v Dick</span> doctrine. Arbitration succeeded; the Commercial Court disagreed; and the Court of Appeal reinstated the sellers’ success. The buyers appealed to the Supreme Court.

Issues Before the Supreme Court

1. Does the <span class="news-text_italic-underline">Mackay v Dick</span> principle form part of English law?
2. Did the sellers’ contractual right to the deposits accrue regardless of the failed condition precedent?
3. Could an implied term or contractual interpretation produce the same outcome as <span class="news-text_italic-underline">Mackay v Dick</span>?
4. Did the buyers’ breach merely affect the machinery of payment or the actual accrual of the debt?

Decision

1. <span class="news-text_medium">Mackay v Dick is not part of English law:</span> The Supreme Court unanimously rejected the principle for several reasons:</br></br>
   
   • Lord Watson cited no English authorities for the principle and subsequent English decisions were inconsistent.
   • Outcomes in supporting cases could be reached through orthodox damages analysis without resorting to fictional “deemed fulfilment”.
   • Applying the principle to conditions precedent (e.g., in sale of goods or land) would undermine contractual certainty.
   • The principle relies on legal fictions (“deemed performance”, “quasi-estoppel”), which modern contract law seeks to avoid.
   • English law already protects parties through damages for breach, removing the need for such a doctrine.
2. <span class="news-text_medium">Contractual interpretation does not support the sellers’ argument:</span> The sellers relied on cases suggesting a party cannot profit from its own wrong. The Court held:</br></br>
   • Those cases concerned termination or claiming benefits under the contract; they did not create a general presumption barring a party from relying on unmet conditions.
   • The buyers were not relying on their breach to obtain a benefit; rather, they accepted damages liability but denied debt liability.
   • Clause 2 expressly made the deposit conditional on specific steps (confirmation of the escrow’s opening). Those conditions must be respected.
3. <span class="news-text_medium">No implied term to bypass the condition precedent:</span> Suggested implied terms either contradicted the contract’s wording or fundamentally altered the parties’ bargain. Clause 2 was not “for the buyers’ benefit” in the way the sellers argued.
4. <span class="news-text_medium">Deposits did not accrue at the time of contracting:</span> The Court held that:</br></br>
   
   • Clause 2 was a genuine condition precedent to the accrual of the debt, not merely to its timing or the mechanics of payment.
   • The debt never accrued because the condition was never fulfilled.
   • Precedents such as “<span class="news-text_italic-underline">The Dominique” [1989] AC 1056</span> and “<span class="news-text_italic-underline">The Karin Vatis” [1988] 2 Lloyd’s Rep 330</span> distinguished between accrual and payment; here, there was no accrual at all.

Conclusion

The appeal was allowed. The sellers had no claim in debt for the deposits; their remedy lay exclusively in damages for breach of contract. This decision reinforces the primacy of express contractual terms and rejects doctrinal fictions that would circumvent conditions precedent. Commercial parties must ensure that conditions tied to deposit payments or other financial obligations are workable and clearly drafted. The ruling underscores the importance of distinguishing between accrued rights and conditions affecting payment - a key principle in shipping and sale contracts.