Supreme Court rejects Mackay v Dick principle in King Crude Carriers v Ridgebury

The Supreme Court's recent judgement in King Crude Carriers SA v Ridgebury November LLC [2025] UKSC 39 has conclusively determined that the so-called "Mackay v Dick principle"—which suggests a condition precedent may be deemed fulfilled when prevented by a party's breach—does not form part of English law.

The case concerned three vessel sale contracts on the Norwegian Saleform 2012. Under clause 2 of each Memorandum of Agreement, buyers were obligated to lodge a 10% deposit within three banking days of two events occurring: the parties signing and exchanging the MOA, and the deposit holder confirming the escrow account was open and ready. Crucially, both parties were required to provide necessary documentation to open the account.

The buyers breached their obligation by failing to provide the required documentation. Consequently, the deposit holder never confirmed the account opening, and the deposits were never lodged. The sellers terminated the contracts and claimed the deposits as debts, relying on the principle established in the Scottish case of Mackay v Dick (1881).

The Mackay v Dick controversy

Lord Watson's speech in Mackay v Dick suggested that where a party wrongfully prevents fulfilment of a condition precedent to their debt obligation, the condition should be treated as fulfilled. This "deemed fulfilment" principle has long been debated, with courts and commentators divided on whether it represents English law.

The sellers relied on four principal cases supporting the doctrine: Hotham v East India Company (1787), Panamena Europea Navigacion v Frederick Leyland [1947], Cory v London Residuary Body (1990), and Companie Noga v Abacha [2002]. However, previous High Court decisions, including Scott J in Thompson v ASDA-MFI and Millett LJ in Little v Courage, had explicitly rejected the principle as contrary to English law.

The Supreme Court's reasoning

Lord Hamblen and Lord Burrows delivered the leading judgement, identifying six compelling reasons for rejecting the Mackay v Dick principle in English law.

First, Lord Watson relied solely on civil law doctrine without citing English authorities. Secondly, English cases present conflicting views, with the four cases supporting the principle potentially explicable through ordinary damages principles. Thirdly, applying the principle would fundamentally undermine established law in sale of goods and other commercial contexts—as recognised in Colley v Overseas Exporters [1921].

Significantly, the Court emphasised that all formulations of the principle rest on legal fictions—deemed performance, deemed waiver, or quasi-estoppel—none of which reflect actual performance or satisfy the elements of true waiver or estoppel. The Court noted the modern judicial tendency to eschew legal fictions, citing Lord Nicholls' observation that "as a mature legal system, English law had outgrown the need for legal fictions."

The Court affirmed that English contract law proceeds through express and implied terms and their proper interpretation, not through fictional fulfilment of conditions. This approach respects freedom of contract and promotes certainty. Moreover, remedies in damages adequately address breaches preventing condition fulfilment, without needing to strain contractual language to support debt claims.

Interpretation and implied terms

The sellers alternatively argued the contract should be interpreted, or terms implied, to prevent buyers relying on their own breach. The Court rejected this approach. The presumption against profiting from one's own wrong applies only where parties claim to terminate contracts or obtain benefits under them—not where defending against debt claims.

The Court found no basis for implying terms that would either render clause 2 unworkable or fundamentally rewrite the parties' bargain by requiring deposit payment directly to sellers rather than into escrow.

Secondary issue: accrual versus payment

The sellers' final argument—that the deposit right accrued upon contract formation, with clause 2 merely governing payment machinery—was rejected. Following The Blankenstein [1985], the Court held that the MOA does not distinguish between when deposit rights accrue and when payment becomes due. The clause 2 conditions are true conditions precedent to debt accrual, not merely payment mechanics.

The Supreme Court's decisive rejection of deemed fulfilment clarifies that parties may only claim debts when contractual conditions are genuinely satisfied, with breach of those conditions remedied through damages alone.

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