White and Carter (Councils) Ltd v McGregor [1961]
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White and Carter (Councils) Ltd v McGregor [1961] UKHL 5 is a significant English contract law case that explores the right to terminate a contract and the associated duty to mitigate damages.
The facts of the case involve a three-year contract entered into by White & Carter (Councils) Ltd. in 1954 to display advertisements for McGregor's garage company on litter bins. In 1957, with the contract nearing expiration, McGregor's sales manager, Mr Ward, renewed the contract. However, upon learning of this renewal, McGregor informed White & Carter that Ward lacked the authority to enter into such an agreement and requested the cancellation of the contract. White & Carter refused to cancel the contract and proceeded to display the advertisements. Subsequently, they brought an action seeking payment for the contract price.
In the judgment, the House of Lords held, by a majority of 3 to 2, that the claimants were entitled to recover the contract price, and they were not obligated to take steps to mitigate their loss. The crucial aspect was that the claim was considered a claim in debt rather than damages. The court reasoned that there was no obligation to accept the breach, even though it might have been unfortunate for the claimants to have committed to an unwanted contract, causing apparent waste of time and money.
Lord Hodson emphasised that this case involved a claim in debt, and as such, the mitigation rule, which usually requires parties to take reasonable steps to minimise their losses, did not apply. He expressed the view that introducing a novel equitable doctrine, wherein a party would not be held to the contract unless the court deemed it reasonable, was not warranted.
This case establishes an important precedent regarding the distinction between claims in debt and claims in damages, impacting the application of the duty to mitigate damages in contract law.
The facts of the case involve a three-year contract entered into by White & Carter (Councils) Ltd. in 1954 to display advertisements for McGregor's garage company on litter bins. In 1957, with the contract nearing expiration, McGregor's sales manager, Mr Ward, renewed the contract. However, upon learning of this renewal, McGregor informed White & Carter that Ward lacked the authority to enter into such an agreement and requested the cancellation of the contract. White & Carter refused to cancel the contract and proceeded to display the advertisements. Subsequently, they brought an action seeking payment for the contract price.
In the judgment, the House of Lords held, by a majority of 3 to 2, that the claimants were entitled to recover the contract price, and they were not obligated to take steps to mitigate their loss. The crucial aspect was that the claim was considered a claim in debt rather than damages. The court reasoned that there was no obligation to accept the breach, even though it might have been unfortunate for the claimants to have committed to an unwanted contract, causing apparent waste of time and money.
Lord Hodson emphasised that this case involved a claim in debt, and as such, the mitigation rule, which usually requires parties to take reasonable steps to minimise their losses, did not apply. He expressed the view that introducing a novel equitable doctrine, wherein a party would not be held to the contract unless the court deemed it reasonable, was not warranted.
This case establishes an important precedent regarding the distinction between claims in debt and claims in damages, impacting the application of the duty to mitigate damages in contract law.
