08 November 2017 - Post by:Jason Rix
Specified remedies for breach of certain provisions in a contract will not be exclusive remedies unless the parties clearly intend to restrict the available remedies: Harcap Ltd v FK Generators.
HarCap, a private equity investor, had entered into an agreement with FK Generators to find USD22m bridging finance for a power plant. This contained an exclusivity and confidentiality undertaking which, if breached, would trigger payment of an “Abort Fee” of USD500,000. HarCap sought damages for breach of that undertaking, in addition to the Abort Fee. FK Generators argued that the Abort Fee was HarCap’s exclusive remedy. The High Court disagreed, following the dicta of Briggs LJ in the Court of Appeal decision of Nobahar-Cookson: while commercial parties are free to decide how they will cater for a breach of contract, they are unlikely to intentionally restrict their remedies for breach of contract, particularly in the absence of any clear wording to that effect. This was a summary judgment application. Though HarCap was entitled to the Abort Fee, the validity of the damages claim was not examined; but it could be pursued.
While this decision will embolden parties that wish to include tailored remedies against specific risks, care must be taken to ensure there is no implicit restriction on the remedies available at law. In the present case, Bryan J found that there was no suggestion that the Abort Fee was intended to operate as an exclusive remedy. To the contrary, the agreement provided that the parties could pursue “any and all other rights and remedies (and recover any and all damages) available at law or in equity”, wording which Bryan J found could not have been clearer.