Case Study: Breach of Contract

Bell Lax has recently successfully defended a breach of contract claim valued at over £600,000 against our client, A.

A is a parts manufacturer who supplied parts to B. B used these parts in the construction of a number of boats, which it then sold to C.

In 2018, C discovered that the parts manufactured by A, and used in the construction of the boats by B, were contaminated by a carcinogenic chemical. C brought a claim against B (as the manufacturer of the boats) for the costs associated with their decontamination. B ended up paying over £600,000 for the boats to be cleaned and decontaminated.

As A had supplied B with the allegedly contaminated parts, B subsequently issued proceedings against A for the sums they had paid to C. B argued that the presence of a carcinogenic substance on the parts supplied by A breached their contract as they claimed this was a defect and a breach of the Supply of Goods Act, on the basis the parts were not fit for purpose.  

The claim raised the complex issue of contractual interpretation, and whether the mere presence of the potentially carcinogenic chemical amounted to a defect, as argued by B.

Bell Lax advised A on the interpretation of the clauses in the contract, on the limitation issues surrounding the claim brought by B and on the possibility of A bringing a claim against a third party who introduced the carcinogenic chemical to the parts, when the parts were being painted.

We also instructed a specialist chemical expert to produce reports on the toxicity and legality of the chemicals found. The reports proved that the levels of the potentially carcinogenic chemical found were not harmful to humans and that at the time the parts were supplied, the chemical used was not prohibited under UK or EU law.

We successfully argued that as the chemicals were neither harmful nor illegal, their presence did not amount to a defect or a breach of the contract on the part of our client.