In the case of Ure Energy Limited -v- Notting Hill Genesis, the defendant housing association entered into an electricity supply contract with the claimant, Ure Energy, for a term of 4 years in 2017 as the precursor to a 25-year contract. In 2018, the defendant amalgamated with Genesis Housing Association to become Notting Hill Genesis.
The relations between the two parties broke down and Notting Hill Genesis notified Ure Energy that it did not want to enter into a further supply contract.
In November 2018, Ure Energy served notice to terminate the contract under clause 10.2(d) which included a right to terminate if Genesis Housing Organisation had amalgamated with another organisation.
After the termination notice had expired, Ure Energy issued a claim for a £4 million termination payment. Notting Hill Genesis defended the claim on the basis that Ure Energy knew or should have known that it had a right to terminate the contract in April 2018 at the time of the amalgamation but waived this right by continuing to supply electricity before terminating the contract in November 2018. This waiver was said to have prevented Ure Energy from terminating the contract.
The housing association’s defence failed because the individual at Ure Energy who was responsible for managing the contract wrongly assumed that the termination clause was a standard provision which only allowed termination if the customer became insolvent or breached the contract. The contract had been negotiated quickly and the right to terminate based upon an amalgamation had not been brought to the employees’ attention. During the proceedings, Ure Energy disclosed a copy of legal advice that it had received, just two days before serving notice, which highlighted its right to terminate.
As Ure Energy only became aware of its right to terminate a couple of days before serving notice the continuation of the electricity supply between the date of Genesis’ amalgamation in April 2018 and the service of a termination notice in November 2018 did not waive the right to terminate. Even if Ure Energy had been aware of right to termination in April 2018, the court indicated that it could have relied upon a so-called non-waiver clause in the agreement to terminate it in November 2018.
Alexander Haddad works in the Litigation Department and deals with property and commercial disputes. Please contact Alexander Haddad (ahaddad@nockolds.co.uk/0203 892 6805) if you have any questions about terminating a commercial contract.