The White & Carter Principle: A Restatement

Published date01 March 2011
Date01 March 2011
Volume 74 March 2011 No 2
TheWhite & Carter Principle: A Restatement
Qiao Liu
This article reviews the English courts’ approach to the controversial decision inWhite & Carter
(Councils)Ltd vMcGreg or and suggests a systematic reformulation of the principle to be derived
from thatcase. It argues that the notion of ‘legitimate interest’,at the core of that principle, su¡ers
from severe obscurityas it sta nds. The critical issue inWhite & Carter is whether the wastefulness
of a party’s continuing performance outweighs its performance interest in earning the contract
price.Three tests currently employed to determine the existe nce of a‘legitimate interest’, namely,
the adequacy of damages, the duty to mitigate and the concept of wholly unreasonable, are
assessed and dismissed as either misdirecting or unsatisfactory in other ways.Fi nally, it articulates
a new test based on a reappraisal of existing case law and summarises the key reasons for the
courts to exercise their equitable jurisdiction against wasteful performance.
English courts, as well as courts in other commonlaw jurisdictions,are frequently
called upon to undertake the daunting taskof determining which of two equally
important values, such as certainty or e⁄ciency, should prevail in the event of a
clash. Even more taxing is the burden of devisinga formula, usable in future like
cases, which strikes a proper balance between the two clashing values. In this
regard White & Carter (Councils) Ltd vMcGregor
constitutes a prominent attempt
by the Houseof Lords to doprecisely that withthe traditionally proclaimed value
of sanctity and certainty of contract
and the more recently articulated value of
economic e⁄ciency. Since its publication the decision has aroused as much con-
troversy as interest. This is due, at least in part, to the fact that the formula sug-
gested by the House is unintelligible and elusive, and consequently incapable
of responding satisfactorily to subsequent cases. In particular, while a failure to
address openly the underlyingclash of values exposeslater courts to thedanger of
missing the critical issue in thatcase, the notionof ‘legitimate interest’ introduced
Senior Lecturer,TC Beirne School of Law, Universityof Queensland; Adjunct Professor,School of
Law, Xi’an Jiaotong University (China). I am grateful to Professor Ewan McKendrick, Professor
Charles Rickett and Professor Nick Gaskell for their comments on several earlier drafts of this article.
Thanks are also due to two anonymousreferees for their helpful suggestions. All errors are, of course,
1White & Carter(Councils) Ltd vMcGregor [1962] AC 413 HL Sc,1962 SC (HL) 1 (White & Carter).
The Appeal Cases report will be cited hereafter.
2By ‘sanctity and certainty of contract’ I mean the underlying value(s) of upholding the parties’
agreement and giving one whatit has contracted for, including the certainty (predictability) that
one’s contractual right will be upheld and enforced bythe courts.
r2011The Author.The Modern Law Review r2011 The ModernLaw Review Limited.
Published by BlackwellPublishing, 9600 Garsington Road,Oxford OX4 2DQ,UK and 350 Main Street, Malden, MA 02148, USA
(2011) 74(2) 171^194
by one of their Lordships has left too much to be furtherde¢ned. The purpose of
this article is to reassess, re¢ne and reconstruct that formula and to develop a
sound doctrinal basis on which a more sustainable solution may be founded.
Where a party commitsan anticipatory breach of its obligation to pay a ¢xed sum
at a future time, is theother party entitledto continue to perform the contract and
then claim that sum when it falls due? This is the legal question arising under
White & Carter vMcGregor.
Although the case is st rictly a Scottish one, the sub -
sequent development by English courts of the principle originating therein
means that that principle (‘theWhite & Carter principle’) can be properly regarded
as part of English law. It is necessary ¢rst to look more closely atthe case itself.
The pursuers were a company supplying litter bins to local councils and were
paid by businesses like the defender in return for displaying the latter’s advertise-
ments on the bins. On 26 June 1957, when a three-year contract for displaying
advertisements between the two parties was about to expire, the sales manager
of the defender renewed it with the pursuers for a further term. On the same
day the defender purported to cancel the deal, stating that the manager acted
without valid authority. The pursuers nonetheless proceeded with the contract
and had the defender’s advertisements displayed as contracted for.When the ¢rst
few payments under the contract were not paid within the speci¢ed times, the
pursuers brought a claim for t he whole contract price pur suant to condition 8 of
the contract, which provided that all of the defender’s future payments would
accrue immediately upon a failure to make any payment timeously. The claim
was refused on two occasions in Scotland,
only to be allowed on appeal to the
House of Lords by a narrow 3 to 2 margin. Both parties had prior authority on
which they could rely. The pursuers relied upon White & Carter (Councils) Ltd v
a case where they had successfully enforced an identical clause against a
di¡erent client. The defender looked instead to a then leading Scottish authority,
Langford & CoLtd vDutch, where Lord President Cooper said that the victim of a
repudiation could not force its per formance upon the repudiator and ‘the only
reasonable and proper course’for it to take was to accept the repudiation and be
content with a claim for damages.
In upholding the pursuers’ claim, their Lordships in the majority adopted
two distinct approaches. They all started from the general principle that the
victim of an anticipatory breach had an unfettered option whether to accept it or
not, and that it was under no duty to enforce i ts contractual rights in a reasonable
3White& Carter above n 1.
4First by the Sheri¡ Court and then:White & Carter(Councils)Ltd vMcGregor 1960SC 276 Court of
Session Inner House (CSIH).
5(unreported 21 May 1958, CA). The only factual di¡erence with McGregor was that in Harding
repudiation occurred sometwo months after the pursuers had started to display advertisements.
But this hardly matters as i n both cases the victim continued to perform the contract after the
61952 SC 15 CSIH 18.
TheWhite & Carter Principle
172 r2011The Author.The Modern LawReview r2011The Modern Law ReviewLimited.
(2011) 74(2) 171^194

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