Terminating Contracts – Shell Contract Termination Case

by Kidd Rapinet on April 22, 2010

In March, the court looked at termination of contracts in a case which could be very important in many other contract termination situations. Shell failed to recover $15 million as the termination of the agreement was not done in the matter in which the court felt it ought to have been done. Danny Hockman, a partner in Kidd Rapinet’s High Wycombe office said:

“Get termination right and you will be in a much stronger position if litigation ensues or simply to enable you to negotiate a better financial settlement. In recessions, companies terminate contracts more often and fight for every penny afterwards. Companies who have no written contracts find their legal position is much worse when a dispute between shareholders, business partners, suppliers, customers, distributors or agents ensues. If you do have contracts, it can be sensible to take legal advice on how to terminate before doing so.

“In this case Centurion Petroleum Corporation, now Dana Gas Egypt, broke its contract with Shell. Shell used the contract terms to terminate giving 30 days’ notice. This is not unusual but the court said it should have said instead that the breach went to the root of the contract, was a repudiatory breach and should have rescinded the contract immediately. Instead, by following the contract’s procedure, Shell was affirming that the contract was still in existence in what might seem a rather unfair decision.”

We can advise you on how to get out of contracts. Call Danny Hockman on 01494 535321 for further information.