Business Law Specialist Frank Scott-Ashe considers a key Court of Appeal decision, and explains why cumulative delivery obligations can make or break supply contracts.Contact Frank on 01225 462871 or complete the Contact Form below. |
During the COVID-19 pandemic, supply chains were under extraordinary pressure. Contracts were signed quickly, volumes were huge, and everyone was relying on assurances that suppliers could deliver at speed. A recent Court of Appeal decision, Advanced Multi-Technology for Medical Industry (trading as Hitex) and others v Uniserve Limited [2025] EWCA Civ 1212, shows just how risky that environment can be – and why delivery obligations in contracts are far more than just dates on a page.
Although the case arose from a very specific set of pandemic-era facts, the principles it confirms are highly relevant to everyday commercial contracts in England and Wales. In simple terms, it reinforces that when a contract says goods must be delivered by certain dates, and that time is “of the essence”, the law will usually take those words seriously.
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What was the dispute about?
The contract at the centre of the case was for the supply of an eye-watering 80 million face masks. Before the contract was signed, the buyer, Uniserve Limited, had been told by the supplier’s agent that production capacity was around 5 million masks per week. That figure mattered because the contract required deliveries to be made to a fixed schedule, with each delivery date reflecting a cumulative total of masks that should have been produced and made available by that point. Uniserve had also carried out its own investigation of the supplier’s production capability before the supply contract was signed, and was concerned that Uniserve would not be able to produce a sufficient volume of face masks.
The issue here was not just about missing one shipment. By each delivery date, the supplier was supposed to have a growing total number of masks ready to go. The contract also made it explicit that the time of delivery was of the essence, meaning delays were potentially serious breaches.
Almost immediately, things went wrong. The first four delivery dates were missed. Only one million masks were delivered in two batches, far short of what should have been available by that stage. As delays mounted, Uniserve carried out further checks and concluded that the supplier’s production capacity was much lower than originally suggested.
Uniserve terminated the contract. The supplier said that termination was unlawful and sued Uniserve for damages, alleging Uniserve’s refusal to accept further goods.
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What did the courts decide?
At first instance, the High Court sided with the supplier. However, the Court of Appeal took a different view on several key issues.
First, it confirmed that where a contract contains cumulative delivery obligations and makes time of the essence, a buyer may be entitled to terminate if the seller fails to meet those obligations. Missing early delivery dates was not a minor issue that could simply be brushed aside. It went to the heart of the bargain.
Secondly, the Court of Appeal held that the supplier could not recover damages for goods that were never actually available for delivery. Under section 50 of the Sale of Goods Act 1979, a seller claiming damages for non-acceptance must show that the goods were ready and available. If the goods do not exist, or cannot be delivered, there is nothing to claim damages for.
Thirdly, the buyer’s argument that it had been misled by statements about production capacity failed. The court found that Uniserve had ultimately relied on its own due diligence rather than the agent’s earlier email. Accordingly, there was no right to rescind the contract for misrepresentation.
Why does this matter outside pandemic contracts?
The importance of this decision extends well beyond face masks and emergency procurement.
Consider a manufacturer that agrees to supply a retailer with a fixed number of products each month ahead of a major product launch. If the contract states that time is of the essence and includes cumulative delivery targets, early delays can quickly undermine the entire commercial purpose of the deal. This case confirms that a buyer does not necessarily have to wait until the final delivery date to act. Repeated or serious failures early on may justify termination.
Another common example is in construction or infrastructure projects where materials are required on a rolling schedule. If a supplier falls behind and cannot catch up to meet cumulative targets, the buyer may face knock-on delays and additional costs. The Court of Appeal’s decision underlines that suppliers cannot assume they will be protected simply because they eventually hope to deliver something later.
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Key lessons for businesses
For buyers, the case is a reminder to pay close attention to delivery clauses. If timely delivery really matters, that should be made explicit in the contract. Clear wording around cumulative obligations and “time being of the essence” can provide valuable protection if things go wrong.
For suppliers, the message is even starker. Delivery schedules are not aspirational. If a contract requires a certain quantity of goods to be available by a certain date, the law may hold the supplier to that promise. Over-optimistic statements about capacity, even if not ultimately treated as misrepresentations, can still lead to serious commercial consequences.
Perhaps the most practical takeaway is this – contracts should reflect reality. Delivery timetables need to be achievable, and capacity claims should be carefully checked before they are made. When they are not, the courts are increasingly willing to enforce the deal as written.
In a world where supply chains remain fragile, this decision is a timely reminder that clarity, realism and precision in commercial contracts are not just good practice – they are essential.