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Contractual performance and total failure of consideration
11 February 2016

The recent case of Gartell & Son –v- Yeovil Town Football and Athletic Club Limited (2016) is an interesting example of the normal approach to damages for breach of contract having become distorted by an assertion that there had been a total failure of consideration on the part of the provider of materials and services. 

In this case the claimant contracted to carry out various improvement works to Yeovil Town’s main and training pitches which ultimately failed and were alleged by Yeovil Town to have made the pitches worse than they had been at the commencement of works. The claimant sought payment of the sums claimed in their invoice and Yeovil Town defended the claim alleging among other things that there had been a total failure of consideration due to the fact that the work that the club had contracted to receive was not undertaken with reasonable skill and care in accordance of Section 13 of the Supply of Goods and Services Act 1982, and was in any event incapable of making any improvement to the playing surface of the pitches. In addition the club counterclaimed seeking damages representing the cost of remedial works carried out by third party contractors (Ecosolve) and overtime payments paid to club staff for work on the pitches. 

In the event of breach of contract being found by the court the normal measure of damages would be designed to put the paying party in the position it should have been if the performing party had performed correctly in accordance with its contractual obligations. In a typical situation those damages would be represented by any sums payable to the original supplier and a third party for remedial works over and above those payable to the original supplier under the contract. However in this case Yeovil Town sought and obtained a judgment at first instance whereby the Judge ruled that it was not obliged to pay the claimant anything for its services on the grounds of total failure of consideration, and in addition was entitled to receive from the claimant damages reflecting the invoice of Ecosolve and an element of the overtime payments it had claimed.

The claimant appealed to the Court of Appeal on the grounds firstly that the trial Judge had been wrong to find there was a total failure of consideration in view of the fact that the claimant had carried out the works specified in its quotation. On this point Lord Justice Floyd found against the claimant, stating that the trial Judge was entitled to take the view that what Yeovil Town had bargained for was work which was done with reasonable care and skill and work that was capable of making improvements to the playing surface of the pitches, and that in the circumstances the breaches of contract were so serious that the club had received no part of the contractual performance to which it was entitled.

However the second ground of appeal was that it was wrong for the trial Judge to allow the counterclaim for a sum of damages that was any greater than that required to restore the club to the position it would have been in without performance for the contract. Counsel for the club tried to argue that the works undertaken by Ecosolve did no more than restore the quality of the pitches to the condition that had subsisted before the works undertaken by Gartell, but Lord Justice Floyd was unimpressed by this argument since the evidence indicated that the works undertaken by Ecosolve were designed to achieve an improvement in the pitches. The Appeal Court also found that no evidence had been adduced in support of the overtime element of the counterclaim, and accordingly the net result of the Appeal was that both claim and counterclaim were dismissed.

Given that the original trial lasted 4 days this was an expensive foray into the courts for both parties over relatively modest sums of money, but lawyers considering this Judgment may well reflect on the implications of the use of the concept of total failure of consideration in this case. Firstly the claimant might have been better off not arguing total failure of consideration and simply claiming his lost bargain by way of set off and counterclaim, i.e. the costs of getting the pitches into the improved stated that it had sought in its contract with Gartell less the sums payable to Gartell. Secondly it remains to be seen whether an assertion that services have not been supplied in accordance with the obligation to use reasonable care and skill under Section 13 of the Supply of Goods and Services Act 1982 may be used in the future as a platform for suggesting not only that there has been a breach of contract justifying damages, but a total failure of consideration. One suspects that in reality in this case it is the trial judge’s finding that the treatment proposed by Gartell could not have delivered an improved pitch that was the telling factor allowing him to find there was a total failure of consideration. 

For more information about the issues raised in this article or to find out more about how the Dispute Resolution team can help you please contact Mike Robinson on 0118 952 7206 or email [email protected].

Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.

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