Jurisdiction(s):
United Kingdom

Chugga Chugg v Privinvest: English Commercial Court on conditional termination not renunciation, affirmation by conduct, and 'see to it' guarantees; breaches contested until arbitration concludes

Published on: 22 May 2025

Published by a LexisNexis Commercial expert

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Article summary

Chugga Chugg Pty Ltd v Privinvest Holding Sal [2025] EWHC 585 (Comm)

What are the practical implications of this case?

This decision offers practical guidance for businesses negotiating termination or handling guarantees:

Advisers should urge clients to record, in clear terms, any conversations about possible termination, and ensure exploratory exchanges are expressly labelled as such. The judgment shows that mooting a consensual termination subject to price does not amount to renunciation. Mrs Justice Dias stressed that only a ‘clear, absolute and unequivocal’ refusal to perform qualifies. The standard is objective: viewed through the reasonable eyes of the innocent party, did the other side plainly signal an unwillingness or inability to perform, irrespective of its subjective intentions? Simply indicating a willingness to terminate if the figures work is not enough
When faced with an alleged renunciation, innocent parties must act promptly to affirm or bring the contract to an end. The court confirmed that carrying on performance, even to a limited extent, without reserving rights, may constitute affirmation. Even acts described as ‘peripheral and inconsequential’—for example fixing meetings or sending progress updates—can support a finding of affirmation unless accompanied by a reservation of rights

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