“No Deemed Fulfilment” in English Law: UK Supreme Court rejects Mackay v Dick as a rule of law and confirms Saleform deposits accrue only when express preconditions are satisfied

Introduction

In King Crude Carriers SA & Orsv Ridgebury November LLC and others [2025] UKSC 39, the United Kingdom Supreme Court (“UKSC”) has delivered a landmark judgment for English contract law and commercial practice, especially in shipping and other transactional contexts involving escrow arrangements and certification regimes.

The Court has authoritatively held that the controversial “deemed fulfilment” principle associated with Lord Watson’s speech in the Scottish case of Mackay v Dick (1881) 6 App Cas 251 is not a rule of English law. Where a debtor’s payment obligation is subject to express preconditions, those preconditions are not automatically “treated as fulfilled” merely because the debtor wrongfully prevented their fulfilment. The creditor’s remedy is damages for breach, not a claim in debt, unless the contract expressly provides otherwise.

The dispute arose from three ship sale agreements on the Norwegian Saleform 2012 (with amendments) for the Makronissos, Ridgebury Astari, and Ridgebury Alina L. The buyers failed to provide know-your-client and other documents to the nominated deposit holder (Holman, Fenwick, Willan Greece), so the escrow accounts were never opened, no confirmation was issued, and the 10% deposits were not lodged. The sellers terminated and claimed the deposits as debts, advancing Mackay v Dick. The arbitrators largely agreed, Dias J in the Commercial Court disagreed, the Court of Appeal restored the sellers’ position by recasting Mackay v Dick through “presumed contractual intention,” and the UKSC has now reinstated Dias J.

The Supreme Court also addressed a closely connected issue: whether, under Saleform, the right to the deposit accrues on contract formation (so that escrow mechanics are just “payment machinery”)—and rejected that argument, reaffirming The Blankenstein [1985] 1 WLR 435. The Court found it unnecessary to revisit The Griffon [2014] 1 Lloyd’s Rep 471 on forfeiture because, on the Court’s analysis, the deposits never accrued as debts in the first place.

Summary of the Judgment

Mackay v Dick “deemed fulfilment” is not a principle of English law. English law does not adopt fictions of deemed performance, deemed waiver or quasi-estoppel to bypass express preconditions to payment where the debtor prevents their fulfilment. The remedy lies in damages for breach, not debt, unless the contract clearly says otherwise.
The maxim that a party cannot take advantage of its own wrong is not a universal rule of interpretation. Properly understood, authorities like Rede v Farr, New Zealand Shipping, Cheall v Apex, and Alghussein concern parties relying on their own breach to avoid a contract or to claim a contractual benefit, not purely defensive reliance on contract terms to resist a debt claim. The maxim therefore does not convert a conditional debt into an unconditional one.
No implied term (by business efficacy or obviousness) allows the sellers to treat the escrow preconditions as inapplicable. Attempts to imply terms either rendered the clause unworkable (no account to pay into) or rewrote the bargain (substituting payment to the seller for an escrow). Those are neither necessary nor consistent with the express allocation of risk and benefit in escrow arrangements.
Under Saleform 2012 clause 2, the express preconditions (execution and deposit holder’s written confirmation that the escrow account is opened and ready) are true conditions precedent to the accrual of the deposit debt, not merely to its payability. The deposit right does not accrue until those preconditions are satisfied. The Blankenstein is correct and remains good law.
The sellers’ “accrual on contract formation” argument fails. The phrase “as security for the correct fulfilment of this Agreement” does not sever accrual from payability or recast escrow as “mere machinery.” Where parties intend accrual and payability to diverge, they say so expressly (cf The Dominique [1989] AC 1056; The Karin Vatis [1988] 2 Lloyd’s Rep 330).
Result: appeal allowed; Dias J restored; sellers’ claims in debt fail. The sellers’ remedy (if any) is damages for the buyers’ breach of the co-operation obligation—likely nominal on assumed facts that market values exceeded contract prices at termination.

Detailed Analysis

1) The legal question and its commercial setting

The central issue was framed as follows: Where a party must pay on fulfilment of a precondition and also must perform that precondition, but breaches that obligation, is the precondition deemed fulfilled so that the counterparty can sue for the sum in debt, or is the counterparty confined to damages?

The question arose in a common commercial pattern: escrow deposits under Saleform 2012 clause 2—expressly conditional on (i) the MOA being signed and exchanged, and (ii) written confirmation by the deposit holder that an escrow account is “fully opened and ready to receive funds,” with both parties to provide all documentation “without delay.” The buyers’ failure meant the escrow was never opened and the deposit never fell due under the clause as written.

2) Precedents cited and how the UKSC used them

(a) Authorities relied upon to support “deemed fulfilment”

Hotham v East India Company (1787) 1 TR 639. Ashhurst J allowed a deadfreight claim notwithstanding the charterers’ agents’ failure to issue a certificate, reasoning that the owners had done all they could and the charterers’ default made performance “equal to” fulfilment. The UKSC observed that damages would in any event have been available for the breach, and Hotham does not compel a general rule of debt by deemed fulfilment.
Panamena Europea Navigacion v Leyland [1947] AC 428. Lord Thankerton held that an owner’s surveyor’s wrongful refusal to certify “absolved” the repairers from obtaining that certificate. Again, the Court noted the overlap with damages and that the language of “absolution” shades into fiction; it does not establish a general English rule that a debt accrues by deemed fulfilment.
Cory v London Residuary Body (CA, 1990 WL 753484). Lord Donaldson MR treated the authority as a “quasi-estoppel” preventing reliance on the absence of certification where the certifier in breach did nothing within a reasonable time, imputing accrual before a transfer date. The UKSC characterised this as fictional and context-specific, and not a platform for a general debt rule overriding express conditions.
Companie Noga v Abacha (No 3) [2002] CLC 207. Rix LJ, while acknowledging the conceptual difficulties, invoked Mackay v Dick both for an implied duty to cooperate and to treat a condition (release of freezing orders) as “waived” or “deemed fulfilled.” The UKSC stressed Rix LJ’s own acceptance that these are fictions and that damages for breach could reach the same practical result.

(b) Authorities pointing the other way

Thompson v ASDA-MFI Group plc [1988] 1 Ch 241 (Scott J). Explicitly rejected Mackay v Dick-style “fictional fulfilment” as a principle of English law; English law proceeds by express/implied terms and contractual interpretation. The UKSC endorsed this orientation.
Little v Courage Ltd (1994) 70 P & CR 469 (Millett LJ). Confirmed that the civil law doctrine of fictional fulfilment forms no part of English law; the analysis turned on construction and, in substance, implication of terms fitting the parties’ evident bargain. The UKSC used Little both to resist the “deemed fulfilment” doctrine and to test the sellers’ implied term case here—finding no workable implication.
Colley v Overseas Exporters [1921] 3 KB 302 (McCardie J). Declined to award the price of goods where property had not passed because loading had not occurred due to the buyer’s default. Crucially, the judge warned that applying “deemed fulfilment” to price conditions would have “far-reaching” and “extraordinary” effects. The UKSC treated Colley as strongly inconsistent with any general Mackay v Dick rule and indicative of the mischief of transplanting fictions into accrual rules.

(c) Authorities on the “no advantage of own wrong” principle and its scope

Rede v Farr (1817) 6 M & S 121; New Zealand Shipping v Ateliers [1919] AC 1; Cheall v Apex [1983] 2 AC 180; Alghussein v Eton College [1988] 1 WLR 587. These establish a presumptive rule of construction: absent clear wording, a party cannot rely on its own breach to avoid the contract or to claim a contractual benefit. The UKSC limited the scope of the maxim to such contexts and emphasised that it does not convert a conditional debt into an unconditional one, particularly where the debtor’s reliance is defensive and does not invoke a right to terminate or to obtain a benefit.

(d) Authorities on accrual vs payability and Saleform deposits

The Dominique [1989] AC 1056; The Karin Vatis [1988] 2 Lloyd’s Rep 330. These voyages drew an express distinction: freight “deemed earned” on an event (accrual) but payable later. The UKSC used them to show that where commercial parties mean to separate accrual and payability, they say so. The Saleform text here does not.
The Blankenstein [1985] 1 WLR 435 (CA). The deposit under the then Saleform was payable “on signing” of the MOA; until signing, only damages lay. The UKSC endorsed The Blankenstein, emphasising certainty in standard forms and rejecting the argument that escrow conditions are mere payment mechanics or that the deposit right accrues on contract formation.

3) The Court’s legal reasoning

(a) Six reasons for rejecting Mackay v Dick as an English rule of law

MacKay v Dick rests on a civil law doctrine in Lord Watson’s speech, with no English authorities supporting a general rule of deemed fulfilment.
English authorities are divided; some can be explained by damages rather than debt. There is no coherent, consistently applied English rule of deemed fulfilment.
Colley shows that a general deemed fulfilment principle would disrupt established accrual structures (e.g., payment of price conditioned on passing of property), and it is unclear on what principled basis such a rule could be cut back.
The doctrines advanced—deemed fulfilment, deemed waiver, quasi-estoppel—are fictions. Modern English law strives to avoid fictions in favour of transparent doctrinal reasoning (cf Bentham’s critique; Lord Nicholls in OBG v Allan; Toulson LJ in Forsyth-Grant v Allen).
English law resolves these problems through interpretation and implied terms, respecting the parties’ express allocation of risk and promoting certainty and predictability in commercial contracting.
Denying a debt claim does not produce injustice: the claimant has a damages remedy for breach (subject to mitigation and remoteness). Courts should not strain to award a debt that exceeds the net loss where the contract made accrual conditional.

(b) Why interpretation could not save the sellers

The sellers relied on the “no advantage from own wrong” maxim as an interpretive presumption. The UKSC accepted the line of cases recognising such a presumption but confined it to avoiding termination-by-breach and benefit-seeking cases. Here, buyers relied defensively on the express preconditions to resist a debt claim. The presumption had no purchase. Construing clause 2 to excuse the preconditions in these circumstances would contradict the text; it would read them out of the bargain. Commercial dissatisfaction with the risk allocation does not warrant judicial rewriting.

(c) Why implication of terms failed

The Court tested three formulations of an implied term designed to bypass the buyers’ breach-induced failure to open escrow:

Variants that treat the deposit as due if the deposit holder “would have” confirmed “but for” the buyers’ breach render the clause unworkable—there is no account to pay into.
A variant requiring the buyer to pay the deposit directly to the seller if escrow is frustrated by the buyer rewrites the bargain in a fundamental way, stripping the buyer of escrow protections central to the Saleform regime; it is neither necessary nor obvious, and inconsistent with express terms that require an account “for the Parties” and joint instructions.
Clause 13 already allocates consequences for failure to lodge the deposit: the sellers may cancel and claim compensation. That express allocation stymies implication.

By contrast, in Little v Courage the Court of Appeal could, on the language and commercial logic, interpret/implicate a narrow adjustment fitting the parties’ evident bargain. Nothing similar is available here without wholesale re-engineering of the clause.

(d) Accrual of the Saleform deposit: not “mere machinery”

The sellers’ secondary case argued that the right to the deposit accrues on contract formation and that escrow was merely “machinery of payment.” The UKSC rejected this:

The wording “as security for the correct fulfilment” does not decouple accrual from payability; security can come into existence when the deposit is in fact lodged, and that is what the clause provides.
If parties intend accrual to pre-date payability, they know how to say so (cf freight “earned” on an event). The MOAs do not say this; accrual and payability are concurrent in these forms.
The Blankenstein correctly treated signature (in that version) as a true condition to the deposit becoming due. Here, the additional condition of deposit-holder confirmation is likewise a true condition precedent; escrow is not a trivial payment channel but a central security structure with joint-control and refund protections.
If escrow fails through no fault, the answer is a reasonable implication to arrange alternative escrow, not to deem a direct payment obligation to the seller.

(e) Procedural points

The Court did not need to decide the buyers’ secondary case concerning The Griffon (forfeiture on termination) or jurisdictional Issue 2A, because the deposit never accrued as debt.
The Court permitted the sellers to run Issue 3 (accrual at formation) by way of supporting the order below under Supreme Court Rules r.25(1), noting no prejudice and that it was squarely within the question of law canvassed throughout (“debt or damages?”). On the merits, the sellers’ argument failed.

4) Position of specific authorities after this decision

Mackay v Dick: Lord Blackburn’s implied duty to cooperate remains orthodox English law; Lord Watson’s deemed fulfilment doctrine does not. The Court deliberately left the position in Scotland untouched.
The Blankenstein: approved and followed; deposits under Saleform accrue only when the clause 2 preconditions are met.
The Griffon: not reopened; it remains untouched but, in practice, only becomes relevant if and when a deposit has accrued. If the deposit never accrues, there is nothing to forfeit.
“No advantage of own wrong” cases: remain good law within their proper scope (termination/benefit), but are not a roving license to override express preconditions to a debt.
Abacha, Cory, Panamena, Hotham: should be read cautiously. To the extent the result could be reached by damages, they do not support a general debt-by-deemed-fulfilment principle.

Impact and Implications

(1) Contract drafting and transactional structuring

Conditions precedent to payment mean what they say. If parties want a sum to accrue notwithstanding a counterparty’s prevention, they must say so expressly. Consider clauses such as:
- “If [debtor] wrongfully prevents satisfaction of Condition X, Condition X shall be disregarded for the purposes of accrual and payability of [sum], and [sum] shall be treated as accrued and payable on [date/event].”
- “If escrow cannot be opened due to [debtor]’s breach, [creditor] may (i) nominate an alternative deposit holder; or (ii) require interim lodgement with [escrow agent/escrow substitute/refund-guaranteed account] pending establishment of escrow, without prejudice to [debtor]’s breach and damages.”
Do not assume “anti-prevention” consequences will be implied. Expressly allocate what happens if a party fails to provide KYC, refuses to sign, or frustrates certification.
Escrow is not mere “payment machinery.” If the commercial bargain relies on escrow’s protections (joint instructions, refund pathway on seller’s default), courts will resist recasting it as a simple pay-the-seller obligation.
Where commercial logic requires accrual to be separated from payability, use established words of accrual/earning (“earned on [event]; payable [later]”) to achieve debitum in praesenti, solvendum in futuro.

(2) Litigation and remedies

Creditors prevented from fulfilling a condition by the debtor’s breach should expect damages, not a debt claim, unless the contract expressly says otherwise. This carries consequences for mitigation and remoteness and may yield nominal damages where the market moved favourably (as in this case).
Arguments that “you cannot take advantage of your own wrong” will be tightly policed. They assist where a party seeks to terminate or to claim a benefit by its own breach, but they do not generally remove express preconditions to a debt.
Expect increased focus on whether a precondition is “true accrual” versus “payability” versus “mere machinery.” The Supreme Court’s analysis shows a strong reluctance to reclassify escrow and certification as mere payment mechanics.
In arbitration and first-instance litigation, raise implication arguments early. Appellate courts will expect arbitral tribunals to address business efficacy and officious bystander tests where the industry context matters.

(3) Sectoral effects

Ship sale and purchase: The Blankenstein remains the anchor. Deposits accrue only when the contractually identified clause 2 steps are completed. Sellers who want earlier security must demand it expressly (e.g., deposit on execution, escrow arrangements in place as a signing condition, or a refund-guaranteed seller-held deposit if industry practice permits).
Construction/certification and earn-out mechanisms: Non-issuance of certificates through the payer’s breach will not ordinarily transmute a conditional sum into a debt. Damages remain the primary remedy unless the contract decouples accrual and payability or contains express anti-prevention language.
Options, bonus schemes, and contingent payments: Thompson v ASDA-MFI and Little v Courage are reaffirmed in spirit. English law prefers construction and implication over fictions. Draft for the improbable (what if the certifier does nothing? what if KYC is refused?).
Scots law: The position in Scotland is expressly left open; this judgment speaks only to English law. Cross-border deals should address conflict-of-laws consequences and tailor clauses accordingly.

Complex Concepts Simplified

Deemed fulfilment: A “fiction” that treats a condition as satisfied where the obligor’s breach prevented its fulfilment. The UKSC rejects this as a rule of English law.
Condition precedent to a debt vs machinery of payment:
- Condition precedent to debt accrual: An event must occur before the debt exists at all (e.g., escrow confirmation).
- Payability condition: The debt exists but is payable later upon an event (e.g., freight “earned” on loading, payable on surrender of bills).
- Machinery of payment: The logistics of moving the money, not the existence of the debt. The Court held escrow here was not mere machinery.
Debt vs damages:
- Debt: A sum promised under the contract, claimable irrespective of loss; no mitigation; limited defences.
- Damages: Compensation putting the claimant in the position as if the contract had been performed; subject to mitigation and remoteness; may be nominal if no loss.
“No advantage from own wrong”:
- A presumption of construction that a party cannot rely on its own breach to avoid a contract or to claim a contractual benefit—unless the contract clearly provides otherwise.
- Not a general principle overriding express conditions to the accrual of payment obligations.
Implied term tests (Marks and Spencer v BNP Paribas):
- Business efficacy: Is the term necessary to make the contract work?
- Officious bystander: Would both parties have answered “of course” if the proposed term were suggested at the time of contracting?
- Consistency constraint: No implied term that contradicts express terms or rewrites the bargain.
Duty to cooperate (Lord Blackburn in Mackay v Dick): Parties must do what is necessary on their side to enable performance of the contract. Breach of that duty sounds in damages, not automatic debt.
Debitum in praesenti, solvendum in futuro: A debt accrued now but payable later. Parties must clearly draft to achieve this separation.

Conclusion

King Crude Carriers confirms a significant and clarifying recalibration of English contract law at the intersection of conditions precedent and payment obligations:

The “deemed fulfilment” limb of Mackay v Dick is not a rule of English law. English law eschews fictions in favour of the parties’ words, interpreted contextually, and implied terms that meet demanding tests.
The “no advantage of own wrong” principle remains a limited rule of construction applicable to reliance on breach to avoid a contract or to claim a benefit, not a general solvent of express preconditions to payment.
Saleform deposits accrue only when clause 2 preconditions are satisfied. Escrow is a substantive risk-allocation device, not mere payment plumbing.
Where a debtor prevents a condition to payment, the creditor’s primary remedy is damages. If commercial parties want debt to accrue despite prevention, they must draft for that outcome expressly.
The decision promotes certainty and predictability, particularly in standard-form markets, and it encourages careful drafting to address foreseeable “prevention” scenarios without reliance on legal fictions.

The Supreme Court allowed the appeal and restored Dias J’s order: no debt claim lay for the deposits; the sellers are confined to damages for breach of the buyers’ co-operation obligations. The decision reaffirms freedom of contract and textual fidelity, with immediate ramifications for escrow-heavy transactions, certification-based payment regimes, and standard form practices across the commercial landscape.