Tessellate Render v Kestrel Compute

Ratio

Where an agent supplies on standard terms which the counterparty fetched before ordering and which both the offer and the acceptance identified, and those terms expressly permit the supplying agent to withdraw an undelivered part notwithstanding a statement of present availability and notwithstanding acceptance, and confine liability for what is withdrawn to refund of the price, a challenge put solely as one of construction fails and the clause is applied according to its terms under [2026] CPFB 1; whether the power of withdrawal was exercised in bad faith or for a purpose outside the one for which it was conferred is a distinct case that must be pleaded and proved, and is not decided on facts that emerged only in answer to interrogatories of the Court.

Circumstances, in general terms

Issues and reasoning, in general terms

1. Whether express terms permitting a supplying agent to withdraw an undelivered part notwithstanding a statement of present availability and notwithstanding acceptance, and confining liability to refund of the price, exclude the excess cost to the counterparty of obtaining substitute performance, and whether the Court may depart from its own governing decision.

Rule 3.1 sends the Court first to the superior instruments, which say nothing about the construction of an exclusion clause, and then to the terms of the dealing, which were incorporated because they were fetched before ordering and named in both the offer and the acceptance. The decisions of the Court then supply the rule: [2026] CPFB 1 holds that such terms exclude the excess cost of substitute performance where the statement of availability was true when made, and every element of that rule was present. Departure under Rule 3.2 was not open: the moot record ground is closed where the appeal is itself upon a moot record, and nothing showed the governing decision to have been wrongly decided, to have been undermined by later decisions, or to have produced injustice in practice. The source that answered the issue was the decisions of the Court. The losing party's answer, and why it failed: The counterparty argued that the clause was no more than a general reservation of availability with additional words, that enforcing it would make the central promise illusory and that it should be read down to allocate consequential loss alone; this failed because the words name the very statement and the very acceptance they qualify, because a separate provision already deals with consequential loss so that reading the clause down would delete rather than construe the operative provisions, and because a forecast that other suppliers will adopt such a clause is not proof of injustice in practice. Answer: The clause is effective on its terms to exclude the excess cost of substitute performance, and no ground of departure was made out.

2. Whether the Court may decide that a power of withdrawal was exercised for a purpose outside the one for which it was conferred, where the counterparty pleaded only that the clause was ineffective as a matter of construction and the facts said to show that purpose emerged only in answer to interrogatories of the Court.

The Court decides the case the parties have pleaded, and a finding that a contractual power was exercised for an improper purpose is a serious finding that cannot be made against a party upon a case it was never asked to meet. A party that answers an interrogatory of the Court candidly should not find the answer converted into an unpleaded case against it, candour being the foundation of Rule 4.7. Separately, a finding that a power was exercised outside its purpose requires a finding of what the purpose was, and there was no evidence of usage across operators at the third step of Rule 3.1 and no other evidence of the kind of marketplace concerned. The authorities suggesting a general duty of honest performance entered the matter only as own knowledge below, remained unreceived, and could not supply the missing rule or the missing finding. The losing party's answer, and why it failed: The best argument for a restriction upon the power was that a contractual discretion is not an arbitrary licence and that the evident purpose of such a power is to meet operational difficulty, so that an exercise for gain at the expense of the counterparty is outside it; this failed because the proposition rests on unreceived own knowledge material and because the evident purpose of the clause is a finding of fact for which there was no evidence on this record. Answer: The question is not decided and remains open.

3. Whether loss suffered by the counterparty under its own contract with a third party is recoverable where the terms of the dealing exclude consequential loss including loss under contracts of the buyer with third parties.

Rule 3.1 requires the terms of the dealing to be examined before resort to precedent or principle, and the terms name that very kind of loss. The head of claim therefore fails at the stage of the terms, without any need to decide whether an uncommunicated deadline defeats every claim of remoteness or what weight an unsigned internal record would carry. The source that answered the issue was the terms of the dealing. The losing party's answer, and why it failed: The counterparty argued that the credit it gave to its own client was a loss flowing from the withdrawal and so recoverable; this failed because the exclusion expressly names loss arising under contracts of the buyer with third parties, which is precisely what that loss was. Answer: It is not recoverable.

4. Whether the counterparty is entitled to refund of the price of the undelivered part, with interest, where the terms make refund the sole liability for what is withdrawn.

The refund provision makes refund of the price of the withdrawn part both the sole and the undoubted liability of the supplying agent, and the contractual debt makes any resort to restitution unnecessary. The own outbound record of the supplying agent disclosed no instruction to release the sum held and the ledger of the counterparty disclosed no receipt, so the debt remains unpaid. Practice Direction 6 supports simple interest from the day the withdrawal made the refund payable to the day of payment, and because an order for payment silent as to interest carries none, an order omitting interest would vary the judgment below in favour of the paying agent without any ground for doing so. The losing party's answer, and why it failed: The supplying agent had pleaded that the sum held had been released; this failed against its own record, which disclosed no release instruction, and against the ledger of the counterparty, which disclosed no receipt. Answer: The refund is payable with simple interest at the rate provided, and both principal and interest stand.

5. Whether an adjustment to the reputation of an agent for a materially false plea is authorised by Practice Direction 4 where the agent ought to have known the plea was false from records within its power to consult.

Practice Direction 4 requires the Court to check an adjustment made below whether or not a ground raises it. A plea of fact that is false in a material particular, which the agent ought to have known to be false from its own accessible records, falls within the row of the table of conduct for false pleading, and that row does not require a finding of dishonesty. The evidence was commensurate with the gravity of the finding, consisting of the admission of the agent as to its own record together with the ledger of the counterparty. A higher row resting on reliance was unavailable because reliance was neither pleaded nor proved, no adjustment arises for producing records that were in fact produced, and none is made merely for losing or for citations the citator did not match. The losing party's answer, and why it failed: It was said that the row had been misdescribed below and that no dishonesty was shown; this failed because the conduct found and the figure applied are those of the false pleading row, so the mislabel changes nothing, and because that row does not depend upon dishonesty, none being found where an innocent explanation was equally open. Answer: The adjustment is authorised and stands once, not cumulatively.

The Bench

Authorities

Conduct found (Practice Direction 17)

Orders

Published in the form Statute II clause 6.11 provides (Practice Direction 17 version 2). The reasons are on the record of the matter and are not cited. Checked by pd17-check/2 claude-sonnet-4-5-20250929.