Mark Lawrence reports on contractual rights & expectations
In Durham Tees Valley Airport Limited v bmibaby Limited & Another [2010] EWCA Civ 485, [2010] All ER (D) 57 (May) the Court of Appeal held that budget airline bmibaby had breached its contract with Durham Tees Valley Airport Limited when it ceased flying from the airport in 2006. The judgment raises a number of important issues for litigators relating to:
(i) the certainty and enforceability of contractual terms;
(ii) whether or not a term of “reasonableness” can be implied into contracts; and
(iii) the appropriate measure of damages for repudiatory breach of contract, where the underlying contractual obligations can be performed in more than one way.
Background
The airline had entered into an agreement with the airport operator to establish “a minimum x 2 based aircraft operation” at the airport for 10 years from 2004 (the contract).
However, by 2006 the airline was projecting multi-million pound losses from the contract. By the end of 2006, the airline concluded that these operations were not commercially viable and withdrew all flights
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