Delayed performance and failed renegotiations: key lessons from the case of UK Global HealthCare Limited v Secretary of State for Health and Social Care

The judgement of Mr Justice Constable in UK Global HealthCare Limited v Secretary of State for Health and Social Care [2026] EWHC 561 offers a helpful illustration of the legal issues that can arise when performance is delayed and attempts to agree revised terms break down. 

The decision concerns the Defendant’s application for summary judgement on its counterclaim in which it sought a refund of £15,350,000 following the Claimant’s failure to deliver medical gloves during the Covid-19 pandemic. In dismissing the application, the Court held that although the Claimant had failed to deliver the gloves, there remained a realistic prospect that it would be able to show at trial that the Defendant had prevented performance by attempting to expand the scope of the contract in a way that threatened timely delivery and by its subsequent unlawful rejection of the goods. The Court also found an arguable case that, through representations made during efforts to agree a contractual variation, the Defendant had waived its contractual rights and was therefore estopped from insisting on delivery by the originally agreed deadlines.

The decision highlights how demands for additional performance outside the scope of an existing contract, when followed by delays and unsuccessful attempts at negotiating a variation, can result in significant uncertainty and expose parties to substantial legal risk.

Background

The Claimant (“UKGH”) is a medical company specialising in the international provision of healthcare facilities and medical equipment. The Defendant (“DHSC”) was a ministerial department responsible for procuring medical supplies for use by the NHS during the COVID-19 pandemic. The dispute arose out of two contracts entered into by the parties in May and June 2020 for the supply of 320 million medical-grade gloves, for which DHSC made an upfront payment of £15,350,000. Both contracts expressly stated that ‘time was of the essence’ and they specified fixed dates by which UKGH was required to deliver the gloves.

No gloves were ever delivered by UKGH. DHSC sought to terminate the contracts, asserting that the gloves offered by UKGH did not meet the required standards and that the agreed delivery dates had failed to be met. DHSC further argued that the contracts had subsequently expired and that, in any event, it was entitled to a refund of the £15,350,000 advance under a clause providing for such repayment. 

UKGH contended in response that DHSC had unlawfully prevented delivery of the gloves by insisting on standards and testing that was outside the scope of the contract and by wrongfully rejecting the goods on the basis of flawed laboratory tests. Although no gloves were ultimately delivered, UKGH maintained that it had remained ready and willing to supply them. It therefore argued that DHSC was in repudiatory breach of the contracts, entitling UKGH to claim £11.3 million in damages for lost profits arising from other cancelled supply agreements.

Waiver, estoppel and the ‘no oral modification’ and ‘no waiver’ clauses

A central issue in the dispute was whether the original delivery dates specified in the contracts remained binding on the parties. 

UKGH argued that DHSC had either waived the requirement for delivery by the specified dates, or was otherwise estopped from demanding performance in accordance with those dates because of representations made by DHSC to the effect that additional testing of the gloves was required, and that it ‘made total sense’ for the delivery dates to be extended as a result. 

In response, DHSC relied on a ‘no oral modification’ clause which required any variation to the contract to be made in writing and be signed by both parties. With reference to the decision in MWB Business Exchange v Rock Advertising [2019] AC 119, DHSC argued that no valid contractual variation had occurred and that UKGH therefore remained bound to deliver the goods by the dates specified. DHSC also relied on a ‘no wavier’ clause which provided that a failure or delay by either party in enforcing its rights would not constitute a waiver of those rights.

However, in rejecting DHSC’s application for summary judgement, Mr Justice Constable held that although no contractual variation had been agreed, UKGH nonetheless had a realistic prospect of establishing at trial either that DHSC had waived its right to insist on strict compliance with the contractual delivery dates or was otherwise estopped from enforcing those original deadlines. The Court noted that DHSC had demanded additional testing that fell outside the scope of the original contract, and that both parties had recognised that the delivery deadlines would need to be extended to accommodate the pre-delivery testing, with a formal variation being considered “under process” at the time of the purported termination. 

Despite the presence of ‘no oral modification’ and ‘no waiver’ clauses, the Court found that the communications surrounding the attempts to renegotiate the contract went beyond a mere informal promise to revise the terms and amounted to representations that DHSC would not insist on delivery in accordance with the original contracts.

The Prevention Principle

The decision also provides a helpful illustration of the prevention principle, which holds that a party cannot insist on the performance of a contractual obligation where it has itself prevented the other party from fulfilling that obligation. 

UKGH argued that DHSC’s insistence on pre-shipment testing outside the scope of the contracts made it impossible to meet the original delivery deadlines. The Court noted that DHSC’s representatives had informed UKGH at the time that the supply of the goods was ‘stuck’ and would not be accepted until the additional testing had been completed. The contracts did not contain any express mechanism for extending the delivery dates to accommodate such testing. On that basis, the Court considered it at least arguable that the prevention principle applied so as not to allow DHSC to rely upon its unlawful demands for additional testing and rejection of the goods. If established at trial, this would mean that DHSC’s demands for additional testing would have resulted in the delivery dates being ‘at large’, and time no longer being of essence, with the goods only to be delivered by UKGH within a reasonable timeframe.

A related principle also informed the Court’s approach to DHSC’s alternative argument that the contracts required a refund upon expiry, irrespective of the validity of its earlier rejection of the goods or purported termination. The relevant clause required the supplier to reimburse any advance payments for goods “not delivered at the date of expiry”. As no gloves had been delivered, DHSC argued that this provision entitled it to a full refund.

However, the Court was reluctant to adopt such a “mechanistic” interpretation of the clause, preferring instead to apply the prevention principle of interpretation, under which a contract should, so far as possible, be construed to avoid permitting a party to benefit from its own breach. Applying this principle, the Court reasoned that it would be an “exceptional construction” to allow DHSC to recover the advance payments under the clause if DHSC itself had caused the non‑delivery through a wrongful rejection of the goods.

The right to reject the goods

The main factual dispute centred on the testing carried out on the gloves. DHSC rejected the goods on the basis that they failed to meet the required standards following initial pre‑delivery testing. UKGH, however, produced evidence showing that the same model of gloves had passed testing at ten independent laboratories over a four year period. UKGH raised serious concerns about the methodology used in DHSC’s testing, including allegations of inadequate sample sizes and a lack of proper verification of the results. This was therefore a key factual issue in dispute which needed to be tested at trial. In particular, Mr Justice Constable held that there was a reasonable prospect of UKGH demonstrating on the evidence that the testing performed by DHSC was “fundamentally flawed”, such that the termination was unlawful and UKGH was entitled to recover any resulting losses.

Key Lessons

1. Be cautious when making extra‑contractual demands or seeking to renegotiate a contract: The case illustrates that when a party seeks performance beyond the original contractual obligations it risks waiving its right to strict compliance. It can be a difficult balancing exercise to seek to re-negotiate the contract while maintaining your position. Parties should therefore take care during discussions to ensure they are not inadvertently relinquishing rights under the original contract, and should expressly reserve the right to insist on strict performance in accordance with the agreed terms.
2. ‘No oral modification’ and ‘no waiver’ clauses are not infallible: Although, such clauses are designed to promote contractual certainty they are not absolute. In this case the Court was prepared to look beyond their strict wording and found that, despite the absence of any formally agreed variation, the parties’ conduct and their communications indicated that they were no longer relying on the original delivery terms.
3. Managing delivery of the contract: When confronted with a supplier’s non-compliance, a party should make it consistently clear that full performance is expected. Otherwise, the Court may conclude that a common assumption has arisen that strict performance is not required. Conversely, where a supplier is faced with demands that fall outside the scope of the contract, the safer course is generally to continue performing its existing obligations unless and until a formal variation is agreed. Otherwise, if the supplier awaits the outcome of the renegotiations the supplier, it may be forced to rely on uncertain estoppel arguments to defend against allegations of non‑performance.
4. Right to reject goods: In supply contracts, it is important to specify clearly the grounds on which goods may be rejected. If a party intends to rely on pre-delivery testing as a basis for rejection, then the contract should clearly set out the testing requirements in detail, including the applicable standards, methodology and the organisation responsible for performing the tests. Clear contractual provisions reduce the risk of disputes and minimise the need to reply on implied terms as to quality or suitability of the goods.

While the decision in this case was made on an application for summary judgement and the parties will have to await a full trial for the final outcome, it nevertheless indicates the growing willingness of commercially minded courts to carefully review the post contractual communications between the parties when determining their respective rights and obligations. It is therefore essential that communications exchanged during the performance, and any attempted renegotiation of contract terms, are carefully managed in order to avoid inadvertently waiving or compromising legal rights.