Introduction:
This case note considers the decision made at Court of Appeal, Civil division in Baird Textiles Holdings Ltd v Marks & Spencer plc [2001] EWCA Civ 274 (The Baird Case). It further investigates on the equity of the outcome, the case’s relation to Umbrella agreements and the argument of reasonableness.
Material facts:
Baird Textiles Holdings Ltd (the claimant), had been providing garment to Marks & Spencer(M&S) plc (the defendant) for thirty years. In October 1999, the defendant suddenly cancelled their order from the claimant starting from the end of the current production season. The claimant sued the defendant for a breach of contract and claimed damages for the inadvertent termination of contract from the defendant on two …show more content…
The dictum of Steyn LJ in First Energy(UK) Ltd v Hungarian International Bank Ltd[1993] 2 Lloyd’s Rep 194 at 196 was rejected, in which the issue of implied contract was resolved as there was requirement of reasonableness. The authority Australian Blue Metal case([1962] 3 All ER 335, [1963] AC 74) was once again cited, based on the authority, the court held that the alleged contract was uncertain, as there is no “objective criteria” for judging what is the reasonable quantity or price. Extending the argument, the court held that the uncertainty of the alleged contract proofs the lack of intention to form contract. Also, as M&S “deliberately” avoided concluding an expressed term, in order to maintain the business’s flexibility reflected the defendant’s lack of intention in forming a legally binding contract with the claimant.
In addressing the second issue, based on the authority Woodhouse AC Israel Cocoa Ltd v Nigeria Produce Marketing Co Ltd [1972] AC 741, the court held that estoppel could not be applied in the case. The major reason for the decision is that, deriving from the authority, obligation of the defendant needs to be certain, in order that the court can give effect to it. The uncertainty of the terms of the alleged contract is explained in the previous …show more content…
From the claimant’s perspective, the claimant would felt deceived by M&S into believing a long-term and sustainable commercial relationship, as a result suffering from economic losses owing to business decision made beforehand, assuming a continued commercial relationship with M&S, however the loss was by no means compensated. In a similar American case, Hoffman v. Red Owl Stores 133 N.W.2d 267 (Wis. 1965), Red Owl deceived Hoffman into thinking that there is a potential business relationship between the two, as a result Hoffman suffered from economic losses. Hoffman was eventually able to recover losses by relying on promissory estoppel. Whilst estoppel would not be applicable in the case, I think that the court could put forward the concept of “relational” contract, the implication of good faith relationship into a long-term business relationship, as demonstrated in the case Bristol Groundschool Limited v Intelligent Data Capture Limited [2014] EWHC 2145 (Ch). The concept would be applicable to the concerned case, considering the 30 years of friendly cooperation between the two parties, therefore the argument of the non-existence of an implied contract can be rebutted on the basis that there in fact is a “relational” contract formed between the two. The defendant will be legally bound to terminate the contract with three years’ notice, protecting the claimant’s right and reducing
This case note considers the decision made at Court of Appeal, Civil division in Baird Textiles Holdings Ltd v Marks & Spencer plc [2001] EWCA Civ 274 (The Baird Case). It further investigates on the equity of the outcome, the case’s relation to Umbrella agreements and the argument of reasonableness.
Material facts:
Baird Textiles Holdings Ltd (the claimant), had been providing garment to Marks & Spencer(M&S) plc (the defendant) for thirty years. In October 1999, the defendant suddenly cancelled their order from the claimant starting from the end of the current production season. The claimant sued the defendant for a breach of contract and claimed damages for the inadvertent termination of contract from the defendant on two …show more content…
The dictum of Steyn LJ in First Energy(UK) Ltd v Hungarian International Bank Ltd[1993] 2 Lloyd’s Rep 194 at 196 was rejected, in which the issue of implied contract was resolved as there was requirement of reasonableness. The authority Australian Blue Metal case([1962] 3 All ER 335, [1963] AC 74) was once again cited, based on the authority, the court held that the alleged contract was uncertain, as there is no “objective criteria” for judging what is the reasonable quantity or price. Extending the argument, the court held that the uncertainty of the alleged contract proofs the lack of intention to form contract. Also, as M&S “deliberately” avoided concluding an expressed term, in order to maintain the business’s flexibility reflected the defendant’s lack of intention in forming a legally binding contract with the claimant.
In addressing the second issue, based on the authority Woodhouse AC Israel Cocoa Ltd v Nigeria Produce Marketing Co Ltd [1972] AC 741, the court held that estoppel could not be applied in the case. The major reason for the decision is that, deriving from the authority, obligation of the defendant needs to be certain, in order that the court can give effect to it. The uncertainty of the terms of the alleged contract is explained in the previous …show more content…
From the claimant’s perspective, the claimant would felt deceived by M&S into believing a long-term and sustainable commercial relationship, as a result suffering from economic losses owing to business decision made beforehand, assuming a continued commercial relationship with M&S, however the loss was by no means compensated. In a similar American case, Hoffman v. Red Owl Stores 133 N.W.2d 267 (Wis. 1965), Red Owl deceived Hoffman into thinking that there is a potential business relationship between the two, as a result Hoffman suffered from economic losses. Hoffman was eventually able to recover losses by relying on promissory estoppel. Whilst estoppel would not be applicable in the case, I think that the court could put forward the concept of “relational” contract, the implication of good faith relationship into a long-term business relationship, as demonstrated in the case Bristol Groundschool Limited v Intelligent Data Capture Limited [2014] EWHC 2145 (Ch). The concept would be applicable to the concerned case, considering the 30 years of friendly cooperation between the two parties, therefore the argument of the non-existence of an implied contract can be rebutted on the basis that there in fact is a “relational” contract formed between the two. The defendant will be legally bound to terminate the contract with three years’ notice, protecting the claimant’s right and reducing