As they threatened from the start, summarily dumped M&S knitwear supplier Baird duly sued the retailer for breach of contract and on an estoppel argument.
Topic: Contract
Who: Marks & Spencer Plc and Baird Textile Holdings Ltd
When: June 2000
Where: London High Court
What happened:
As they threatened from the start, summarily dumped M&S knitwear supplier Baird duly sued the retailer for breach of contract and on an estoppel argument. In the absence of any formal contract, the factual basis of both claims was the long Baird/M&S relationship, the semi partnership way in which they worked together and M&S’s knowledge of Baird’s substantial investment in manufacturing plant, personnel etc to enable it to meet M&S’s orders. The contract argument was that the court should imply into the relationship a term entitling Baird to reasonable notice of termination. The estoppel line was that having led Baird to invest in the systems required to meet their regular, large-scale orders, M&S were estopped from finishing the relationship by less than three years’ notice.
M&S applied for a quick judgement throwing out Baird’s claims on the basis that they were patently unsustainable. Perhaps surprisingly the Judge agreed with the retailer on the implied notice argument, saying that the terms argued were too vague and it was impossible to infer from the conduct that it was the common intention of the parties to create a contract entitling Baird to reasonable notice.
On the estoppel argument, however, Morison J could not exclude the possibility of Baird succeeding, although he felt they were on the limits of the doctrine. So the case continues on that basis alone.
Why this matters:
Marketing services suppliers without written contracts with their clients giving them a clear right to notice of termination have historically taken comfort from case law suggesting that, depending on the facts, the courts will be ready to imply such a notice entitlement into the contract. Although in a different factual context and dealing with different deliverables, this case shows quite clearly that suppliers should not necessarily put too much store by implied notice arguments and should get that written contract allowing termination on eg 6 months notice signed instead.
