Storage firm fails to prove breach of contract

A firm providing storage and distribution services has failed to prove that a commercial client was in breach of contract by not granting it exclusive rights as discussed during negotiations.

The firm had nothing in writing to prove its claim and had to rely on oral agreements which were far from conclusive.

The court heard that the two firms had enjoyed a successful business arrangement for a number of years. Following at meeting in 2010, the storage firm thought they had reached an agreement whereby it would be granted exclusive rights to supply the client’s warehousing and distribution requirements.

However, the client continued its business exactly the same as before, using other providers when it thought necessary.

The storage firm said this amounted to a repudiatory breach of the agreement entitling it to terminate the contract.

The court, however, found in favour of the client. It held that on the evidence, there had been no discussion of exclusivity between the two until one of the client’s directors had already signed the written agreement.

The issue of exclusivity may then have been mentioned but there was no detailed discussion as to what it would mean. Before any such term could have been agreed, the client’s directors and managers would have had to discuss the implications in detail and decide what to do. No such discussions had taken place.

There was no oral agreement about exclusivity and the terms of the contract could not therefore be said to have been breached.

Please contact Clare Jones if you would like more information about the issues raised in this article or any aspect of contract law.