Shico (UK) Limited v Co-Operative Wholesale Society Limited & Anor

An exclusive purchasing obligation must be established as a contractual commitment, not inferred merely from a buyer’s current practice of obtaining all supplies from one source or from an assurance that changes would receive prior notice. Whether discussions objectively created such an obligation depends on the exchanges and their context, including whether the alleged promisor would have accepted the onerous restrictions and whether essential contractual machinery had been agreed. A trial judge may consider the parties’ known attitudes and conduct as part of that objective assessment. Where the judge has carefully evaluated the evidence and made findings open to him, the Court of Appeal will not revisit them on a permission application.

Shico (UK) Limited v Co-Operative Wholesale Society Limited & Anor concerned a contractual dispute about whether the defendants had agreed to purchase all their ladies’ safety footwear exclusively from Shico. The alleged agreement was said to arise from discussions between representatives of the parties, including references to three months’ notice for changes and the fact that the defendants were then obtaining all supplies from Shico.

After a seven-day trial, His Honour Judge Crawford QC delivered judgment on 30 March 2000. Shico applied for permission to appeal, contending that the judge had wrongly relied on subjective evidence and had failed adequately to address the notice issue and a later letter. The renewed application concerned whether the evidence objectively established an exclusive contractual obligation and whether the trial judge’s factual findings were open to him.

Application dismissed. Lord Justice Buxton delivered the judgment, and Mr Justice Bodey agreed. The court unanimously dismissed the renewed application for permission to appeal and ordered the applicant claimant to pay the costs of and incidental to the application.

1. The central issue was whether the parties had agreed an exclusive purchasing term, rather than whether the defendants were in fact purchasing their requirements from Shico at the relevant time. The two situations are legally distinct.
2. The judge was entitled to assess objectively what the parties had communicated and done. In that assessment, the parties’ known attitudes could be relevant evidence. Considering Mr Gilmour’s evidence about his unwillingness to accept an onerous and restrictive obligation did not involve treating subjective belief as the contractual test. It helped explain what an objective observer would have understood from the exchanges.
3. The judge was entitled to find that no exclusive purchase agreement had been held out or created. An exclusive obligation would ordinarily require agreement on matters such as price, volume, quality, delivery times and termination. The absence of such machinery, together with the evidence that a written agreement was contemplated but never made, supported the judge’s conclusion.
4. The references to three months’ notice did not objectively establish an exclusive purchasing commitment. They could relate to changes in range, volume or style, or to termination, and the later correspondence expressly reserved the defendants’ right to consider alternative sources.
5. Whether an agreement had been made was primarily a question of fact. The trial judge had heard the witnesses, evaluated the evidence and reached conclusions that were properly open to him. The Court of Appeal would not go behind those findings.

• Court of Appeal (Civil Division): Lord Justice Schiemann had refused permission to appeal on paper. On renewal, Lord Justice Buxton and Mr Justice Bodey dismissed the application and ordered the applicant claimant to pay the application costs.
• High Court of Justice, Queen’s Bench Division: His Honour Judge Crawford QC delivered judgment on 30 March 2000 following a contractual dispute concerning the alleged exclusive purchasing obligation.