Verizon UK Ltd v Swiftnet Ltd

A contractual pricing schedule confirmed by the parties governs telecommunications charges unless a different rate is agreed. An oral agreement for a discounted rate may be binding even where the customer was asked to confirm it in writing; the writing may be evidential rather than a contractual condition. A term requiring accurate invoices will not be implied for business efficacy where the contract operates without it, or for obviousness where the term cannot be said to go without saying. Damages for wasted management time require significant disruption, and consequential losses must satisfy ordinary remoteness principles.

The claimant telecommunications network operator sought payment of unpaid invoices arising from services supplied to the defendant telecommunications services provider under a Wholesale Master Services Agreement. The defendant disputed the applicable rates, alleged that discounted rates had been agreed, and counterclaimed for repayment, management time, accountancy costs and damage to creditworthiness.

The court determined the applicable rates for the GIS, Direct and Indirect Accounts; whether oral discounted rates were binding; whether an implied term required accurate invoices; whether the alleged breach caused significant business disruption; whether the counterclaim was defeated by estoppel; and whether the claimed consequential losses were too remote. An agreed amount remained payable in respect of Israeli traffic.

1. GIS Account. The applicable rates were those in the February 2004 Pricing Schedule. They had been expressly confirmed by Swiftnet in February 2005, and the earlier use of a December 2003 schedule to calculate a credit for an earlier period did not displace that confirmation. MCI’s claim on the GIS Account therefore succeeded.
2. Direct and Indirect Accounts. The applicable rate cards governed unless a special rate was agreed for a particular destination and month. A special rate could subsequently be superseded by a new rate card unless renewed or replaced. Swiftnet failed to prove that the special rates alleged by it had been offered or agreed. The documentary evidence and witness evidence instead showed that any genuine offers would ordinarily have been recorded in emails.
3. Oral agreements. Although this issue did not arise on the facts, an oral agreement for a special rate would have been binding. MCI’s preference for written confirmation did not establish a contractual arrangement excluding oral agreements. Failure to confirm an agreement in writing could create evidential difficulty, but did not prevent contractual effect.
4. Implied term. No term requiring MCI to issue invoices accurately reflecting agreed rates was implied. The agreement was capable of operating without it, so the business-efficacy basis failed. The term was not so obvious at the time of contracting that it went without saying. The conclusion was also consistent with Concord Trust v The Law Debenture Trust Corporation [2005] 1 W.L.R. 1591 and Borealis AB v Stargas Ltd [2002] A.C. 205.
5. Alternative issues. Even if there had been a breach, Swiftnet did not prove significant disruption of its business or the claimed 15 hours of management time per invoice. The counterclaim was not defeated by estoppel, but the claimed accountancy and creditworthiness losses were too remote and, in substance, appeared to have been suffered by Swiftnet’s parent company.
6. MCI’s claim succeeded. Swiftnet’s counterclaim failed except in respect of the agreed Israeli traffic amount. The parties were invited to agree quantum, interest, the order and costs.