One Fish Company Ltd v Iceland Foods Ltd

In a supply contract, the buyer’s obligation was to purchase a percentage of its annual requirements, not a fixed minimum quantity. No term requiring orders at regular intervals was implied where the contract remained commercially coherent without one. Nor was a term implied requiring the buyer to approve a proposed own-label production facility unless approval could reasonably be withheld.

A contractual requirement that goods come from an approved facility in a specified country could not be varied or waived unilaterally by the supplier. Repudiation and renunciation are assessed objectively, in the context of the parties’ dealings as a whole. Orders placed by a buyer will not ordinarily amount to renunciation merely because the supplier considers compliance difficult.

The claimant supplied frozen salmon fillets to the defendant under a contract novated from an agreement originally made with SNG UK Limited. The contract incorporated the defendant’s purchasing terms, provided for supply from an approved Norwegian facility, and required the defendant to purchase 25% of its annual requirement.

The claimant alleged that the defendant had breached the contract by failing to place orders regularly, refusing approval of a proposed facility, insisting on Norwegian production, and placing impossible orders in September 2014. It accepted the alleged repudiation and claimed damages. The defendant denied breach and counterclaimed for the additional cost of obtaining replacement salmon after accepting the claimant’s repudiation.

The issues included contractual construction, implied terms, variation or waiver, repudiation and renunciation, damages, and the counterclaim.

1. Construction of the quantity obligation. The contract required the defendant to purchase 25% of its requirement for frozen salmon fillets in 2014. It did not require the purchase of a minimum 200 tonnes. The contemporaneous correspondence and the commercial context supported that construction.
2. Implied terms. Applying Marks and Spencer plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd & another [2015] UKSC 72, a term could be implied only if necessary for business efficacy or so obvious that it went without saying. No term requiring orders at regular intervals was necessary or obvious. The contract could operate coherently despite the absence of such a term. The different circumstances in Northern Foods Ltd v Focal Foods Ltd [2001] EWCA Civ 1282 did not justify implication.
3. No term required the defendant to approve a proposed facility unless approval could reasonably be withheld. The defendant was entitled to protect the quality and reputation of its own-label products, provided that it addressed proposals in good faith.
4. Norwegian supply requirement. There had been no variation permitting production in Poland. The requirement for supply from Norway was important to the defendant and was not a term which the claimant could waive unilaterally.
5. Repudiation and renunciation. Applying Spar Shipping AS v Grand China Logistics (Group) Co Ltd [2016] EWCA Civ 982 and Eminence Property Developments Ltd v Heaney [2010] EWCA Civ 1168, the question was objective and concerned the effect of the conduct in context. The defendant was not in breach by failing to place earlier orders or by requiring an approved Norwegian facility. Its September orders, viewed with the surrounding correspondence, demonstrated an intention to perform rather than an intention to repudiate. The claimant’s acceptance of repudiation was therefore itself repudiatory.
6. Outcome. The claim was dismissed. The defendant obtained judgment on its counterclaim for £30,520, together with interest.