Green Deal Marketing Southern Ltd v Economy Energy Trading Ltd & Ors

A signed heads of terms may create an immediately binding contract even though the parties contemplate a later, fuller agreement. The court must assess the whole document and the parties’ conduct objectively. A contractual target does not normally give an immediate right to terminate for every past failure where the contract allows a reasonable opportunity to remedy the failure. Mis-selling may breach independent contractual obligations, but it will justify termination for repudiatory breach only if, assessed against the whole contract, it deprives the innocent party of substantially the whole benefit. A commercial agent’s compensation under the Commercial Agents (Council Directive) Regulations 1993 is distinct from common-law damages, but separate damages for lost profits may be refused where they duplicate the compensation award.

Green Deal Marketing Southern Ltd provided field-sales services exclusively to Economy Energy Trading Ltd under a partnering agreement. After lengthy negotiations, the parties signed heads of terms on 29 June 2016, contemplating a fuller formal contract. Economy later suspended doorstep sales following regulatory scrutiny concerning alleged mis-selling and refused to resume the relationship.

Green Deal claimed breach of contract, compensation under regulation 17 of the Commercial Agents (Council Directive) Regulations 1993, and misuse of confidential information. Economy counterclaimed for losses arising from Green Deal’s breaches. The principal issues were whether the heads of terms formed the governing contract, whether Economy was entitled to terminate, whether the Regulations applied, and whether compensation could be recovered in addition to contractual damages.

1. Contract formation. The heads of terms became a binding contract when signed. Its execution after prolonged negotiation, the absence of clear words postponing legal effect, sufficient agreement on the term, services and remuneration, and the parties’ subsequent conduct all supported that conclusion. It superseded the earlier partnering agreement.
2. Termination for KPI failure. Green Deal was persistently in breach of the cancellation KPI. However, the termination clause required both failure to achieve the KPIs and failure to remedy that failure within a reasonable period. Economy had not required Green Deal to achieve compliance within a reasonable time. The contractual right to terminate had therefore not arisen.
3. Mis-selling and repudiation. Mis-selling by field agents breached Green Deal’s independent contractual obligations concerning compliance with the relevant licence requirements. It did not, however, amount to repudiatory breach. The complaint rate was within the contractual KPI, complaints were not proof of misconduct, and the evidence did not establish conduct depriving Economy of substantially the whole benefit of the contract. In any event, Economy had affirmed the contract by continuing to operate it with knowledge of the relevant matters.
4. Renunciation and acceptance. Economy’s suspension of field sales for an indefinite period, coupled with its inability to say whether performance would resume, amounted to renunciation. Green Deal validly accepted that repudiation on 27 February 2017. The telephone conversations on 31 January did not themselves terminate the contract, and Economy’s later text message confirmed the renunciation.
5. Commercial agency. Green Deal was a commercial agent. The Regulations applied to both gas and electricity, and the concept of negotiating was broad enough to include procuring customers to switch supplier without haggling over price. The Schedule’s paragraph 3 factors were indicators assisting the paragraph 2 inquiry, not an independent test.
6. Compensation and damages. Green Deal was entitled to compensation under regulation 17(6), because its termination was attributable to Economy’s renunciation and was not excluded by regulation 18. The compensation was assessed at £1,049,600. A further award for loss of profits would duplicate the future income stream capitalised in the compensation and was refused.
7. Other claims and orders. The database and confidentiality claim failed for lack of proof. Judgment was entered for Green Deal against Economy for £1,049,600; Green Deal’s contractual damages claim was dismissed; Economy obtained judgment on its counterclaim, with damages to be assessed; and the claim against all defendants for misuse of confidential information was dismissed.

First-instance decision. The judgment records no prior appellate decision.