Alison Jayne Cooper v Dnata Catering Services Limited

A commercial framework agreement may be established from the parties’ intended arrangement and the way it operated. Subsequent conduct may assist in identifying what was agreed, although it cannot generally be used to construe an already complete written contract.

Contractual terms are implied only where necessary to give business efficacy or so obvious that they go without saying. Fairness, reasonableness, commercial disadvantage or hindsight are insufficient. In a volatile industry, a supplier may bear the risk of early termination where the contract does not allocate that risk to the customer.

A loss-of-chance claim requires proof of the claimant’s own hypothetical conduct on the balance of probabilities, but only a real and substantial chance of the relevant third-party conduct. Where several contingencies are required, the overall chance must be assessed cumulatively.

The claimant was the minority shareholder and managing director of En Route International Ltd. The defendant was its majority shareholder. The claimant alleged that the defendant breached a shareholders’ agreement by failing to protect her interests in relation to the early termination of a snack-box supply arrangement with Emirates Airline and the attempted recovery of Dubai import duty.

She claimed that these matters would have increased En Route’s earnings before interest and tax and therefore the price payable for shares acquired under put options. The issues included the contractual nature and terms of the snack-box arrangement, whether terms should be implied requiring continued supply, whether an independently operated En Route would have pursued compensation, and whether the import-duty recovery involved a sufficient loss of chance.

1. Snack-box arrangement. The parties had made a framework agreement. En Route undertook to supply snack boxes, at prices agreed with the airline, to the airline’s caterers when they placed orders. The airline agreed to direct its caterers to purchase the required boxes from En Route. The arrangement was established by the parties’ intended structure and its operation in practice. The defendant’s case that there were only ad hoc contracts was rejected. Subsequent conduct was relevant to determining what had been agreed, as explained in Great North Eastern Railway Ltd v Avon Insurance plc [2001] EWCA Civ 780.
2. The court did not finally determine whether the claimant’s alternative contract was void for uncertainty. It observed that an agreement leaving an essential price to future negotiation, without a sufficiently certain formula, may be too uncertain to constitute a contract. A reasonable-price term would not save an agreement where the parties had agreed an insufficiently certain pricing formula.
3. Implied terms. Neither a minimum-order term nor a term requiring the airline to continue loading the boxes throughout the three-year period was implied. Applying the principles summarised in Yoo Design Services Ltd v Iliv Realty Pte Ltd [2021] EWCA Civ 560, the proposed terms were neither necessary to give the agreement business efficacy nor so obvious that they went without saying. The contract remained workable if En Route bore the risk of early termination. The airline industry was volatile, suppliers commonly bore that risk, and the airline had strong purchasing power. The apparent unfairness of the result, viewed with hindsight, did not justify implication.
4. Compensation claim. An independently operated En Route would not have pursued even a carefully handled discussion about compensation. The relevant considerations included the limited contractual documentation, the airline’s importance as En Route’s major customer, the seniority of the decision-maker, the cost-saving objective, the risk of damaging other business and the management team’s contemporaneous decision not to raise a claim. Accordingly, the defendant was not in breach of the shareholders’ agreement in relation to Little Bites 2.
5. Import duty. The claimant had to establish, on the balance of probabilities, the actions of En Route and its personnel, but only a real and substantial chance of the relevant actions by Mr Mohammed, EKFC and Dubai Customs. Five contingencies had to occur before 31 May 2017, including submission of stamped delivery notes and repayment, or a sufficiently firm commitment to repay, the duty. None was established, and cumulatively there was no real chance of the necessary result. The claim therefore failed. In any event, repayment would probably have been credited to the airline and would have been neutral for En Route’s earnings.
6. The claim was dismissed. The court directed further submissions on the form of order, costs and consequential matters.