Mackie Motors (Brechin) Limited v RCI Financial Services Limited

An implied contract inferred from conduct requires a sufficiently certain agreement, an intention to create legal relations, consideration, and necessity for implying the contract. A long-standing and commercially useful arrangement does not itself establish those elements where the parties might have acted in the same way without legal obligation.

Neither a relational duty of good faith nor a Braganza-type constraint permits a court to rewrite express framework finance agreements so as to impose a continuing commitment to lend. An unqualified contractual right to terminate on seven days’ notice must be given effect where the proposed alternative construction would deprive it of independent operation.

Mackie operated Renault, Nissan and Dacia dealerships. RCI, a Renault subsidiary, supplied dealer finance, customer finance, clearing arrangements and certain online services. The dealership agreements were terminable on 24 months’ notice, whereas the written RCI finance contracts contained seven-day termination provisions and did not commit RCI to lend.

After RCI terminated its services and contracts, Mackie sought to amend its claim to allege an implied umbrella relational agreement involving RCI, Renault and Nissan. It also relied on implied terms, contractual interpretation and estoppel. The High Court refused permission to amend and struck out the claim: [2022] EWHC 1942 (Ch).

The appeal asked whether those proposed claims had a real prospect of success.

1. Appeal dismissed. Lady Justice Asplin held, with whom Lady Justice Andrews and the Master of the Rolls agreed, that the proposed amended claims had no real prospect of success.
2. An implied contract founded on conduct requires an intention to create legal relations and necessity for its implication. The additional database, platform and customer-finance services advanced the common commercial objective of selling vehicles. That was consistent with non-contractual assistance by the manufacturers and RCI. The parties might have acted as they did without an umbrella agreement. The draft pleading did not allege that implication was necessary and was materially vague as to the date, terms and foundational conduct of the alleged agreement.
3. A relational duty of good faith could not be used to imply an obligation to continue providing finance that was contrary to the express written RCI contracts. Those contracts were framework arrangements under which RCI retained discretion whether to lend, whether to enter a customer hire agreement, and what credit limit to make available. Past funding and informal indications of a willingness to continue funding did not create a legal commitment to lend. A Braganza-type restriction did not apply to convert an express bilateral right of termination or a lender’s case-by-case lending discretion into such a commitment.
4. The seven-day termination clauses were unqualified and unambiguous. Reading them as subject to the 24-month termination provisions in the separate dealership agreements would deprive them of meaning, particularly because other clauses already provided for automatic termination upon termination of a dealership agreement.
5. The estoppel claim failed. The alleged collaboration and long-term partnership did not amount to a clear and unequivocal representation that RCI would not invoke the seven-day notice provision. Mackie also sought impermissibly to deploy estoppel as a cause of action. Lady Justice Andrews additionally emphasised that commercial dependence on finance does not make the financier contractually bound to continue providing it.

• Court of Appeal (Civil Division): dismissed Mackie’s appeal in [2023] EWCA Civ 476.
• High Court of Justice, Business and Property Courts, Competition List (Chancery Division): Mr Simon Gleeson, sitting as a Deputy High Court Judge, refused permission to amend and struck out the claim in [2022] EWHC 1942 (Ch).