Anheuser-Busch International Inc and another v Commonwealth Brewery Ltd (The Bahamas)

Where a contract contains no express termination period, the court must assess reasonable notice in two stages. Whether a notice term is implied depends on the circumstances and common purpose at the time of contracting. The length of notice is assessed by the circumstances existing when notice is given.

The central purpose is an orderly winding up of the relationship and a reasonable opportunity for the recipient to adjust its business and make progress towards alternative arrangements. The period is not intended to preserve all lost turnover or profits. Relevant factors include the significance of the relationship, resources devoted to it, extraordinary recent expenditure, third-party commitments, market practice and the parties’ continuing obligations during the notice period. The list is non-exhaustive. Appellate intervention is justified for legal or evaluative error, or where the period falls outside the reasonable range.

A long-standing oral distribution agreement gave Burns House Ltd, later merged into and represented by Commonwealth Brewery Ltd, exclusive rights to distribute Anheuser-Busch products in the Bahamas. The agreement contained no express termination period. Anheuser-Busch International Inc and Cerveceria Nacional Dominicana SA gave notice of termination initially for about three months, later extended to more than three and a half months.

Charles J in the Supreme Court of the Commonwealth of the Bahamas held that 15 months’ notice was reasonable. The Court of Appeal allowed the suppliers’ appeal, holding that three and a half months fell within a reasonable range of three to six months. The central issue before the Privy Council was how the reasonable period of notice should be assessed and whether the Court of Appeal was entitled to interfere with the first-instance assessment.

1. Appeal dismissed. Lord Hodge delivered the judgment of the Board, which would humbly advise His Majesty accordingly. The Court of Appeal was entitled to set aside Charles J’s order and to conclude that the notice given was reasonable.
2. The implication of a reasonable-notice term is determined by the circumstances and common purpose of the parties when the contract was made. The length of notice is assessed by the circumstances existing when notice is given. The common purpose will usually be to cushion the recipient from sudden change, enable an orderly winding up, and allow substantial progress towards alternative business arrangements. It does not ordinarily extend to preserving all profits that would otherwise have been earned.
3. The relevant factors are fact-sensitive and non-exhaustive. They may include the significance of the relationship to the recipient’s business, the length and established character of the relationship, financial, management and personnel resources devoted to it, extraordinary recent expenditure undertaken with the counterparty’s knowledge and assent, third-party commitments, market custom, seasonal trading, and the parties’ continuing obligations during the notice period. Each factor has weight only to the extent that it bears on the recipient’s ability to adjust.
4. The continuing obligation to perform the agreement during the notice period may strongly favour a shorter period. Both parties may otherwise be tied to a relationship that one wishes to end while resources must be redeployed. Similar cases may provide a useful check, but they do not replace assessment of the particular circumstances.
5. Appellate assessment is not a discretionary exercise. An appellate court may intervene for irrelevant or omitted considerations, an error of law or principle, or a conclusion outside the range reasonably available to the trial judge.
6. Charles J erred by treating the period during which profits were reduced as relevant to the notice period and by giving weight to ordinary staff expenditure and generally useful refrigeration expenditure. She also failed to give sufficient weight to the competitive products BHL could distribute, the relatively small proportion of turnover represented by the agreement, the suppliers’ need to establish a replacement distributorship, and the difficulties of continued performance during the notice period. The balance supported a relatively short notice period.
7. The Board clarified that the absence of a formal written document is relevant because the parties had not stipulated a fixed notice period, but informality in that sense does not itself justify a shorter period. An established, regular and relatively unchanging relationship may support a longer period where it makes adjustment more difficult. That clarification did not affect the outcome.

• Privy Council: In [2026] UKPC 8, appeal dismissed. The Board held that the notice of more than three and a half months was reasonable.
• Court of Appeal of the Commonwealth of the Bahamas: On 28 November 2023, the court allowed the appeal from Charles J and held that three and a half months fell within a reasonable range of three to six months.
• Supreme Court of the Commonwealth of the Bahamas: On 19 May 2022, Charles J held that 15 months’ notice was reasonable.