Question: Case study - Siddique Spice Ltd (“SS”) regularly create and produce ready-made indian meals for Tesbury’s Supermarkets PLC for sale in their stores. For the last 10 years SS and Tesbury’s have had regular dealings and SS have created and produced between 4 – 8 different dishes per year for SS. Each year, Tesbury’s has given SS an outline menu in January. SS then submits recipes and menus which Tesbury’s consider along with menus from other ready meal producers. Tesbury’s then selects the new meals it wishes to promote and sell and places orders with SS. Orders are normally placed 3 weeks in advance at prices and quantities agreed from time to time. There is no written contract in place although 70% of SS’s business worth £500,000 per year comes from Tesbury’s with whom they have a very close working relationship. SS have also adapted their business practices to fit in with Tesbury’s. Despite the success of SS’s range of ready meals, Tesbury’s have decided not to sell SS’s products anymore.
On 1st October, Tesbury informed SS that they would not be placing any more orders with SS with immediate effect. This will have a devastating effect on SS’s business and SS say Tesbury’s are not entitled to end their longstanding relationship with SS without reasonable notice as they say there is a contract for the production and supply of a reasonable number of meals per year at reasonable prices. SS claim they are entitled to compensation for breach of contract. They also say that the conduct of Tesbury’s has led them to believe that the relationship could not be terminated without reasonable notice and, even if there is no contract, Tesbury’s cannot deny the longer term relationship and that they are entitled to compensation. Tesbury’s had deliberately avoided entering any long term commitments to allow them as much flexibility as possible given the fast changing nature of the ready meals market.
Advise Tesbury’s as to whether or not SS can claim there is any binding obligation between them either in contract or as the result of estoppel. (30%)
Answer: As it has been stated before without intention a legally binding contract cannot be created hence it is important that when entering a contract the offeror and offeree must intend to create a legally binding contract. It is possible for one party to assume that there is intention when actually there is not for example in the case of Balfour v Balfour , Balfour’s wife assumed that he intended to send her £30 per month when he actually did not and therefore the court held that there was no intention to create a legally binding contract. Intention can be defined as “in the context of commercial agreements, it is presumed that parties intended to be legally bound unless there are clear words indicating the absence of a promise or that the parties have agreed to be bound in honour only......(short extract)
Details: - Mark: Not available | Course: Contract Law | Year: 2nd/3rd | Words: 667 | References: Yes | Date written: January, 2011 | Date submitted: January 12, 2012 | Coursework ID: 711