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Sacked Commercial Agency Wins £180,000 for Breach of Contract

The end of business relationships can often be bitter and can give rise to difficult issues as to which party is in the wrong in contractual terms. That was certainly so in one case in which a commercial agency won more than £180,000 in damages following the termination of its contract with a manufacturer.

The agency had represented the manufacturer for several years before it received emails which purported to terminate the relationship on three months’ notice. The agency argued that it should have been given a notice period of at least 12 months and each party accused the other of repudiatory breach of contract.

The High Court ruled that the emails sent by the manufacturer, which were marked without prejudice, were inadmissible as evidence. In those circumstances, it was a later email, sent by the agency, which had repudiated the contract. However, the manufacturer had done nothing to accept that repudiation and had taken up the agency’s offer to work out the remainder of the notice period.

That amounted to a reaffirmation of the agreement by the manufacturer and the contract thus did not end until the notice period expired. In those circumstances, the agency was entitled to compensation in respect of the shortened notice period and under the Commercial Agents (Council Directive) Regulations 1993. The exact amount of the award had yet to be calculated but it exceeded £180,000.