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Are Your Contracts with Long-Standing Clients a Mess?
Long-standing business relationships can lead to tangled contractual arrangements, as one company discovered when its £8.2 million damages claim against a former client it had dealt with for many years was cut down to size by the High Court.
For almost 15 years, a trucking company had provided warehousing and haulage services to a manufacturer of insulation products. Over the years, a number of different agreements had been reached, added to and amended, giving rise to substantial difficulties in interpretation.
The manufacturer purported to terminate the relationship but the trucking company disputed its right to do so and responded with claims that the manufacturer had, for a number of years, failed to allocate to it a minimum number of haulage loads annually. The trucking company also asserted that its charges should have been adjusted upwards each year but had not been. It valued its total breach of contract claim at £8,208,937.
However, after analysing a number of sometimes conflicting contractual documents, the Court found that the majority of the trucking company’s claim was bound to fail. Its claim in respect of minimum loads was struck out in its entirety, although it was permitted to proceed with a claim that it had been underpaid during a period of about three years.