Implied terms of non-competition and of good faith held to have real prospect of success

Implied terms of non-competition and of good faith held to have real prospect of success

CategoryNews Author Vikram Sachdeva KC Date

In SPI North Limited v Swiss Post International (UK) Ltd and Asendia UK Ltd [2019] EWHC 2004 (Ch) the underlying dispute concerned alleged breach of an exclusive supply agreement to provide certain Swiss Post services. The contract was terminated early, resulting in a claim for up to £17.3 million.

Vikram Sachdeva QC successfully persuaded the court to grant permission to amend a claim for to add implied terms that the contractual counter-party would not seek to compete and/or assist any other entity to compete with the Claimant’s performance of the contract, and also of good faith.

The Defendants sought to argue that the implied terms were not necessary, nor were they capable of clear expression, and would impermissibly re-write the bargain.

Andrew Hochhauser QC, sitting as a Deputy High Court Judge, permitted the amendments as having a real prospect of success. Given the express rights granted under the contract, it was “seriously arguable” that it would be a derogation from those rights for the First Defendant to be permitted, for the duration of the agreement, directly or indirectly to solicit the Claimant’s clients or potential clients (other than Excepted Clients) within the territory, using services which could compete with the products. It was also arguable that there was an implied term that the First Defendant would not be permitted directly or indirectly to develop and market a competing brand and products to the (contractual) brand and products within the territory. The lack of an express obligation on the First Defendant, while there was an express obligation on the Claimant, was explicable on the basis that it would have been odd had the First Defendant sought to compete with its own products.

It was further held that it was realistically arguable, given the nature and terms of the contract, that the contract was a “relational” contract, applying the approach of Leggatt J (as he then was) in Yam Seng Pte Ltd v International Trade Corp Ltd [2013] EWHC 111 (QB).

Vikram Sachdeva QC acted for the Claimant.

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