The Defendant (Koolco) is a clothing design and manufacturer in seaport, Cockle Bay. The Claimant (Top) is a local clothing shop (local retailer).
Agreement: On 2nd May 2003, the D agreed with the C partly in written and oral to supply to the C their stock of jeans, tee shirts, sweatshirts and baseball caps (‘the stock’), during the period from 1st Sept 2003 to 31st August 2004.
Contention: the C contends that it was buying exclusive rights to the D’s stock for the stipulated period. The D denies that there was an express or implied exclusivity clause in the agreement. The D further missed the deadline for disclosure and the C is applying for an unless order
1. The implied or express exclusivity clause in the agreement
Agreement: The D agreed with the C to supply the stock during the period which agreement was in writing, alternatively was partly oral and partly in writing, and insofar as it was in writing it is contained in the said letter and agreement dated 5th May 2003.
D agreed to supply them exclusively for 2001/2002 and Sept 2002 to August 2003, but not the latest agreement.D supplied to the C jeans, tee shirts, sweatshirts and baseball caps At a meeting between Joseph Denizen (MD) for the D and Amit Varma (MD) for the D on or around 2nd May 2003, the D explained to the C that the D:
- Had won a national design award for its sweatshirts and tee shirts;
- Had purchased factory premises and so would be able to increase production of its stock; and
- Would be widening the exposure of its stock by supplying to larger retailers in 2003.
Over the year 2002/2003, D produces some denim skirts and jackets for a couple of shops in the next county and they also sold very well.
The problem with the C has arisen because their director, Amit, believed that we would supply them on an exclusive basis for the Autumn 2003 to Summer 2004 year. D can’t remember telling Amit that they would no longer supply them on an exclusive basis, but it was clear from the content of our conversation that it just was not practical for us to continue to do so.
D supplies shops in Maesford, the next town just outside the Cockle Bay area about 5 miles south of Seaport, as well as shops in inford in the next bay, about 30 miles away.
D has a fax from the C’s Sales Manager dated 12th June 2003 where she wishes us luck in our expansion plans. This makes it clear that the C knew the agreement was not meant to be an exclusive arrangement.Cs were paying slightly more because D’s designs had won awards and proved to be very popular.
Ds have an ad hoc agreement with Barnard’s Clothing, a shop trading on the same street as the C. Ds supplied them with a sample of their sweat shirts and tee shirts and expecting a permanent arrangement with them.
Amit phoned D to ask about supplying to Barnard’s he said he would have to reduce the prices on all the goods supplied.Compromise to reduce the price of the goods. D prefer to have a foothold in Seaport and though they would prefer to be able to supply to whomever they chose in Seaport, for the time being they want to stay selling through Top Image given their growing reputation.D expansion plans money is tight.
By an oral agreement between Amit on behalf of the C and Denizen on behalf of the D made at the C’s premises on or around 2nd May 2003 the D agreed to sell and the C agreed to buy 30 men’s suits designed and manufactured by the D at a price of $ 150 per suit. Total= $ 4,500. When D delivered these, the C claimed that he had only agreed to sale and return, actually which was not. C did mention buying on ‘sale or return’ but D thought he made it clear this was unacceptable. In fact he allowed him to beat him down on the volume and price to counter his reluctance to do the deal on ‘sale or return’. They did agree the price and D assumed it was on the basis that he would buy outright. He thinks that he should have put this in writing as well. He thinks that these suits would sell well if only they had reasonable exposure in the sort of shop that Top Image is.Compromise a little on the price.
In their meeting last May, D had explained to Amit about their expansion plans, but the C still went ahead and advertised on the basis that they would have exclusive rights to sell D’s garments.
Cost of abandoned advertising campaign based on the theme that the D’s stock could only be bought at the C’s shop $ 1500.
Costs to date including Counsel’s fees for today are in the region of $ 900.