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Broken Trading Relationship? Don’t Let it Get Out of Hand!

PLEASE NOTE: Information in this article is correct at the time of publication, please contact DFA Law for current advice on older articles.

Breakdowns in commercial relationships are an unfortunate fact of business life and a good lawyer can help to broker a sensible compromise. However, in one case where that did not happen, former trading partners spent 13 costly days in the High Court battling it out over little more than £300,000.

The case involved a company which had supplied consignments of rice to another company over a lengthy period before they fell out. The former claimed to be owed about £317,000 in respect of unpaid invoices, but the latter denied that it owed a penny and counterclaimed for various sums. Amongst other things, the defendant company claimed that certain batches of rice delivered were not of the quality required and that others were affected by mould.

In considering the case, the Court was required to resolve 11 detailed issues and to hear extensive oral evidence from the companies’ employees and from pricing experts. The task was not made easier by arguments that written contractual arrangements had been added to and amended by a number of ad hoc oral agreements.

The Court found in favour of the company that raised the claim on the principal issues in the case and the defendant company was ordered to pay £291,688. The latter’s counterclaim succeeded to the extent of £12,782.

Says Clare Towers, “This case illustrates the benefits of reaching a negotiated settlement where possible. The Court heard further argument in relation to interest and legal costs, which, when decided, are likely to dwarf the sums at stake in the dispute.”

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