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Shoe Makers Face £16 Million Claim

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

The manufacturer of Crocs beach shoes has failed to convince the Court of Appeal that a derogatory ‘joke’ about its service department that was posted on the internet amounted to a repudiatory breach of contract which justified the termination of its relationship with its UK selling agents.

Crocs Europe BV (the defendant) is facing a £16 million breach of contract claim after the court ruled that the posting on the Facebook website was not so serious as to justify the termination of its contract with Spectrum Agencies (the claimant), one of whose employees had posted the joke on the Facebook website.

Dismissing Crocs’ appeal against an earlier ruling in Spectrum’s favour, Lord Justice Mummery, sitting with Lord Justice Hughes and Mr Justice Bean, said: ‘I am not persuaded by the defendant’s far-fetched propositions of contract and fiduciary law that the judge was wrong to hold the defendant liable to the claimant for breach of contract by summarily terminating the agency agreement in circumstances where the breach relied upon was not sufficiently serious to be repudiatory.’

He concluded that, although the disparagement of Crocs in the online posting did amount to a breach of contract, ‘it was not a breach that went to the root of the agency relationship.’ The ruling opens the way for Spectrum to press ahead with a damages claim which it values at between £12.8 million and £16 million although those figures are ‘strongly disputed’ by Crocs.

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