More legal news
19 July 2001 | Liam O'Brien
Companies involved in partnerships are being urged to check they have a formal contract following the failure of clothing manufacturer William Baird's £53.6 million damages claim against Marks & Spencer.
Sir Michael Latham, chairman of construction firm Willmott & Dixon and author of Constructing the Team, the 1994 report on purchasing in the building sector, said a contract was necessary to define commercial relationships clearly.
"Partnering is extremely useful, but companies need to have external facilitation to ensure they are all signed up to the same objectives," he said.
The House of Lords refused Baird leave to appeal last month against a lower court ruling that prevented it from suing the retailer for alleged breach of contract. Baird had claimed that despite not having a contract, its 30-year partnering relationship with M&S entitled it to a reasonable notice period.
In October 1999, and without any notice, M&S told Baird it was ending the relationship after the supplier had sent its final orders. Baird subsequently claimed it had to close factories in the UK with the loss of thousands of jobs.
Baird had asked the court to enforce an implied duty of good faith on M&S. Although some Commonwealth and US systems recognise good faith, UK law generally refuses to recognise it as an implied contractual term.
"In the absence of express terms in a contract, this shows it is going to be very difficult to bring a case for breach of contract," said Jan Middleton, procurement solicitor at law firm Denton Wilde Sapte.