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England and Wales Court of Appeal (Civil Division) Decisions
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Cite as:  EWCA Civ 1400
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ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
SIR RAYMOND JACK sitting as a Judge of the High Court
Case No: HQ10X04075
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE HUGHES
MR JUSTICE BEAN
| CROCS EUROPE BV
|- and -
|CRAIG LEE ANDERSON & Anor trading as SPECTRUM AGENCIES (a partnership)
WordWave International Limited
A Merrill Communications Company
165 Fleet Street, London EC4A 2DY
Tel No: 020 7404 1400, Fax No: 020 7404 1424
Official Shorthand Writers to the Court)
MR OLIVER SEGAL QC (instructed by Morgan Cole LLP) for the Respondent
Hearing date: 4th July 2012
Crown Copyright ©
Lord Justice Mummery:
More background facts
"These Regulations shall not affect the application of any enactment or rule of law which provides for the immediate termination of the agency contract–
(a) because of the failure of one party to carry out all or part of his obligations under that contract; or
(b) [not relevant]"
"42. My conclusion here is that it was a breach of Spectrum's duty to BV to put the crawl onto the website, but that the seriousness of that breach fell a long way short of the seriousness required to entitle BV to terminate the agency. A reasonable person would not conclude that it showed an intention on the part of Spectrum not to fulfil the contract. The main factors in my reaching that conclusion are that the crawl was obviously intended to be humorous (and its scatology sounds worse in a court than in the world of the web); that its circulation was very limited, and to persons who would see the joke; that it was very unlikely that a retailer (or any other person seriously interested in Crocs) would see it unless they had the link; and that the situation at BV which was the subject of the crawl's Star Wars humour was well known to Crocs retailers."
Discussion and conclusions
Mr Justice Bean:
"(1) In performing his activities a commercial agent must look after the interests of his principal and act dutifully and in good faith.
(2) In particular, a commercial agent must: –
a) Make proper efforts to negotiate, and, where appropriate, conclude the transactions he is instructed to take care of;
b) Communicate to this principal all the necessary information available to him;
c) Comply with reasonable instructions given by his principal."
"In our view it is clearly established that there is implied in a contract of employment a term that the employers will not, without reasonable and proper cause, conduct themselves in a manner calculated or likely to destroy or seriously damage the relationship of confidence and trust between employer and employee. (670G) … In our view, an employer who persistently attempts to vary an employee's conditions of service (whether contractual or not) with a view to getting rid of the employee or varying the employee's terms of service does act in a manner calculated or likely to destroy the relationship of confidence and trust between employer and employee. Such an employer has therefore breached the implied term. Any breach of that implied term is a fundamental breach amounting to a repudiation since it necessarily goes to the root of the contract: see Courtaulds Northern Textile Ltd v Andrew  IRLR 84"
"… whether or not there has been a repudiatory breach is highly fact-sensitive. That is why comparison with other cases is of limited value. "
"This argument, in my opinion, is based upon a dangerous misunderstanding, or misapplication, of what was decided and said in Hong Kong Fir. That case was concerned with an obligation of seaworthiness, breaches of which had occurred during the course of the voyage. The decision of the Court of Appeal was that this obligation was not a condition, a breach of which entitled the charterer to repudiate. It was pointed out that, as could be seen in advance the breaches, which might occur of it, were various. They might be extremely trivial, the omission of a nail; they might be extremely grave, a serious defect in the hull or in the machinery; they might be of serious but not fatal gravity, incompetence or incapacity of the crew. The decision, and the judgments of the Court of Appeal, drew from these facts the inescapable conclusion that it was impossible to ascribe to the obligation, in advance, the character of a condition.
Diplock LJ then generalised this particular consequence into the analysis which has since become classical. The fundamental fallacy of the appellant's argument lies in attempting to apply this analysis to a time clause such as the present in a mercantile contract, which is totally different in character. As to such a clause there is only one kind of breach possible, namely, to be late, and the questions which have to be asked are, first, what importance have the parties expressly ascribed to this consequence, and secondly, in the absence of expressed agreement, what consequence ought to be attached to it having regard to the contract as a whole.
The test suggested by the appellants was a different one. One must consider, they said, the breach actually committed and then decide whether that default would deprive the party not in default of substantially the whole benefit of the contract. They invoked even certain passages in the judgment of Diplock LJ in Hong Kong Fir to support it. One may observe in the first place that the introduction of a test of this kind would be commercially most undesirable. It would expose the parties, after a breach of one, two, three, seven and other numbers of days to an argument whether this delay would have left time for the seller to provide the goods. It would make it, at the time, at least difficult, and sometimes impossible, for the supplier to know whether he could do so."
Lord Justice Hughes: