Mileform Ltd v Interserve Security Ltd

Mileform Ltd v Interserve Security Ltd [2013] EWHC 3386

Contract law – Contract terms – Certainty

Facts

Mileform provided packaging, warehousing and the distribution of products for the defendant. M claimed that the parties had agreed, both written and orally, to the defendant using Mileform’s services for two years on an exclusive basis. Following this agreement, the defendant carried on business as usual and Mileform claimed that this breached their agreement, which entitled them to terminate the contract between the parties. The court was asked to establish the facts of the supposed agreement and whether there was a binding contract between the parties.

Issue

The court was required to establish whether the parties had agreed on the term, either verbally or by a written document and importantly, whether this term could be included in the contract. The court was also required to comment on whether the exclusivity term would have been certain enough to bind the parties.

Decision/Outcome

Based on the evidence provided, the court could not find a discussion of exclusivity until after one of Mileform’s directors had signed the agreement. The defendant also did not have the authority to agree on exclusivity without their manager’s approval. This was not discussed with the defendant’s manager in any detail and no work was done to understand what this might mean for the business. As a result of this, the term had not been included in the written agreement, nor had its inclusion been conveyed at any stage of proceedings. Therefore this was not included in the contract. It was also held that the exclusivity term would have been too vague to bind the parties.