Did an exchange of emails create a contract? High Court judgment in Athena v Superdrug

The High Court found that they did in a hearing for summary judgment.

The High Court has ruled in the case of Athena Brands Ltd v Superdrug Stores plc [2019] EWHC 3503 (Comm). The case is a commercial case, but will be of interest to technology lawyers too, as it illustrates the importance of ensuring arrangements are not entered into “accidentally” through casual emails.

The claimant (Athena) sought summary judgment about whether a contract was made by an exchange of emails between Ms Whincup (W) at the claimant and Mr Sisson (S) at the defendant (Superdrug) on 23 and 25 May 2017. Athena argued that the emails bound Superdrug to purchase specified minimum quantities of various cosmetic products in a 12 month period from September 2017. The sale price would have been just over £1.3m.

Superdrug resisted the claim, arguing that it had a real prospect of adducing evidence of an industry practice so well-known and established that Athena could not have believed that S, whatever he said, was committing Superdrug to purchase minimum quantities of stock. Superdrug said that its (complicated) standard practice was that purchase contracts would only be entered into by issuing purchase orders.

In her email of 23 May 2017 W asked for confirmation that S was "placing orders and committing to the yearly quantity … below… you will call off stock… on an ad hoc basis within a 12 month period". The judge said that this plainly meant that she was seeking a commitment to purchase those annual quantities, to be called off over 12 months. S's reply "Please go ahead… happy on Nature's Alchemist…" was a clear acceptance. The reference to "placing orders" did not mean that there would not be individual purchase orders at a later stage; W knew that would be the case, as shown by the acknowledgement that stock would be "called off" over a 12 month period. 

There was nothing in Superdrug's standard conditions of purchase to indicate that Superdrug did not or would not agree terms for purchase of minimum quantities, or would not be bound by any such terms if its employees did agree them.

Superdrug also argued that there was no intention to create legal relations with the emails and S was did not have actual or ostensible authority to agree the transaction. The judge said that none of Superdrug’s possible defences had any real prospect of success. S was held out as a buyer authorised to negotiate terms of trade, with no relevant restriction identified to Athena. There was no basis to assert that such terms could not include a minimum quantity commitment, if S on behalf of Superdrug considered it commercially appropriate in the circumstances. There was no evidence that he or anyone else on Superdrug's behalf told Athena that he in fact lacked authority to agree a minimum quantity commitment, and even if he may have at some point in the past during negotiations stated that he did not intend to agree such a commitment, he must have changed his position as he plainly did do so at the end of the negotiations. There was nothing in the history of the negotiations capable of showing that Athena or an objective observer would have understood that his apparent agreement to a minimum quantity was not or could not be taken as being what it seemed or that in making it he did not intend to bind Superdrug. In particular the transaction involved a materially similar quantity commitment which, for the same reasons, would not have been interpreted by an objective observer as meaning anything other than what it appeared to be. There is no doubt that Athena relied on S's confirmation as binding Superdrug, and nothing in the evidence adduced was capable of showing that it acted unreasonably in doing so.

As a result, the judge allowed the claim for summary judgment.

Published: 2020-01-15T11:00:00

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