Two High Court cases decided within 18 months of each other have raised the unlikely topic of abusive language and its ability to result in a lawful termination of contract. The two pertinent words in the cases were s**t and shite and the apparently conflicting judgments are surprising.
Gledhill v Bentley Designs was the earlier of the judgments and concerned an agent that had acted for a furniture company successfully for a number of years. The principal had been trying to get the agent to start using email rather than fax for business efficiency purposes and even offered to provide him with training.
The claimant refused to use email which resulted in the defendant making an administration charge of £100 a month against him which was deducted from his commission. The agent was unhappy with this, which led to him leaving the following voicemail:
“I just can’t believe you. You are at your happiest when you are always causing grief for people and just try to sort of upset people, people would not support you, and I just think you are a horrible, despicable little man. I really do. I just think you are absolutely gutless. You have just taken £195 from me which covers the hotel, fair enough, and £100 twice plus the VAT. You just seem more intent on sort of ……….. as opposed to getting the business, the nitty gritty part, you seem more intent on causing trouble to people. I think you are an absolutely shit, I really do. You are a despicable, horrible little excuse for a human being.“
Spectrum Agencies v Crocs Europe BV was a case brought by the former agents for the Crocs footwear brand for the UK and Ireland. The agent was proving very successful in obtaining orders which in part resulted in a deterioration of the relationship. As a result, the principal tried to reduce the amount of commission payable to the agent and when negotiations reached a sticking point, the principal offered to buy the agency from the agent at a price which the agent felt was unreasonably low.
Negotiations proved fruitless and the agents’ sales force became aware of the uncertainty over the future of the relationship. This led to one sales executive sending the following spoof Star Wars parody to a member of the principal’s customer service team in response to one which he had received:
“That’s a Croc!! Of Shite!!
SPECTRUMS WAR OF LIGHT VS DARK
SOS to the stoned nether regions of the Netherlands, evil dark lord create partys to numb the brains of the workers but couldn’t do the galactic job of putting shoes in boxes. Leaving the UK to fend off retailers fighting like storm troopers with phone & email abuse, they fought for a year with a promise of reinforcements. This was an evil plan to draw the UK into the dark abyss filled with Croshite.. in the intense battle that followed, we had offered the crown jewels of Uk retail to the dark Lords who then shat all over the retail landscape, leaving behind the strewn waste of the spectrum crew. WE WILL SURVIVE battered, bruised but laughing.”
The parody was available for anyone to read on the internet and the principal did not take it well, subsequently using it as a basis for terminating the agency agreement.
The judge set out that an agent should not criticise the way in which the principal does business and that to do so constitutes a breach of regulation 3 of the Commercial Agents (Council Directive) Regulations 1993, which provide that a commercial agent in performing his activities ‘must look after the interests of his principal and act dutifully and in good faith’.
The judge then turned to whether the disparaging comments were sufficiently serious as to entitle the principal to terminate the agency, which is dependant upon the disparagement itself and the circumstances in which it is made. Here the judge was of the opinion that whilst the Star Wars spoof was a breach of the agent’s duty, it was not serious enough to enable the principal to terminate the agency.
In Gledhill v Bentley Designs on the other hand, the agent had a further contractual duty ‘to act towards the Principal conscientiously and in good faith’. The agreement also provided that ‘any serious breach’ of such a term would entitle the Principal to terminate ‘with immediate effect’. This contractual duty was in addition to (and not in substitution for) the statutory duty under Regulation 3.
The judge chose to ignore both of these duties and decided to deal with the agent’s claim by incorrectly applying employment law principles.
It is hard to agree with both decisions, firstly in the Crocs case because an agent’s breach of his duty to his principal destroys the confidence which the principal has in him. Once confidence is lost, it is gone and the basis of the relationship is sabotaged. In the Gledhill case the correct outcome was reached but as a result of the wrong reasoning.
Once thing remains certain though, steer clear of using s**t to avoid ending up in shite.
Stephen Sidkin is a partner in the Commerce & Technology Department and is a member of the agentlaw team. Stephen can be contacted at slsidkin@foxwilliams.com
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