SUPASEAL GLASS LTD AGAINST INVERCLYDE WINDOWS MANUFACTURING LTD

Factual and Procedural Background

The Plaintiff, Company A, manufactures and supplies sealed double glazing window units. The Defendant, Company B, supplies and installs replacement windows, glazed doors, and conservatories, and had been a longstanding customer of Company A, purchasing glass and sealing units. In December 2015, the Plaintiff contended that a binding contract was concluded whereby the Defendant agreed to purchase all of its glass exclusively from the Plaintiff until 31 December 2020, at prices agreed on an annotated price list signed by both parties. The Defendant denied the existence of a binding contract, contending that only an agreement in principle was reached, which was never committed to writing as intended.

The dispute arose over whether a binding contract existed following a meeting on 8 December 2015 between the controlling individuals of the parties, the managing director of Company A and his counterpart at Company B. The court held a preliminary proof to determine (i) whether a choate, binding, and enforceable contract was concluded at that meeting, and (ii) if so, what the terms of that contract were.

Evidence was given by representatives of both parties and other witnesses, including witness statements and oral testimony. The court heard objections to certain evidence, which it ruled upon during the proceedings. After considering the evidence and submissions, the court proceeded to analyze the issues raised.

Legal Issues Presented

1. Whether a choate, binding, and enforceable contract was concluded between the parties at the meeting on 8 December 2015.
2. If such a contract was concluded, what were the terms of that contract.

Arguments of the Parties

Plaintiff's Arguments

• The parties reached a binding agreement at the meeting on 8 December 2015 that the Defendant would purchase all glass exclusively from the Plaintiff until 31 December 2020 at prices agreed on an annotated and signed price list.
• The agreement was part of a package deal including the sale of shares held by the Plaintiff’s managing director to the Defendant’s counterpart for £57,000.
• The agreement did not require to be reduced to a formal written contract to be binding and enforceable.
• The contemporaneous emails sent by both parties to their solicitor confirmed the existence of the agreement.
• The terms of the contract were sufficiently certain and complete to be enforced by decree of specific implement.

Defendant's Arguments

• The parties had only reached agreements in principle which were intended to be formalized by written contracts.
• The emails referring to "signing up" to buy glass indicated that the parties anticipated further formal documentation would be required before being bound.
• The absence of a signed exclusivity agreement and the failure to prepare discharge documents demonstrated that no binding contract existed regarding the glass purchase.
• The Defendant contended that the parties did not intend to be bound until the written agreements were executed.
• There was no consensus on all essential terms, and the contract was void for uncertainty.

Table of Precedents Cited

Court's Reasoning and Analysis

The court began by setting out the governing legal principles, notably that contracts need not be in writing unless required by statute, and that the existence of a binding contract is assessed objectively based on what the parties said and did rather than their private intentions. The court noted that parties intending to be bound only upon execution of a written agreement are not bound until then, but also that the stipulation of a formal contract does not necessarily mean negotiations are ongoing.

The undisputed facts established that the controlling individuals of the parties met on 8 December 2015 and reached agreement on the sale of shares and on the terms of glass supply, including prices recorded on a signed price list. Contemporaneous emails from both men to their solicitor confirmed the agreements reached.

The court carefully evaluated the credibility and reliability of the witnesses. It preferred the Plaintiff’s managing director’s evidence, finding it clear, consistent, and supported by contemporaneous documentation and aspects of the Defendant’s own evidence. The Defendant’s evidence was found to be inconsistent, unreliable, and at times indicative of dishonesty, particularly regarding the claimed lack of agreement and the alleged post-meeting telephone call to the solicitor denying the agreement.

The court rejected the Defendant’s contention that the parties intended to be bound only upon execution of a formal written contract. It found no objective evidence to support this, noting that neither party mentioned the necessity of a written agreement at the meeting, and that the Defendant began making payments before the share purchase agreement was signed. The solicitor’s emails likewise did not anticipate that a written agreement was necessary to bind the parties.

The court distinguished the case from precedents where agreements were void for uncertainty or dependent on further negotiations. It found that the essential terms of the exclusivity contract were agreed: parties, subject matter, duration, and price. The court held that the contract was sufficiently certain to be enforceable and that the parties had concluded a binding, choate contract.

Finally, the court addressed procedural objections and evidential challenges, ruling on the admissibility and weight of evidence accordingly, and rejected submissions that the Plaintiff’s evidence was incredible due to lack of cross-examination on some points.

Holding and Implications

The court held that a choate, binding, and enforceable contract was concluded between the parties on 8 December 2015, and that the terms of that contract included the Defendant’s agreement to purchase all its glass exclusively from the Plaintiff until 31 December 2020 at the agreed prices.

The court repelled the Defendant’s pleas in law and confirmed the existence and terms of the contract.

The direct effect of this decision is to establish the enforceability of the exclusivity agreement and the share purchase arrangement between the parties. No broader legal implications or new precedents were established beyond the application of existing contract law principles to the facts of this case.