The High Court Considers The Correct Approach To Assessing What Is 'Reasonable Notice' To Terminate Where The Contract Is Silent

The High Court has found that nine months was the correct notice period to terminate a supply contract where the agreement was silent on the point. The decision does not create any new law, but it does provide useful guidance on the application of the law to particular situations, as the judge laid down five principles for assessing what constitutes "reasonable notice" in such circumstances.

The law

Where a contract has no fixed term and there are no termination rights, it can be terminated by reasonable notice by one or both of the parties1. What constitutes "reasonable notice" will be determined in accordance with the ordinary principles applicable to implying terms into contracts, and the sufficient period will be largely dependent on the individual circumstances of each case.

The facts

The claimant in the case before the High Court was Hamsard 3174 Ltd ("Hamsard"). Hamsard designed, manufactured and supplied children's clothing to the defendant, Boots UK Ltd ("Boots"). The unwritten agreement between the parties had arisen out of various earlier trading relationships. In summary:

(i) In July 2007, an agreement between Mini Mode Childrenswear ("Mini Mode") and Boots Company Plc provided for termination at will by either party on 12 months' notice.

(ii) In April 2008, Boots Company Plc...