#6787 - Atlas Express V. Kafco - Restitution of Unjust Enrichment BCL

Atlas Express v. Kafco

Facts

By their statement of claim the plaintiffs, Atlas Express Ltd., claim against the defendants, Kafco (Importers & Distributors) Ltd., 17,031.83, plus interest, as outstanding payments due to them under a number of invoices submitted to the defendants.

The plaintiffs are well-known carriers of goods by road in the United Kingdom. They offer a parcels delivery service. The defendant company imports basketware from abroad and supplies it to retailers in the United Kingdom… On 24 June 1986 the plaintiffs entered into a general trading agreement with the defendants whereby the plaintiffs agreed to deliver cartons of the defendants' basketware at a rate per carton depending on the number of cartons in the load. By October 1986 the defendants had entered into an agreement to supply their basketware to F. W. Woolworth Plc.'s shops in the United Kingdom.

The rate agreed was expressed as being 1.10 per carton.

When Mr. Hope saw the load from the defendants, he said he was surprised to see how large the cartons were and how many large cartons were included in the load. He said they were far larger than the parties had contemplated, and because of this there were fewer of them - only 200 instead of the 400 he had anticipated.

However, Mr. Hope was convinced that it would not be financially viable to carry such a load at the rate agreed. He contacted Mr. Armiger about it, in an attempt to re-negotiate the rate. I find that the two of them met to discuss it, and that Mr. Hope made it plain to Mr. Armiger that the plaintiffs would not carry any more goods under the Woolworth agreement unless the defendants agreed to pay at least a minimum rate of 440 per trailer load. I find that if the defendants had refused, the plaintiffs would not have made any further deliveries.

Woolworth Contract: The defendants were a small company and their three directors were personally committed to its success. They had secured a large order from Woolworth and had obtained a large quantity of goods in order to fulfil it. It was essential to the defendants' success and to their commercial survival that they should be in a position to make deliveries. I find that this was obvious to Mr. Hope, and was known by him. It was now early November, a time of year when demands on road hauliers and deliverers are heaviest.

No other Alternatives: It would have been difficult, if not impossible, for the defendants to find alternative carriers in time to meet their delivery dates.

The following day, 18 November, one of the plaintiffs' drivers arrived at the defendants' premises with an empty trailer. Mr. Hope had written in the new rates, which now specified a minimum charge of 440 per trailer. Mr. Armiger did not want to agree to this, and he had not done so at the meeting. He queried it with the driver, who said that he had instructions that if the defendants did not sign the agreement he was to take the trailer away unloaded.

Attempt to protest: Mr. Armiger tried to contact Mr. Hope on 18 November, but he was unable to do so. Mr. Hope was unavailable. I infer that this was deliberate. It prevented the defendants from protesting to him.

In these circumstances, Mr. Armiger justifiably felt himself to be in a situation of "take it or leave it." He could not afford to lose the plaintiffs' services, with all the consequences that would ensue, so he signed the agreement.

Holding

I find that when Mr. Armiger signed that agreement he did so unwillingly and under compulsion. He believed on reasonable grounds that it would be very difficult if not impossible to negotiate with another contractor. He did not regard the fact that he had signed the new agreement as binding the defendants to its terms. He had no bargaining power. He did not regard it as a genuine arm's length re-negotiation in which he had a free and equal say and, in my judgment, that view was fully justified.

In the words of the co-director, Mr. Fox, he felt that he was "over a barrel." He tried in vain to contact Mr. Hope but, as he said to Mr. Armiger, they really had no option but to sign. I accept the evidence of the Woolworth manager, Mr. Graham, that...