Provimi France S.A.S. & Ors v Stour Bay Company Ltd [2022] EWHC 218

Facts

After numerous purchases of a Vitamin D3 500 Feed Grade product from FBL through Stour Bay, Provimi received complaints from customers who reported low vitamin D3 levels in a pre-mixture that was intended for and ultimately fed to chickens. Provimi settled the complaints and sued Stour Bay alleging that the Vitamin D3 Feed Grade product was defective and claimed damages for breach of the contract of sale.

Provimi argued that the composition of the Vitamin D3 Feed Grade product, in particular the absence of a gelatin or other coating, meant that the product was insufficiently stable and could not withstand the normal processes involved in the poultry pre-mixture. Stour Bay was therefore in breach of (i) an express term of the sale contract that the product would meet the requirements of the Provimi Gelatin Specification (which displaced the Stour Bay T&C) and (ii) implied terms under ss 14(2) and (3) of the SOGA that the product would be of satisfactory quality and reasonably fit for purpose.

Held

The Stour Bay T&C were incorporated into the sale contract and thus there was no requirement for the product to comply with the Provimi Gelatin Specification.

Main points

1.      Provimi Gelatin Specification required the product to include a gelatin coating. Stour Bay’s T&Cs contained no such requirement.  Whereas the Stour Bay T&Cs were almost invariably printed on the reverse of the invoices sent to Provimi in all dealings with Stour Bay, the Provimi Gelatin Specification was not provided to Stour Bay until after the first order had been agreed.   There was also no evidence that the Specification had ever previously been sent to Stour Bay; nor any evidence that the terms of the Specification had ever been discussed, let alone, agreed between the parties. In addition, inclusion of the Specification was inconsistent with various questionnaires exchanged between the parties prior to the conclusion of the sale contract as well as with the FBL Product Information Sheet which made clear that the product had no gelatin coating.

2.      Not only did FBL confirm to Provimi that the Vitamin D3 Feed Grade product was not gelatin-coated but it was also subject to a Provimi’s two-stage internal audit process to determine whether the product was coated or not. Although, it was obvious from the information supplied to Provimi’s quality department that the product had no gelatin coating, in apparent breach of Provimi’s internal regulations, no such testing seemed to have taken place and the product was granted approval. The Court was therefore satisfied that Provimi must have appreciated that FBL’s product was  gelatin-free. Stating otherwise would be at odds with any objective analysis of the totality of the dealings between the parties and could not be justified.

3.      The appropriate criterion in course of dealings cases is obviousness, that is looking at the matter objectively. It must be obvious from the parties’ dealings, that they intended the relevant terms and conditions to apply; a conclusion that the parties might (but equally might not) have intended the terms and conditions to apply is not sufficient.

4.      Whether or not terms are incorporated by reason of a prior course of dealing is ultimately a question of fact and degree, which depends, amongst other things, on the number of previous contracts, how recent they are, the similarity of subject matter, and the manner in which they were concluded. The present case included: a significant course of dealing between both parties extending over five years prior to the conclusion of the sale contract; Stour Bay’s consistent invoice practice throughout this period and the standard nature of Stour Bay T&C which are routinely used by other companies in the animal feed industry, including Provimi’s companies. Considering the evidence as a whole, the Court was therefore satisfied that there was a sufficient course of dealing between the parties, that reasonable notice had been given to Provimi of the Stour Bay T&C and that these were incorporated into the contract of sale. Looking at the matter objectively, the parties must have intended that the contracts would be made on the Stour Bay S&C which were silent as to gelatin coating and excluded the statutory implied terms under s 14 of the SOGA.

Comment

 The case shows the overriding importance of consistency in dealings between long-term business partners, specifically where two conflicting sets of terms are at play. In the matrix of hundreds of trades being negotiated every day, it is not always easy to ensure such consistency all the way through, in particular where company’s internal procedures are not followed. The more people are involved in executing a single trade, the more likely they are at risk of lacking consistency which may have devastating consequences to the company. This judgment makes it clear that the courts are unlikely to sympathise with those who mistakenly purchase a non-compliant product, specifically in the circumstances where they were explicitly informed about its features before the contract is made.