EE Barred From 'Loss Of Bargain' Claim Because Of The Way It Ended Phones 4U Contract

Author:Mr Nick Pike and Tom Withyman
Profession:Pinsent Masons LLP
 
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Originally published by Out-Law.com

EE ended contract over insolvency, not repudiatory breach This meant it had no right to make 'loss of bargain' claim Phones 4U Ltd (in administration) v EE Ltd [2018] EWHC 49 (Comm) LEGAL UPDATE: The  High Court has ruled that it is an essential requirement for loss of bargain damages that a company has terminated the contract for a repudiatory breach. If the contract has been terminated on other grounds, it has not been terminated for breach and a claim for loss of bargain damages cannot be maintained.

Mobile phone retailer Phones 4U and mobile network EE had a trading agreement relating to mobile phone contract acquisition, retention and in-life management.

Phones 4U entered into administration and ceased trading in September 2014. Two days after the appointment of administrators, EE sent a letter to Phones 4U terminating the trading agreement with immediate effect on the basis of Phones 4U's insolvency. The trading agreement expressly permitted EE to terminate on insolvency grounds.

Phones 4U's administrators sued EE over unpaid commission fees and revenue shares which it estimated would total approximately £120 million. EE counter-claimed that there had been a "loss of bargain", meaning that when the trading agreement was terminated, it lost the opportunity to receive performance of the remainder of the agreement.

EE argued that when Phones 4U ceased trading, it had breached its contractual obligations to promote and sell EE's products and services. EE said that this was a repudiatory breach of the contract because the "seriousness of [the] breach entitles the innocent party to treat the contract as discharged". This allowed it to make a claim for damages for loss of bargain.

Phones 4U said that because EE's termination of...

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