The Mudcat Café TM
Thread #37837   Message #529140
Posted By: Richard Bridge
16-Aug-01 - 09:33 AM
Thread Name: Folk Alliance vs. NAACP Part 2
Subject: RE: Folk Alliance vs. NAACP Part 2
Dear Guest

Thank you for making the point. The First Amendment is to do with Freedom of Speech. Therefore it does not impact damages for breach of contract in this case.

You ask to be spared knowledge of the law of contract. Why? You feel very free to insult others. Why should anyone spare your feeling? Contract law is the basis of the liability the FA fears. If you won't listen to their argument, why should they listen to yours?

A recent UK case confirms the recoverability of loss of profits if causation is proved

.

Docno:

C0101346

Case Name: (1) BRITVIC SOFT DRINKS LTD (2) BASS BREWERS LTD (3) THOMAS HARDY PACKAGING LTD (4) BROTHERS DRINKS CO LTD v (1) MESSR UK LTD (2) TERRA NITROGEN (UK) LTD (2001)

Court: QBD Commercial Court (Tomlinson J) 9/5/2001

Subject: CONTRACT - DAMAGES - TORT - SALE OF GOODS

Descriptors: DRINKS : BEVERAGES : CARBONATED : BULK LIQUID CARBON DIOXIDE : CO2 : IMPURITIES : CONTAMINATION : BENZENE : CARCINOGENS : PERMISSIBLE LEVELS : MANUFACTURERS : SUPPLIERS : BREACH OF CONTRACT : CONTRACTUAL TERMS : BREACH OF DUTY OF CARE : CONTRIBUTORY NEGLIGENCE : LOSSES : PRODUCT RECALL : WASTED COSTS : DESTRUCTION : DISTRIBUTION : COMPENSATION TO RETAILERS : LOSS OF PROFITS : IMPLIED TERMS : QUALITY : FITNESS FOR PURPOSE : SALE OF GOODS ACT 1979 : HEALTH RISKS : HEALTH SCARES : BS4105 : BRITISH STANDARDS : FOOD APPLICATION

Summary: Liquid carbon dioxide supplied for incorporation into carbonated drinks had to comply with implied terms of quality and fitness for purpose in addition to British Standard 4105 so that the inadvertent contamination with benzene founded a claim for damages against the supplier and manufacturer in respect of the recall and destruction of drinks incorporating the carbon dioxide.

Text: Claimants' action to recover losses sustained as the result of the supply by the defendant ('Messer') of food application bulk liquid carbon dioxide ('CO2') that was contaminated with benzene. Messer had acquired the contaminated CO2 from the second defendant manufacturer ('Terra'). Terra accepted that the contamination had occurred in the manufacture of the CO2, but contended that it had done so in a way that was entirely unexpected. Following the discovery in 1998 that carbonated soft and alcoholic drinks manufactured by the claimants and others were contaminated with benzene, a known carcinogen, in quantities which, although uncontrolled, were not harmful to human health, the claimants nevertheless took the view that the appropriate response was to recall all drinks contaminated in excess of 15-20 parts per billion ('ppb') that were still with their wholesale customers or with supermarkets. The defendants did not argue that that was an unreasonable response. By this action the claimants sought to recover from Messer, which in turn claimed against Terra, damages for breach of contract and/or duty of care in respect of: (i) wasted costs of recalling and destroying the drinks; (ii) additional distribution costs; (iii) compensation paid to retailers; (iv) loss of profits; and (v) other additional costs. Messer and Terra denied liability in both contract and tort, and further contended that the claimants' loss was caused or substantially contributed to by their own negligence in failing to stipulate that the CO2 supplied to them was not to contain benzene and in failing to test the CO2 supplied to them for the presence of benzene. In particular, Messer contended that the terms of the supply contract between itself and the claimants were such that the CO2 supplied by it was required to conform only with British Standard 4105, which stated that the content of the CO2 supplied by it was to be "not less than 99 per cent by volume", thereby excluding the statutory implied terms as to satisfactory quality and fitness for purpose. It was common ground that the benzene present in the CO2 was far less than 1 per cent by volume. They further contended that the claimants had recalled and/or destroyed drinks which, although containing benzene in excess of 10 ppb but below the range of 15-20 ppb, were perfectly safe and could have been returned to the market for sale.

HELD: (1) The contract of supply between Messer and the claimants did not limit Messer's obligations merely to the supply of CO2 that complied with BS4105. It was nothing to the point that BS4105 did not mention benzene, or that it only required the CO2 supplied to consist of something less than 100 per cent CO2. The fact remained that this was a contract for the supply of CO2 for an industrial food/drinks application, and the claimants were entitled to assume, without having to specify, that the CO2 would not contain anything that was inconsistent with that application. (2) In light of that, it was impossible to conclude that the CO2 supplied by Messer was of a satisfactory standard. Messer was in breach of the implied terms as to quality and fitness for purpose. (3) It followed that Terra was liable to indemnify Messer in respect of all claims. (4) Given that the benzene had been introduced into the CO2 in a way that not even Terra, its manufacturer, had been able to anticipate, it was wholly unrealistic to suggest that the claimants should have tested for its presence when Terra had not thought it necessary. (5) As to the claim for destruction costs, it was unrealistic to suggest that, after the considerable publicity generated by the initial "scare", the public would have been prepared to accept a product that was "less" contaminated than that which had been withdrawn. However, the amount claimed would be reduced to reflect the fact that some cases of drinks had been destroyed without being tested at all for contamination. (6) The other heads of claim were all made out, save the claim for loss of profits. Although the claimants' sales had dropped at the same time as the recall, the court was satisfied that this was attributable to the claimant's pricing and promotional policies combined with strong competition from their rivals.

Judgment accordingly.

Appearances: Mr A Boswood QC and Mr J McCaughran instructed by Nicholson Graham & Jones for the claimants. Mr C Symons QC and Ms J May instructed by Herbert Smith for the first defendant. Mr A Prynne QC, Mr C Gibson QC and Mr G Webb instructed by Eversheds for the second defendant.

References: LTL 15/8/2001 (Unreported elsewhere)

Judgment: Approved - 130 pages

Full Text: [Full Text]