TITLE: Baird Textile Holdings Ltd v Marks & Spencer Plc CITATION: [2001] EWCA Civ 274; [2001]

All E.R. (Comm) 737; [2001] C.L.C. 999 APPELLANT: Baird Textile Holdings Ltd RESPONDENT: Marks & Spencer Plc COURT: Court of Appeal(Civil Division) FACTS: The appellant had been supplying clothes to the respondent for thirty years until this arrangement was suddenly terminated by the respondent. The nature of the parties' business relationship was based on the spirit of co-operation and good faith, and the appellant had reliably supplied the respondent with the goods it required for the duration of their relationship. When it decided to cancel its order with the appellant, the respondent had not provided the appellant with a reasonable notice of termination, though there was no express contract between the two parties. ISSUE: Whether a contract could be implied based on the nature of the parties' business relationship? RESULT: The appeal was dismissed. REASONS: Sir Andrew Morritt V-C found that the test of necessity which was required for a contract to be implied, had not been satisfied in this case. Both Judge LJ and Mance LJ concurred with this judgement. Sir Andrew Morritt V-C held that the arrangement made by the two parties had failed to satisfy this requirement, due to the uncertainty in this arrangement. The uncertain nature of the parties' business relationship was confirmed by the absence of intention to be legally bound, held Sir Andrew Morritt V-C. The argument of estoppel also did not succeed as estoppel is not capable of creating its own cause of action. Furthemore, Judge LJ held that the law of estoppel would require further development if equity was to be applied. THOUGHTS: This case illustrates the application of the test of necessity in contract and the importance of an intention to be legally bound when implying a contract. The test of necessity in this case was determined by the nature of the business relationship of the two parties involved and this relationship was deemed to be too uncertain for a contract to be implied, as both parties had no intention to be legally bound. This case also demonstrates how the law of estoppel is insufficiently developed, as equity could not be applied on the basis of this law.