“6.1 Forecast demand schedules will be issued to the Supplier on a regular basis or by exception in the event of major schedule changes. These forecasts will cover forward period of up to twelve (12) months, updated at least on a monthly basis. Subject to clause 6.2, the forecast demand schedules are non-binding forecasts, can be amended by NCR at any time, and do not constitute the commitment of NCR to purchase the forecasted quantities, or any Product whatsoever. NCR will issue a blanket purchase order to the Supplier for each JIT Product. Such order will cover the supply of that Product covering a period of up to a year. The blanket order will give a projected Product quantity requirement for such period; however such quantity will be subject to amendment by NCR. The blanket purchase order does not constitute the commitment of NCR to buy the stated quantity of Product, or any Product whatsoever. NCR may cancel any outstanding blanket order for Product forthwith provided that any such cancellation shall not affect any outstanding Product orders under then issued "call-off” documentation (see clause 6.4 below). 6.2 The Supplier may procure raw materials and detail parts in preparation for assembly of a Product based on forecast demand schedules, provided that in no event shall NCR be liable for: Detail part holdings in excess of 6 weeks. Finished Product holdings in excess of 4 weeks. NCR's liability will be strictly limited to such holdings. Notwithstanding the foregoing, in the case of any component which has an exceptionally long lead time NCR may agree, in advance, to accept the potential liability for an extended holding. Any such agreement will be reflected in Appendix C of this document. Notwithstanding the foregoing, NCR will have no liability to the Supplier for excess or obsolete Products or Spare Parts which are not purchased by NCR due to the Product's or Spare Part's failure to meet Specification or warranty provisions of this Agreement or to the extent that the Products or Spare Parts (including raw materials or detailed parts) are readily reusable or resealable. 6.3 The Supplier will deliver strictly in accordance with the NCR "call-off” schedule of quantities and delivery dates. This schedule will be provided to the Supplier 2 weeks prior to requirement of Non-LSS Products and 5 days prior to LSS Product requirement. 6.4 NCR will be committed to purchase of JIT products, and the Supplier will be committed to deliver such Products, only upon the Supplier's receipt of NCR’s “call-off” documentation for a specific quantity of the Product. 6.5 The authority for the control and issue of "call-off" documentation under this Agreement rests solely with NCR's Purchasing Department. 6.6 The Supplier's forward planning will allow for NCR program changes. Supplier's capacity will be based on the NCR Delfor. Relative to the Delfor, unrestricted downturn can be accommodated subject to the funding arrangements defined in 6.2. Uplift will be limited to a maximum of 40% of the forecast total demand in any 24 week period following issue of the relevant Delfor. Of this additional quantity, approximately four tenths will be immediately available. The balance of uplift capability can be made available at not less than 4 weeks notice by using up forward holdings of details parts (6 weeks' worth). (For example, if the 24 weeks of Delfor is 100, NCR can increase its call-off by an additional 16, and the Supplier will deliver the Products in accordance with such call-off.) Beyond 40%, further uplift will depend on unscheduled replenishment of the pipeline and especially on expediting long lead time components. Such activity will be pursued on a joint best efforts basis by NCR and Supplier on the understanding that all exceptional costs incurred by the Supplier will be advised to NCR and will be refunded by NCR. In these circumstances, by definition, Supplier will be free of its contractual supply line uplift obligations until the normal levels of target stocks and pipeline have been re-established. 6.7 More complete details of the forecasting, delivery scheduling, and ordering processes are described in Appendix E.”
“All forecasts and call-offs will be provided through the EDI Delfor and Deljit. One Blanket Order per part will be issued, showing a single quantity, and a date. The Delfor messages providing forecast quantities will provide a weekly estimation of the schedule for supplier capacity planning purposes. Delivery call-off will be controlled through the Deljit. Material liability will be as per clause 6.2.”
“Yes, Well that would be the plan, but if anything was to go wrong, we would take it the full way, I would imagine. That was the plan”
“Q … it’s your best assessment of the timeline of project Dynamo at this point? A. … Every one of these documents is.”
“Dynamo – GDS Exit Plan/ SLRP Impact”
“We are exiting GDS … we are months away from starting production at NCR Beijing and the last thing we need is more engagement with GDS”
“Gents, the very first Dynamo 15”
“Confidential: Heads up folks. GDS is coming to the US September 13-16… The game plan here is to keep up the pretensions with GDS as we continue executing project Dynamo. GDS is nervous and suspicious. I am hearing this loud and clear from our embedded supply chain (AUO etc.) Our mission is to calm them down and continue on our business as usual state of the affairs with them…In general, our party line is that GDS is a major and important to supplier to NCR and we are always open in exploring new opportunities with GDS.”
“it seems to be the better view that an employer is not ordinarily “in combination” with his employees and that no charge of conspiracy can be brought when the latter merely go about his business”
“even if Mackenzie could be regarded as only obeying orders received from his superior, the combination would still exist if he appreciated what he was about”
“On these facts the case seems to me to be clear. The plaintiff was entitled to the benefit of the contract which he had made, and that benefit he would have continued to enjoy but for the intervention of the defendants. The object of the defendants' intervention was to deprive him of that benefit. The facts leave no room for doubt as to that. He was not a member of their society, and was under no obligation, legal or moral, to conform to their rules. In these circumstances they conspired to enforce, by threats of a formidable character which they had the means of carrying into effect, a breach by his employers and instructors of the contract which the latter had with him ; and the only justification they can suggest for this conduct is that Messrs. Wigg & Wright had come under an obligation to them, not perhaps legally enforceable, if not illegal, not to make such a contract as they had made with the plaintiff. But the justification to be of any avail must cover their whole conduct, the means they used as well as the end they had in view. As against Messrs. Wigg & Wright they had whatever rights within the law the rules assented to by Messrs. Wigg & Wright afforded them. But to combine to coerce them, by threats of the character I have described, to break their contract with the plaintiff was in my judgment an illegal act carried out by illegal means. They cannot be in a better position if the rules are unenforceable than they would have been had a breach of them given them a legal cause of action. But in such case how can they possibly justify taking the law into their own hands and compelling the opposing litigant by coercion to give effect to their view of a disputed obligation by breaking his contract with the plaintiff?” 128.He continued at page 738 – 739: “The defendants did knowingly and for their own ends induce the commission of an actionable wrong, and they employed illegal means to bring it about. Such conduct would be actionable in an individual and incapable of justification, a fortiori where the defendants acted in concert. These considerations seem to me to exclude from discussion in this case the illustrations given in argument of what might in given circumstances be "just cause," or, in other words, suffice to negative malice. There was no relation between the defendants and either of the parties in this case at all analogous to those existing in the instances put of father and child, or doctor and patient, which I leave for solution when the case arises. The defendants have no higher immunity from legal obligations than any other members of the community, and if they have legal rights they can enforce them by legal means only.”
“We were not using that leverage because it was a kind of a challenge to our customer. We were more concern about risks and responsibilities, so if this has to happen we are very afraid that it happen. It would be a big problem for GDS but if this has to happen we have to manage properly, manage the problem is to … reduce the risk of GDS to reduce the US$ 20 million of working capital which sat on. … [The leverage] is not existing because you know it’s the last thing that a company like GDS could do, because if you do that …. And then what? Then what? You have finished to work with the customer? You end a 20 years profitable relationship? You cut your future? You risk to remain with the US$ 20 million of working capital which may be five to ten millions are invoiced to be paid which the customer will have stopped immediately to pay, so what is the sense to do that?”
“I know you are working hard Evan, but to be honest, Dynamo is not on the forefront of my mind, it really is not. I am thinking about how to keep my job for 2011, not project that will take 3 years to implement etc … I know all the reasons why and quite frankly, if you have anxiety around how GDS will react, don’t. Reason being: the best thing that can happen to us is for them to stop shipping. It will just vindicate and validate our broken record message of “we are sole sourced and have no alternatives”
“There are different way to terminate a contract. You could expect to be given notice, and you could expect that you are offered to ramp down your manufacturing, respecting the forecast that has been provided to you, in order that somehow to protect the customer, because in somehow you work as a safety net while they are ramping up, and it allowed the supplier to adapt, to adjust to a new scenario”
“Other measures TBA”
“what is your point on the “GDS negative response” potential. We know it’s going to be negative, that’s why we are going down the path with the 80-20 rule etc. You might want to consider removing this item unless I am missing anything here”
“Vendor hears of our plans prior to replacement products being finalized and stops delivery of the current product”
“This is self-destroying on behalf of the vendor. Likely hood is will look for short term price hike or promise of continued orders”
“further incremental orders likely to be delivered beyond point of disclosure with the risk of disruption due to breakdown of relationship although it is thought GDS would deliver any products they have material to build”
“Negotiate Finished Goods Receipt quantity vs. Raw Materials exposure and agree on delivery schedule.”
“GDS Contractual Obligation on Exit”
“A detailed file of what material we will be taking will be sent shortly … NCR welcomes discussions with respect to our respective obligations and commitments arising from this change in our display sourcing strategy. … We appreciate your support over the years.”
“From January 16th +30 days is the 15th of February. +60 days is March 17th Purchase Orders: Craig to mastermind & Holly to execute (Production Orders): - Craig will provide a file to Holly detailing which receipts to leave open and which to cancel. The game plan is for GDS and BENCHMARK: ◦ Part 1: Leave in tact receipts that are due by February 15th (30 days) ◦ Part 2: For materials with dock dates between February 16th through March 17th ▪ Keep the receipts open that are in transit (NCR owns that) ▪ Keep intact materials we need (5965, thermally managed) that are NOT in transit ▪ …Craig will keep track the part 2 value and shipments qty in order for us to negotiate our 60 days WIP contractual commitment with GDS ◦ Part 3: Cancel all receipts with dock dates beyond March 17th that are NOT in transit.”
“As we discussed in our conference call today, NCR has vertically integrated the design and manufacture of its display portfolio which includes the displays that have historically been supplied by GDS. As a result, NCR is cancelling open purchase orders for material to the extent set out in the attached spreadsheet. Furthermore, NCR is amending the forecasts to zero for all the products GDS supplies to NCR. We understand this change in sourcing strategy will have a significant impact to GDS's operations and employees. Being sensitive to that and in order to enable you to manage your company effectively through this transition we have agreed on today's call that all communications between our two companies are to be funneled through Luca and I. The attached file contains all the open orders NCR will be cancelling. Please note that both NCR factory and NCR Services orders are included in this file in two separate tabs. My recommendation as to the next steps is to review the file I am attaching and advise how you would like to proceed. I am standing by to discuss next steps, engage in good faith commercial discussions either by phone, email or face to face. NCR welcomes discussions with respect to our mutual obligations and commitments arising from this change in NCR's display sourcing strategy.”
“NCR-GDS Display Sourcing Transition”, and the text of the e-mail itself referred to NCR’s involvement in enabling GDS to “manage your company effectively through this transition”
“To the say that we are disappointed with the news delivered by Evan yesterday would, of course, be an understatement. We are, however, equally disturbed by the process that has been followed in the last year and is now being followed to close out in a hard stop and without warning. Regardless of contracts and costs, the over-arching objective of GDS in its 25 year relationship with NCR has been never, ever to stop NCR's production lines. We have always said to NCR and often repeated among ourselves that, no matter how difficult the circumstances and no matter what commercial dispute may arise, we would never abuse our position as the sole display supplier to our largest customer and our record is evidence that we have been true to that principle even, for example, when NCR owed us millions of dollars in overdue payments. The relationship has been symbiotic and the dependency mutual and this has been its strength. Since the single source has worked for NCR for so long, despite so many challenges that GDS has always risen to meet, the change of philosophy now to in-source is a legitimate one that we respect but it is not one that follows logically from what has gone before. Our immediate concern is that the relationship has been onesided causing GDS to absorb many costs and risks that should rightfully have been NCR's. We consider that NCR is now abusing its dominant position to the potential detriment of one of its most dependable and loyal suppliers. NCR has evidently deliberately misled us in recent months by delivering demand forecasts that it knew it would not fulfil and also by blocking all dialogue, preventing us from investigating plans for the future. NCR has even stood by and allowed us to make a last time buy for parts it did not intend take and knowing we would invest in the associated engineering effort that would secure NCR's supplies. We will do everything we can to minimise the pipeline but, since NCR has elected not to facilitate the gradual transition that our support over the years deserves, the minimum we would ask you to support is to procure the outstanding material that has been committed in good faith for NCR according to customs and practices established over entire careers not just in the current NCR era. I am, therefore, writing to you personally now to ask for your broad support of this principle; the detailed information will be provided in the coming days.”
“Evan is waiting for your proposal to work with GDS to discuss the commercial issues related to this change in sourcing strategy and he has my full support in this endeavour. I hope that our two companies can manage the transition in the same spirit of cooperation that has been demonstrated during the course of our relationship.”
“GDS Day 2 Picture Not looking good for them”
“Wanted to give you a quick update on where we are as a "Day 1" with GDS. Haven't had their response yet but here's what they are now reacting to. In summary they are toast. See attached slide. As of the day of the announcement we had Open PO's with GDS for a total$13.05M including WCS. As of this morning I am confirming that all GDS orders that needed to be cancelled (including WCS) has taken place. Total value of cancellations$4.65M . That leaves GDS with open orders with us to cover our contractual obligations with$8.4M of which$6.15M is in stock or in transit (NCR owns it now). That leaves GDS to make and ship to us$2.25M worth of displays. Giovanni should pick his next words to us very carefully. His company can and most likely will go belly up in less than 30 days. We have all the aces in our sleeves and the deck is stacked to our favor. That was not an accident. That was engineered.” are now reacting to. In summary they are toast. See attached slide. As of the day of the announcement we had Open PO's with GDS for a total$13.05M including WCS. As of this morning I am confirming that all GDS orders that needed to be cancelled (including WCS) has taken place. Total value of cancellations$4.65M . That leaves GDS with open orders with us to cover our contractual obligations with$8.4M of which$6.15M is in stock or in transit (NCR owns it now). That leaves GDS to make and ship to us$2.25M worth of displays. Giovanni should pick his next words to us very carefully. His company can and most likely will go belly up in less than 30 days. We have all the aces in our sleeves and the deck is stacked to our favor. That was not an accident. That was engineered.”
“For our upcoming meeting my advise will be to proceed in 4 sequential stages – in fact I will insist we follow this sequence as I am used to orderly and organized fact based good faith commercial discussions. I will need to receive your responses to items 1 & 2 below at a minimum one business day ahead of our meeting to allow us to prepare. 1. Agree what NCR will be purchasing from GDS in line with our contractual obligation. NCR has kept open purchase orders for materials it is obligated to take and for the materials that it’s not we have cancelled the orders accordingly. If GDS believes that NCR has additional contractual material obligations please articulate what those are and why After Agreement is reached on item #1 we move to item #2 2. For materials that NCR is not obligated to purchase from GDS, NCR will review GDS’s proposal. We will consider your proposal and we’ll go from there. As it stands today NCR is not prepared to take any material from GDS that we are not contractually obligated to. After Agreement is reached on item #2 we move to #3 3. What is GDS position for the spares and repair of displays for NCR WCS needs after items 2 & 3 have been settled? After we understand #3 we move to #4 which is a GDS request 4. What role can GDS play in NCR’s future strategy after the transition of the display portfolio has been completed. Looking forward to your feedback and meeting. I think only #4 needs a face to face meeting. I think items 1-3 can be resolved quicker via email and conference calls. You are insisting on a face to face and we will honour your request. Please come prepared. Thanks as always for your support.”
“If only the terms of the contract are applied (and we think the true obligation exceeds this) most of the cancelled PO + additional forecasts are inside such terms. There is much more to discuss and there is great urgency to resolve all matters because of the impact is massive. You expressed a willingness to meet and we would like to do so, travelling tomorrow. We think this is essential. Can we please confirm this plan?”
“I am not looking forward to this”
“Me neither – but I do want to put this behind me”
“Can I call you? I was thinking to beat them up from 9-12 and then you can go in for the kill at 1 pm? Or I can have them at 1 pm and grind them for 1 hour and kick them out at 2 :-)”
“ … for me it wasn’t a question to resolve issues. It was a question to find a way to deliver, to invoice. That was the only objective that we went to, and to understand why NCR had that position.”
“Once again, GDS is not listening to what we have asked them to prepare. No surprises. That’s their SOP [standard operating procedure].”
“Contractual Obligation Summary”
“Cutting to the end, they have declared that they want to work with us, and work with us fast, to plan a use-up / cancellation of the parts. We will provide all the detailed data they want within the next 48 hours. We suspect that they will then make 'an offer'. Who knows whether it will be fair and reasonable one. The main thing is that we are talking. Bob's closing words were "you have our commitment to do the very best that we can under the circumstances". Make of that what you will. Once the materials plan has been agreed they are open to continuing to work with us on support to WCS and to consider us as a second source EMS possibility. We should have a better idea by the end of this week what NCR will do for us on the parts and Finished Goods but it is fair to say that we can expect it to be more than the zero that we were facing when we arrived here.”
“NCR did a last time buy, mainly to assist GDS. We did not even need the extra products we bought from them”
“Proposed Incremental GDS Take (Risk Mitigation)”
“GDS has procured material and planned production according to your forecast and it would be catastrophic in case we would not consume such material. Our scope for the meeting was exactly to agree a transition that allow to consume the material and to ramp down the factory in a reasonable way for GDS.”
“WITHOUT PREJUDICE: NCR Proposal for GDS Displays”
“NCR GDS Finished Goods Proposal 2.6.13.xlsx”
“Under the circumstances, without prejudice to our position, GDS will accept NCR’s proposal, subject to appropriate finalization”
“Its like … magic … love it”
“That’s what happens when you have them by the ….ls… ;-). I will pull us together to go over our game plan. I already spoke to don G, and we’re checking on inventory at the corporate level (non displays of course).”
“Attached please find the factories + WCS proposed inventory purchase plan aimed to de-risk dynamo NPI and bring in significant savings to NCR. We have an opportunity to bring in$11.4M of inventory for$3.7M PPV. In PPV % terms this equates to 26% discount for factories and 44% for WCS. The proposed breakdown by quarter and by factory/WCS is below”
“Kaparis: also I decided not put any FRO language in this contract. I am trying to keep it simple. I am also working on clearing out AP. Bisognin: got it and reading now. I will feedback asap. Kaparis: self explanatory.”
“On January 16th 2013 NCR announced to GDS that it has vertically integrated the design and manufacture of the display portfolio used in NCR’s self-serve products. Pursuant to the terms and conditions in the Purchase Agreement PA04.016 between NCR and GDS, NCR cancelled open purchase orders with GDS for material to the extent set out in the attached Exhibit 1. Furthermore, NCR amended the forecast to zero for all products GDS supplies to NCR. In an effort to alleviate the impact that the aforementioned announcement to GDS’s operations and employees, NCR in good faith and without prejudice is making the following offer to make a last time buy purchase of displays from GDS set out in the attached Exhibit 2. Global Display Solutions Group Ltd and its affiliates (GDS) and NCR corporation (NCR) agree that the amounts set forth in this offer are in full and final settlement of any claims, damages or losses whatsoever that GDS has or may have, arising directly or indirectly from all orders placed by NCR pursuant to the Purchase Agreement (PA04.016, as amended) between NCR and GDS on or before16 January 2013 (“Orders”), and the termination of Orders pursuant to the Purchase Agreement. In consideration for payment by NCR of the amounts set out in this offer, GDS waives and releases NCR from all claims, liabilities, demands and causes of action, known or unknown that GDS has or may have against NCR relative to the Orders. GDS will supply the products as detailed on Exhibit 2 at the prices indicated, subject to the terms and conditions in the Purchase Agreement PA04.016 between NCR and GDS, including but not limited to quality, warranty and support. This settlement offer will become binding upon signature by the authorised representative of the parties.”
“I am curious, since we have little choice is there some extortion?”
“In few words is the “execution of the deliveries of existing POs and the LTB annexed” that constitute the settlement”
“There are dangers in signing this agreement, let me highlight a few points before speaking to you: 1. It is expressed to be in full and final settlement of all claims which GDS may have. In answer to your question of whether you can subsequently claim economic duress and escape the consequences of signing this, that would be very difficult. This is a complex area but even if you could, you would have to sue them as soon as you were released from the operation of the duress. I would not advise you to rely in this, you must assume that if you sign this you will be bound by it and will have waived all claims. I wanted to explore your options with the barrister but did not do so in view of your instructions. 2. The underlying contracts remain in place and I have not identified how this would operate within these structures and for example whether or not there would be anything to stop NCR from cancelling the orders and so you would not get the money you are expecting. This is certainly a risk as the draft currently appears. 3. NCR Corporation is said to be entering into this agreement but that is not the party to the underlying agreements. This needs to be resolved and you should be clear on what the status of the other contracts is; for example can you be called upon to perform these in future? 4. It does not address the TUPE issue that arises as a matter of law. This means GDS may be left with TUPE claims. I am sure we could cover off these points in a fuller draft agreement. Can we speak at 2.30pm?”
“We also talked about whether or not they wanted to leave any claims open, we discussed at some length why they were accepting this comprise. Essentially they feel that they have got no choice and they need the money urgently to continue to run the business. I asked if it was not possible to obtain funding elsewhere so they could pursue a claim and possibly get a much better return but that seems to be out of the question. I said the compromise as it stands, is a release of waiver of claims “relative to the orders”
“Changes I would make commercially”
“I hope this is what you wanted. I am sorry that I cannot guarantee that it will give you the protection you really need but it would take a much longer document to do that. If I have missed any point or issue that you feel should be covered off, do let me know. I should add that as this stands, it only waives any claims youhave “relative to the Orders”
“Reading the letter carefully it clearly tries to reference the cancelled POs but, in fact, it actually refers in the third paragraph to all POs issued before Jan 16th (not just the cancelled ones) and asks us to relinquish all related claims in return for the new POs (the settlement agreement). Since open POs and AR all relate to POs issues before Jan 16th they need to be addressed in the agreement as well as the cancelled ones. I think our revised letter seeks only to achieve clarification and is not contentious.”
“Letter of Agreement, Release and Waiver On January 16th 2013 NCR announced to GDS that it has vertically integrated the design and manufacture of the display portfolio used in NCR’s self-serve products. Pursuant to the terms and conditions in the Purchase Agreement PA04.016 (as amended) between NCR Global Solutions Group Limited and GDS Group Limited, NCR cancelled open purchase orders with GDS for material to the extent set out in the attached Exhibit 1. Furthermore, NCR amended the forecasts to zero for all the products GDS supplies to NCR. In an effort to alleviate the impact that the aforementioned announcement has on GDS’s operations and employees, NCR in good faith and without prejudice is making the following offer to purchase the displays from GDS set out in the attached Exhibit 2 and Exhibit 3. GDS and NCR agree that the amounts set forth in Exhibits 2 and 3 attached to this offer are in full and final settlement of any claims, damages or losses whatsoever that GDS has or may have, arising directly or indirectly from all orders placed by NCR pursuant to the Purchase Agreement PA04.016, (as amended) between NCR and GDS on or before16 January 2013 (“Orders”), and the termination of Orders pursuant to the Purchase Agreement. In consideration for and upon payment by NCR of the amounts set out in this offer, GDS waives and releases NCR from all claims, liabilities, demands and causes of action, known or unknown that GDS has or may have against NCR relative to the Orders. GDS will supply the products detailed on Exhibits 2 and 3 at the prices indicated, subject to the terms and conditions in the Purchase Agreement PA04.016 between NCR and GDS (as amended) including but not limited to quality, warranty and support, save that none of the orders on Exhibits 2 and 3 can be cancelled or reduced. References to NCR mean NCR Corporation and its associated or affiliated companies. References to GDS means Global Display Solutions SpA and its associated or affiliated companies. NCR Corporation and Global Display Solutions SpA by signing this agreement confirm that they have the authority to bind their respective associate or affiliate companies to the terms of this agreement. This settlement offer will become binding upon signature by the authorized representatives of the parties.”
“GDS and NCR agree that the amounts set forth in Exhibits 2 and 3 attached to this offer are in full and final settlement of any claims, damages or losses whatsoever that GDS has or may have, arising directly or indirectly from all orders placed or forecastsgiven by NCR pursuant to the Purchase Agreement PA04.016, (as amended) between NCR and GDS on or before16 January 2013 (“Orders”, “Forecasts”), and the termination of Orders pursuant to the Purchase Agreement. In consideration for and upon payment by NCR of the amounts set out in this offer, GDS waives and releases NCR from all claims, liabilities, demands and causes of action, known or unknown that GDS has or may have against NCR relative to the Orders or Forecasts.”
“arising directly or indirectly from all orders placed by NCR pursuant to the Purchase Agreement PA04.016 … on or before16 January 2013 (‘Orders’), and the termination of Orders” and “relative to the Orders”
“The court’s task is to ascertain the objective meaning of the language which the parties have chosen in which to express their agreement. The court must consider the language used and ascertain what a reasonable person, that is a person who has all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract, would have understood the parties to have meant. The court must consider the contract as a whole and, depending on the nature, formality and quality of drafting of the contract, give more or less weight to elements of the wider context in reaching its view as to the objective meaning of the language used. If there are two possible constructions, the court is entitled to prefer the construction which is consistent with business common sense and to reject the other. Interpretation is a unitary exercise; in striking a balance between the indications given by the language and the implications of the competing constructions, the court must consider the quality of drafting of the clause and it must also be alive to the possibility that one side may have agreed to something which with hindsight did not serve his interest; similarly, the court must not lose sight of the possibility that a provision may be a negotiated compromise or that the negotiators were not able to agree more precise terms. This unitary exercise involves an iterative process by which each suggested interpretation is checked against the provisions of the contract and its commercial consequences are investigated. It does not matter whether the more detailed analysis commences with the factual background and the implications of rival constructions or a close examination of the relevant language in the contract, so long as the court balances the indications given by each.”
“[10] The court’s task is to ascertain the objective meaning of the language which the parties have chosen to express their agreement. It has long been accepted that this is not a literalist exercise focused solely on a parsing of the wording of the particular clause but that the court must consider the contract as a whole and, depending on the nature, formality and quality of drafting of the contract, give more or less weight to elements of the wider context in reaching its view as to that objective meaning. In Prenn v Simmonds[1971] 1 WLR 1381 , 1383H1385D and in Reardon Smith Line Ltd v Yngvar Hansen-Tangen (trading as HE Hansen – Tangen) [1998] 1 WRL 896, 912-913 Lord Hoffmann reformulated the principles of contractual interpretation, some saw his second principle, which allowed consideration of the whole relevant factual background available to the parties at the time of the contract, as signalling a break with the past. But Lord Bingham of Cornhill in an extrajudicial writing, “A New Thing Under the Sun? The Interpretation of Contracts and the ICS decision” (2008) 12 Edin LR 374, persuasively demonstrated that the idea of the court putting itself in the shoes of the contracting parties had a long pedigree. [11] Lord Clarke of Stone-cum-Ebony JSC elegantly summarised the approach to construction in the Rainy Sky case[2011] 1 WLR 2900 , para 21f. In the Arnold case[2015] AC 1619 all of the judgments confirmed the approach in the Rainy Sky case: Lord Neuberger of Abbotsbury PSC, paras 13-14; Lord Hodge JSC, para 76 and Lord Carnwath JSC, para 108. Interpretation is, as Lord Clarke JSC stated in the Rainy Sky case (para 21), a unitary exercise; where there are rival meanings, the court can give weight to the implications of rival constructions by reaching a view as to which construction is more consistent with business common sense. But, in striking a balance between the indications given by the language and the implications of the competing constructions the court must consider the quality of drafting of the clause (the Rainy Sky case, para 26, citing Mance LJ in Gan Insurance Co Ltd v Tai Ping Insurance Co Ltd (No 2) [2001] 2 All ER (Comm) 299, paras 13, 16); and it must also be alive to the possibility that one side may have agreed to something which with hindsight did not serve his interest: the possibility that a provision may be a negotiated compromise or that the negotiators were not able to agree more precise terms. [12] This unitary exercise involves an iterative process by which each suggested interpretation is checked against the provisions of the contract and its commercial consequences are investigated: the Arnold case, para 77 citing In re Sigma Finance Corpn[2010] 1 All ER 571 , para 12, per Lord Mance JSC. To my mind once one has read the language in dispute and the relevant parts of the contract that provide its context, it does not matter whether the more detailed analysis commences with the factual background and the implications of rival constructions or a close examination of the relevant language in the contract, so long as the court balances the indications given by each. [13] Textualism and contextualism are not conflicting paradigms in a battle for exclusive occupation of the field of contractual interpretation. Rather, the lawyer and the judge, when interpreting any contract, can use them as tools to ascertain the objective meaning of the language which the parties have chosen to express their agreement. The extent to which each tool will assist the court in its task will vary according to the circumstances of the particular agreement or agreements. Some agreements may be successfully interpreted principally by textual analysis, for example because of their sophistication and complexity and because they have been negotiated and prepared with the assistance of skilled professionals. The correct interpretation of other contracts may be achieved by a greater emphasis on the factual matrix, for example because of their informality, brevity or the absence of skilled professional assistance. But negotiators of complex formal contracts may often not achieve a logical and coherent text because of, for example, the conflicting aims of the parties, failures of communication, differing drafting practices, or deadlines which require the parties to compromise in order to reach agreement. There may often therefore be provisions in a detailed professionally drawn contract which lack clarity and the lawyer or judge in interpreting such provisions may be particularly helped by considering the factual matrix and the purpose of similar provisions in contracts of the same type. The iterative process, of which Lord Mance JSC spoke in Sigma Finance Corpn[2010] 1 ALL ER 571 , para 12, assists the lawyer or judge to ascertain the objective meaning of the disputed provisions.”
“Not infrequently the analysis of the appropriate materials will disclose that the parties expressly or by necessary implication compromised certain matters of dispute but not others. In some cases it will be clear that certain matters were expressly or by implication not made part of the compromise. However, there may be cases where, on any objective view, the parties could and should have dealt with a particular matter but neglected to do so. To what extent will they be permitted by the court to litigate that matter on some future occasion? There is, at least in principle, a distinction between a compromise of a dispute achieved before the commencement of proceedings and one achieved thereafter. In the former situation (which will be governed solely by the law of contract), unless the court can imply a term that a particular matter was compromised, the agreement as construed must stand: the court will not rewrite the parties’ bargain. It may be possible for the agreement to be effective without the matter in question having been embraced within it.”
“However, an agreement’s phraseology may not always yield the answer to the question in hand. As observed previously, in the normal course of events the parties’ negotiations are inadmissible as an aid to construction of an agreement. However, they are relevant and admissible to assist in resolving any ambiguity of phraseology in the agreement or to identify the disputes the parties intended to resolve. It is axiomatic that the analysis of these materials is an objective one, the subjective intentions of each party being irrelevant. An objective analysis of the “factual matrix” that formed the background to the compromise is required to enable the disputes settled to be identified.”
“none of the orders on Exhibits 2 and 3 can be cancelled or reduced”
“Forecast demand schedules will be issued to the Supplier on a regular basis or by exception in the event of major schedule changes. These forecasts will cover a forward period of up to twelve (12) months, updated at least on a monthly basis. Subject to clause 6.2, the forecast demand schedules are non-binding forecasts, can be amended by NCR at any time, and do not constitute the commitment of NCR to purchase the forecasted quantities, or any Product whatsoever. NCR will issue a blanket purchase order to the Supplier for each JIT Product. Such order will cover the supply of that Product covering a period of up to a year. The blanket order will give a projected Product quantity requirement for each period, however such quantity will be subject to amendment by NCR. The blanket purchase order does not constitute the commitment of NCR to buy the stated quantity of Product, or any Product whatsoever. NCR may cancel any outstanding blanket order for Product forthwith provided that any such cancellation shall not affect any outstanding Product orders under then issued ‘call-off’ documentation (see clause 6.4 below).”
“and the termination of Orders pursuant to the Purchase Agreement”
“(5) The "rule" that words should be given their "natural and ordinary meaning" reflects the common sense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents. On the other hand, if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had.”
“In order to invoke the principle it is necessary that something should have gone wrong with the language of the contract rather than with the bargain. The mistake must be one of language or syntax, the court has said on numerous occasions that the process of contractual interpretation cannot be used to rectify a failure to think through the financial consequences of the operation of a clause.”
“What is necessary to bring this principle into play is (a) that it should be clear that something has gone wrong with the language and (b) that it is clear what a reasonable person would have understood the parties to have meant: Chartbrook at [22] and [25]. The first problem with this argument is that if anything has gone wrong with the rent review provisions, as Mr Dutton suggests, it is a failure to think through the consequences of what the parties agreed, rather than any deficiencies in drafting. A failure of that kind cannot be solved by the process of interpretation.”
“it is necessary to show either (1) that the document fails to give effect to a prior concluded contract or (2) that, when they executed the document, the parties had a common intention in respect of a particular matter which, by mistake, the document did not accurately record. In the latter case it is necessary to show not only that each party to the contract had the same actual intention with regard to the relevant matter, but also that there was an outward expression of accord meaning that, as a result of communication between them, the parties understood each other to share that intention.”
“it is important to identify the person who is the decision-taker in the corporate body which entered the contract and to see whether he was making a mistake. Prima facie a person who enters a contract intends to be bound by all its terms. The fact that the contract has been negotiated by a person who is not the decision-taker and has made an error is irrelevant unless it can be shown that the decision-taker shared the intention of the negotiator; but that requires evidence.”
“(a) One is looking for the person who in reality is the decision maker in the transaction in order to find intentions in relation to rectification. (b) In the case of the company that person will usually be the person with authority to bind the company. (c) Someone who is not a person with power to bind can nonetheless be treated as the decision maker if that is the reality on the facts. (d) The intention of a "mere negotiator" may be relevant if it is shared with the actual decision maker; but, as it seems to me, that is because the intention has become that of the actual decision maker. (e) Where a person who would normally be expected to be the decision maker (such as the board of a company) leaves it to a negotiator to negotiate a deal and produce a contract by instructing solicitors, on the understanding that the decision maker would do a deal on those terms, then the negotiator's intention is the relevant one, either because that person is the decision maker, or, if that description is not apt, because the technical decision maker has simply adopted the intentions of the negotiator.”
“everything decided and we would walk away and go our separate ways”
"Speaking from my own experience, I have found it essential in cases of fraud, when considering the credibility of witnesses, always to test their veracity by reference to the objective facts proved independently of their testimony, in particular by reference to the documents in the case, and also to pay particular regard to their motives and to the overall probabilities. It is frequently very difficult to tell whether a witness is telling the truth or not; and where there is a conflict of evidence such as there was in the present case, reference to the objective facts and documents, to the witnesses' motives, and to the overall probabilities, can be of very great assistance to a Judge in ascertaining the truth."
“In this regard I would say something about the importance of contemporary documents as a means of getting at the truth, not only of what was going on, but also as to the motivation and state of mind of those concerned. That applies to documents passing between the parties, but with even greater force to a party's internal documents including emails and instant messaging. Those tend to be the documents where a witness's guard is down and their true thoughts are plain to see. Indeed, it has become a commonplace of judgments in commercial cases where there is often extensive disclosure to emphasise the importance of the contemporary documents. Although this cannot be regarded as a rule of law, those documents are generally regarded as far more reliable than the oral evidence of witnesses, still less their demeanour while giving evidence.”
“Let’s see what Michael [Frisby] says and then sign it”
“An illustration of how a claim for rectification may fail at the first hurdle for want of proof that the written contract was contrary to the actual intentions of the parties can be found in Lloyd v Stanbury[1971] 1 WLR 535 , a case decided very shortly after Joscelyne v Nissen, in which the judge (Brightman J) observed that his approach was laid down for him by the Court of Appeal. The issue was whether a particular plot of land had been included through a common mistake in a written contract for the sale of land. On the facts the court found that, when negotiating the contract, the buyer had not given any thought to the matter and had no positive intention that the relevant plot either should or should not be included. Brightman J saw reason to suspect that the seller intended the plot not to be included but considered the evidence insufficient to make a finding to that effect. Accordingly, no common intention to exclude the plot from the land sold had been established and the claim to rectify the written contract therefore failed.”
“I speculate that he did intend to exclude it. Its exclusion is consistent with the events which occurred during the second and third visits of Mr. Lloyd [the buyer], and it is consistent with the fact that the bank would form a convenient boundary of the property being retained by Mr. Stanbury [the seller]. I feel, however, in a difficulty in the absence of any evidence as to the nature of the instructions given by him to his solicitor and in the absence of any explanation of the reason for his supposed mistaken inclusion of 1428 [the plot]. I hold that the evidence before the court falls short of a convincing proof of the intention of Mr. Stanbury to exclude 1428.”
“I am not looking forward to this”
“Me neither – but I do want to put this behind me”
“According to Peter Gibson J., a person in category (ii) or (iii) will be taken to have actual knowledge, while a person in categories (iv) or (v) has constructive notice only. I gratefully adopt the classification but would warn against over refinement or a too ready assumption that categories (iv) or (v) are necessarily cases of constructive notice only. The true distinction is between honesty and dishonesty. It is essentially a jury question. If a man does not draw the obvious inferences or make the obvious inquiries, the question is: why not? If it is because, however foolishly, he did not suspect wrongdoing or, having suspected it, had his suspicions allayed, however unreasonably, that is one thing. But if he did suspect wrongdoing yet failed to make inquiries because "he did not want to know" (category (ii)) or because he regarded it as "none of his business" (category (iii)), that is quite another. Such conduct is dishonest, and those who are guilty of it cannot complain if, for the purpose of civil liability, they are treated as if they had actual knowledge.”
“[45] [Counsel for Wimpey] relies on Commission as holding that actual knowledge by the non-mistaken party of the mistaken party's mistake is not a requisite of the jurisdiction to rectify for unilateral mistake. He relies on the views expressed in that case that knowledge in categories (ii) and (iii) suffices. But he criticises as illogical the reasoning of Millett J in Agip (Africa) Ltd. that knowledge in those categories involves dishonesty, at any rate to the extent that this court adopted that reasoning as applicable to what knowledge of the mistaken party's mistake is needed for rectification. Why, he asks, if rectification can be ordered if the non-mistaken party has actual knowledge of the mistaken party's mistake, but there is neither dishonesty nor sharp practice, should knowledge in categories (ii) and (iii), which is the equivalent in law of actual knowledge, involve dishonest behaviour for the purposes of rectification? I see force in that submission. However, [counsel for Wimpey’s] difficulty, as it seems to me, lies, first, in this court's acceptance in Commission of the reasoning of Millett J. in the context of rectification for unilateral mistake and this court's application of that reasoning to a case of dishonest conduct, and, second, in the judge's acceptance of the same approach in para. 78 in finding dishonest conduct when concluding that VIC had knowledge (in categories (ii) and (iii)) of Wimpey's mistake. I do not accept that it is open to Wimpey to rely on the judge's finding in para. 78 that VIC had such knowledge but to say that such knowledge was without dishonesty or sharp practice where it is plain that the judge's remarks in para. 78 were permeated by his finding of dishonesty, which, because of Commission, he thought was required.”
“Although there seems to be no authority on the point, it cannot be doubted that it is an actionable wrong intentionally to compel a person, by means of a threat of an illegal act, to do some act whereby loss accrues to him: for example, an action will doubtless lie at the suit of a trader who has been compelled to discontinue his business by means of threats of personal violence made against him by the defendant with that intention ...”
“[5] Since the tort of intimidation is at the heart of the Sibneft case it is as well, at this stage, to set out the essential ingredients of that tort as stated by Lord Denning in Morgan v Fry[1968] 2 QB 710 ,724C: “there must be a threat by one person to use unlawful means (such as violence or a tort or a breach of contract) so as to compel another to obey his wishes; and the person so threatened must comply with the demand rather than risk the threat being carried into execution. In such circumstances the person damnified by the compliance can sue for intimidation.”
“It seems, therefore, to me that the cases in which the employment of one party is interfered with by a breach of the contract with his employer by another but without any further threats expressed or implied must indeed be rare. Indeed, in practice I conceive a parallel would not be other than close with the case of one who, instead of breaking a contract with his employer, assaulted him, and as a result (intended by the assaulting party) the employer disposed of the services of his servant. As in the case of the broken contract, the inference would no doubt be that unless the employer permanently severed his relations with his servant the third party would assault the employer again: and so a cause of action would fairly arise from the implied intimidation rather than from the actual assault.”
“Then it is asked how it can be that C can sue when there is a threat to break B 's contract but cannot sue if it is broken without a threat. This means, it is argued, that if A threatens first, C has a cause of action; but if he strikes without threatening, C has no cause of action. I think that this also is fallacious. What ismaterial to C's cause of action is the threat and B's submission toit. Whether the threat is executed or not is in law quite immaterial. In fact it is no doubt material because if it is executed (whether it be an assault or a breach of contract) it presumably means that B has not complied with it; and if B has not complied with it, C is not injured; and if C is not injured, he has no cause of action. Thus the reason why C can sue in one case and not in the other is because in one case he is injured and in the other he is not. The suggestion that it might pay A to strike without threatening negatives the hypothesis on which A is supposed to be acting. It must be proved that A's object is to injure C through the instrumentality of B. (That is why in the case of an "innocent" breach of contract which was remarked upon by Sellers L.J., that is, one into which A was forced by circumstances beyond his control, there could never be the basis of an actionable threat.) If A hits B without telling him why, he can hardly hope to achieve his object. Of course A might think it more effective to hit B first and tell him why afterwards. But if then B injures C, it would not be because B had been hit but because he feared that he might be hit again. So if in the present case A.E.S.D. went on strikewithout threatening, they would not achieve their object unlessthey made it plain why they were doing so. If they did that andB.O.A.C. then got rid of the appellant, his cause of action wouldbe just the same as if B.O.A.C. had been threatened first, becausethe cause of the injury to the appellant would have beenA.E.S.D.'s threat, express or implied, to continue on strike untilthe appellant was got rid of.”
“A threat, for our purposes, is something which puts pressure on the person to whom it is addressed to take a particular course of action, something by means of which that person is “improperly coerced”
“Another thing that is essential to the cause of action is that the threat should be a coercive threat. It must be coupled with a demand. It must be intended to coerce a person into doing something that he is unwilling to do or not doing something that he wishes to do. It must be capable of being expressed in the form, "I will hit you unless you do what I ask," or "if you do what I forbid you to do." A bare threat without a demand does not to my mind amount to the tort of intimidation. If a man says to another, "I am going to hit you when I get you alone," it is undoubtedly a threat: and an injunction can be obtained to restrain him from carrying out his threat. But the threat itself does not give rise to a claim for damages. It is only when he delivers the blow that it is actionable: and then as an assault, not as intimidation.”
“this is as far as I am prepared to go, and if the offer is unacceptable then there is no deal”
“The Defendants threatened that if the Claimants did not accept NCR would simply not purchase the Products (including not making payment in respect of the failure to take the same) despite (a) NCR having entered into binding purchase orders in respect of some of the same; and (b) NCR having provided fraudulent forecasts of its requirement in relation to the Products”
“[63] From time to time cases do arise where awards of compensatory damages are perceived as inadequate to achieve a just result between the parties. The nature of the defendant’s conduct calls for a further response from the courts. On occasion conscious wrongdoing by a defendant is so outrageous, his disregard of the plaintiff’s rights so contumelious, that something more is needed to show that the law will not tolerate such behaviour. Without an award of exemplary damages, justice will not have been done. Exemplary damages, as a remedy of last resort, fill what otherwise would be a regrettable lacuna. … [65] … the availability of exemplary damages should be coextensive with its rationale. As already indicated, the underlying rationale lies in the sense of outrage which a defendant’s conduct sometimes evokes, a sense not always assuaged fully by a compensatory award of damages, even when the damages are increased to reflect emotional distress.”