A Coleslaw Update. No. Case Law Update - Contract

Now that we've said goodbye to 2024, let’s take a quick look at some notable cases last year. 

Secretary of State for the Department for Environment, Food and Rural Affairs v Public and Commercial Services Union [2024] UKSC 41

In the past, many government departments allowed their employees to pay union fees directly from their salaries through a system called "check-off." This system was set up in the 1960s through agreements between the government and trade unions. However, after a notice from the Cabinet Office in 2013, several departments stopped using this system between 2014 and 2016. 

This led to a breach of employment contracts, as the departments later admitted. The union lost money because fewer employees paid their fees, so they claimed compensation under the Contracts (Rights of Third Parties) Act 1999. Although the union wasn't directly part of the contract, it was meant to benefit from it. 

The Supreme Court agreed with the union, allowing them to claim damages, as the contract was intended to benefit them. Thus, the union could enforce the check-off arrangement.

 Ayhan Sezer Yag Ve Gida Endustri Ticaret Limited Sirket v Agroinvest SA [2024] EWHC 479 (Comm)

Agroinvest (the seller) made a deal with Ayhan Sezer (the buyer) to sell rape and soybean meal. 

The deal said the buyer had to pay 20% upfront. If the deal didn't go through, this money would be returned. After signing, the buyer said they couldn't fulfil the deal and asked for their money back. The seller refused.

The High Court looked at the contract's wording and decided that if the upfront payment was meant to be a non-refundable deposit, it should have been clearly stated. Since it wasn't, the buyer was entitled to get their money back.

Tesco Stores Ltd v Union of Shop, Distributive and Allied Workers and others [2024] UKSC 24

In 2007, Tesco reorganised its distribution centres, leading to some closures. Employees who wanted to stay had to move, so Tesco introduced "Retained Pay," a special pay scheme to encourage them. 

This pay was promised as a "permanent feature" and "guaranteed for life," changeable only by mutual agreement or after a promotion.

In January 2021, Tesco decided to stop the Retained Pay scheme. They offered employees a one-time payment equal to 18 months of the Retained Pay to agree to this change. If employees didn't agree, they would be fired and rehired without the extra pay.

The employees sought legal action to keep their Retained Pay. The main legal issues were that the pay was described as permanent and Tesco's power to dismiss employees. The Supreme Court ruled that Tesco couldn't use its right to terminate contracts to remove the Retained Pay. Therefore, the Court issued an order preventing Tesco from breaching this part of the contract.

We can’t wait to see what’s in store for the year ahead!