Jackson v. Royal Bank Of Scotland

2005 UKHL 3 (2005)

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Nature of the Case

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Facts

Jackson (P) was a partner with Davies (who died), trading under the name 'Samson Lancastrian.' They sold goods to a firm called 'Economy Bag.' P and Economy both had the same bank, Royal Bank of Scotland (D). Business between P and Economy started in 1990. By agreement P would deal with the import formalities and arrange carriage and for this was to make an inclusive handling charge of 5% of the CIF price, exclusive of customs clearance and carriage. P placed an order for the dog chews ordered by Economy Bag with the supplier in Thailand, but the supplier failed to perform. P then placed an order with an alternative Thai supplier named Pet Products Ltd. Its transaction with Economy Bag was completed successfully on this basis. P retained part of the price paid by Economy Bag for itself as a markup. From 1990 to until 1993 there were 33 such transactions between the parties. Payment was made by transferable letters of credit issued by D. P charged a different percentage markup on each transaction depending on the variety of the items sold. It did not disclose the amount of the mark up to Economy Bag. The packing list was typed on Pet Products' stationery. This showed its address and its telephone and fax numbers in Thailand. It did not show the price on Pet Products' invoice to P or the unit price charged by Pet Products for each item. Economy had no idea of what P was doing. The transferable credit arrangements concealed the amount of its mark-up on its transactions with Pet Products. D accidently sent Economy Bag a document showing that P was making a 19% markup on every transaction in addition to the 5%. Economy canceled the business relationship. P sued D for the loss of the opportunity to make further profits. In the year ending March 1994, Economy purchased 15 shipments from Pet Products worth US $257,944. Between March 1994 and March 1995, it purchased 28 shipments worth US $468,296. Between March 1995 and March 1996, it purchased 23 shipments worth US $462,467. Between March 1996 and March 1997, it purchased 25 shipments worth US $645,429. P won as the court reasoned that the relationship would have continued for four more years on a decreasing scale, and after then further dealings would just be speculative. D appealed and the Court of Appeal held the damages as limited to one year as anything more was too speculative. D’s primary argument was that the loss of the repeat business was too remote as it was not in D's reasonable contemplation that the disclosure of the profit that P was making would lead to the termination by Economy Bag of its trading relationship with P. P appealed to the House of Lords.