"Blind eye knowledge is still a form of knowledge; ignorance, however surprising, is, if genuine, not"
So said Martin Griffiths QC (sitting as Deputy High Court Judge) in the recent case of The Beans Group Limited v MyUniDays Limited, in which the English High Court has revisited the tort of inducement of breach of contract.
Student Beans and MyUniDays were competitor technology companies providing services to sellers wishing to offer student discounts on their products. Student Beans entered into two contracts with an online clothing retailer, Shein, which contained exclusivity provisions. Subsequently, Shein entered into contracts with MyUniDays. The effect of Shein’s contracts with MyUniDays was to put Shein in breach of its (still extant) contracts with Student Beans.
The Court was required to consider two issues: firstly, whether MyUniDays had induced Shein to breach its contracts with Student Beans when it entered into contracts with Shein itself, and secondly, whether MyUniDays committed the tort of inducement subsequently, when it was put on notice of the contracts that Student Beans had entered into with Shein.
First Issue: tort committed upon entry into the contracts?
For liability to attach, a person has to know that he was inducing a breach of contract and to intend to do so with knowledge of the consequences. A conscious decision not to enquire into the existence of a fact can be treated as knowledge for the purposes of the tort (see OBG v Allan). It was common ground that while recklessness would be sufficient, negligence, however gross, would not be.
On the facts, the Judge held that MyUniDays’ principal had not been reckless as to whether Shein had been entitled to enter into the MyUniDays contracts without breaching its contracts with Student Beans and that in fact he genuinely believed Shein was entitled to do so. Accordingly, no tort had been committed upon entry by MyUniDays into the contracts.
Second Issue: tort committed upon being put on notice?
The Judge relied on the Court of Appeal judgment in DC Thomson & Co Ltd v Deakin, in which Lord Justice Jenkins stated that “inconsistent dealing… may indeed be commenced without knowledge by the third party of the contract thus broken; but if it is continued after the third party has notice of the contract, an actionable interference has been committed by him.”
The Court found, as a matter of fact, that had MyUniDays ceased to provide services to Shein upon receiving notice of the Student Beans contracts, Shein would have chosen to return to Student Beans. Accordingly, MyUniDays’ continued operation of its contracts following receipt of notice caused Student Beans loss. An injunction prohibiting MyUniDays from continuing to service its contracts with Shein would therefore be granted.