In breach of contract: Print 21 magazine article

A recent court case involving a disputed print job has some important lessons about when a customer is allowed to break a contract to print. Wal Abramowicz has the details.

On the 5 August 2008, the Local Court of New South Wales handed down a decision in a printing case.

The background facts were that the customer was an importer of high priced clothing. The customer had engaged the printer to print a catalogue. The agreement comprised various emails between the parties and conversations. The printer provided a quote that was accepted and the customer provided a DVD and CD containing images to be used in the catalogue. Various proofs were produced by the printer and various changes were made by the customer. Ultimately an inkjet proof was produced and it was approved and signed by the customer. The person who approved the proof on behalf of the customer left for overseas and was overseas when the printing work was done.

About a quarter of the catalogues were delivered to the customer who contacted the printer advising that the job was not acceptable. The customer made a number of complaints. These were rejected by the printer. The printer attempted to deliver the balance of the catalogues but delivery was refused.

The complaint
The customer complained that the catalogues had a number of faults including inferior resolution of the photographic imagery, scuffing on the images, inferior stitching causing damage to images, inadequate cropping and poor page alignment. They also claimed that the catalogues were not in accordance with printing industry standards.

As a result of those complaints the customer argued that it was entitled to terminate the agreement and that it was not liable to pay the printer. Furthermore, the customer entered into a new contract with another printer to produce the catalogues and it claimed the costs of that printing work.

During the course of discussions between the parties prior to the acceptance of the quote, the customer had handed the printer a sample of a previous catalogue and requested that the new catalogue be the same as the sample provided.

What the court had to determine
The hearing occupied two days of Court time. The main legal issue in the case was whether or not the customer was entitled to terminate the agreement and, in that regard, it needed to consider the following issues:

* Was the phrase "same as sample" an essential obligation or condition of the agreement or not?
* Did the flaws found in the catalogues produced by printer constitute a breach of an essential term and therefore a breach of the contract, or justify termination as they were sufficiently serious?

What the court found was that, in this case, there was no express or explicit agreement between the parties that the term "same as sample" was essential. In fact, during cross examination, one of the customer's witnesses conceded that the sample catalogue that was provided to the printer had itself a number of flaws.

The Court noted that even though the customer submitted that the catalogues printed by printer were not in accordance with or did not meet printing industry standards, no independent expert evidence was called by customer in relation to that issue. The onus of proving this issue was upon the customer to satisfy the Court on a balance of probabilities. The customer failed to do that. There was no evidence at all that the catalogues produced by the printer were less than the industry standard. Further, the Court found that although a number of flaws were referred to during the evidence, many of those flaws were trivial.

The customer argued that there was a breach of an essential term of the contract which permitted it to terminate the contract and not pay for the printing. The Court held that there was no such breach. As a result the customer had wrongfully terminated the contract and was liable to pay printer the cost of printing the catalogues. It also ordered that the customer pay the legal costs of the proceedings to the printer.

What lessons can be learned?
A number of lessons can be drawn from the outcome of this case:
* In negotiating an agreement reduce all the terms to writing.
* If some of the terms are so essential that any breach of them would allow you to bring the agreement to an end, state that they are essential terms in the agreement.
* If the quality of the printing work is an important issue then make arrangements for a representative of the client to be present at the time that the job is being printed.
* If you find yourself arguing a matter before the Court, consider engaging an expert to give an opinion relating to the complaints of the printed article.