Tool Metal Mfg Co Ltd v Tungsten Electric Co Ltd

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Tool Metal Mfg Co Ltd v Tungsten Electric Co Ltd
Royal Coat of Arms of the United Kingdom.svg
Court House of Lords
Full case nameTool Metal Mfg Co Ltd v Tungsten Electric Co Ltd
Decided16 June 1955
Citation(s) [1955] 2 All ER 657
Case history
Subsequent action(s)none
Court membership
Judge(s) sitting Viscount Simonds, Lord Oaksey, Lord Reid, Lord Tucker, Lord Cohen

Tool Metal Mfg Co Ltd v Tungsten Electric Co Ltd [1955] 2 All ER 657 is a cited case regarding promissory estoppel. [1]

Contents

Background

Tool Metal was set up by its German parent company Krupp to manage its tungsten carbide patents in England.

TMM later took legal action against TEC for breach of its patent in its manufacturing of machine tools. TEC ultimately decided to enter into a licensing agreement with TMM rather than fight the matter in court, and on 02 April 1938, they entered into the following settlement agreement:

"If in any month during the continuance of the said License the aggregate quantity of contract material sold or used by TECO and Industrial (other than contract material supplied to TECO by the Grantors or any Licensees under the said patents) shall exceed a quota of 50 kilograms (50 Kg) TECO shall whether all or any of such material shall be subject to royalty hereunder or not pay to the Grantors compensation equal to thirty percent. (30%) of the sum which represents the excess net value, that is to say, the average net value per kilogram of all contract material sold or used by TECO and Industrial in the said month multiplied by the weight in kilograms of all such contract material as aforesaid sold or used by TECO and Industrial during such month in excess of fifty kilograms (50 Kg). Provided that contract material sold by TECO to Industrial shall only be taken into account for this clause on the occasion of its sale or use by Industrial."

TEC subsequently found the 30% penalty for all production over 50kg, to be onerous for them.

Later, during the war, TMM's management verbally agreed to suspend its penalty fees TEC, with the understanding the parties would subsequently enter into a new written contract. However, TEC would not agree to sign any new contract drafted by TMM.

As a result, TMM informed TEC that they would go back and enforce the original 1938 agreement.

TMM ultimately sued TEC for the licensing fees.

Held

The court held that TMM were entitled to reinstate the licensing fees, as long as reasonable notice was given, which in this case was from 1 January 1947.

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References

  1. Chetwin, Maree; Graw, Stephen; Tiong, Raymond (2006). An introduction to the Law of Contract in New Zealand (4th ed.). Thomson Brookers. p. 220. ISBN   0-86472-555-8.