No breach of loyalty in a contractual relationship

A Norwegian company (Isola) had for many years produced and sold uncoupling membranes for a German company (Dural). Dural resold the membranes under its own trademark in Europe and the United States. In 2019, Dural asked an Italian company (TeMa) to manufacture a copy product. From 2020 onwards, Dural began purchasing this product for resale under the same trademark.

Isola cancelled the supply agreement in 2022. The company argued that Dural had breached its duty to purchase membranes exclusively from Isola, and that Dural in any event had breached its duty of loyalty in the contractual relationship. Dural disputed the lawfulness of the cancellation and brought a claim for damages before the courts.

The Supreme Court, which only considered the question of whether the cancellation was lawful, found in favour of Dural. There was no basis for reading an exclusivity obligation for Dural into the agreement, even though it imposed exclusivity on Isola.

The Supreme Court also concluded that Dural had not breached its duty of loyalty in the contractual relationship. The long duration of the contractual relationship suggested a slightly stricter duty of loyalty. However, this duty cannot be extended to provide a basis for altering the commercial allocation of burdens and risks agreed between the parties. Isola’s membrane was neither patented nor otherwise legally protected by Isola, and Isola had not reserved any right to restrict Dural’s use of its trademark. The Supreme Court specifically considered whether Dural had a duty to inform Isola earlier of its intention to change its “single-sourcing approach”, but concluded that this duty had likewise not been breached.

The judgment contains a general discussion of the scope of the duty of loyalty in contractual relationships, particularly in commercial contexts.

Read the judgment from the Supreme Court (Norwegian only) (PDF)

Areas of law: Contract law, law of obligations

Key paragraphs: 53–59, 64 and 76

Justices: Falkanger, Falch, Thyness, Sæther, Sivertsen