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Tied Garages and the Public Interest*
Published online by Cambridge University Press: 16 January 2009
Extract
When petrol rationing ended in 1950, the Anglo-American Oil Co. Ltd. (the predecessor of Esso Petroleum Co. Ltd.) introduced into Britain the “solus” or “tied garage” system of petrol supply, and by the end of 1951 all the principal suppliers of petrol had adopted this system. The solus agreement between supplier and retailer which is the foundation of the system differs in detail from one supplier to another, and some of the terms of an agreement may be negotiated between supplier and individual retailer, but essentially the agreement is couched in a standard contract of which the principal features are similar throughout the trade. In terms of this contract the retailer undertakes to sell the supplying company's brands of motor fuel exclusively for a fixed period, in consideration of a special rebate off the wholesale price of the motor fuels purchased. The retailer is required, in the event of sale or transfer of his business, to secure the acquirer's acceptance of the obligations under the solus contract (this is called the “continuity clause”), and the supplier sometimes reserves a right of pre-emption in the event of intended sale of the business. At the same time as a solus agreement is concluded there is commonly an advance of money by the supplier to the retailer which may be an advance of the solus rebate or a capital loan. The loan agreement may be made as a separate contract, or the loan and supply arrangements may be incorporated in a single document.
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- Copyright © Cambridge Law Journal and Contributors 1967
References
1 Cf. the Solus Petrol (No. 2) Order 1966, Pt. IV, S.I. 1966 No. 1314.
2 The length of the tie is now subject to the recent undertakings given by petrol companies to the Board of Trade and to the provisions of the Solus Petrol (No. 2) Order 1966.
3 H.M.S.O., July 1965.
4 The Economist, August 7, 1965, p. 543.Google Scholar
5 Unless, e.g., expressed to extend to the date for repayment of a loan made to the retailer, but subject in that event to the retailer's right to repay the loan in full at any time after five years, thereby terminating the exclusive tie.
6 One company, Total Oil Products (G.B.) Ltd., refused to do so, and in consequence the Solus Petrol Order 1966 (S.I. 1966 No. 894, replaced by the Solus Petrol (No. 2) Order, S.L 1966 No. 1314) was made, to compel its compliance.
7 Cf. Cheshire & Fifoot, Law of Contract, p. 332.
8 [1966] Ch. 146.
9 At p. 182, my italics.
10 [1965] Ch. 1073.
11 [1965] 1 W.L.R. 956.
12 Report of the Monopolies Commission, para. 387.
13 At p. 961.
14 See also the judgment of Russell L.J. at p. 963.
15 [1965] 3 W.L.R. 469.
16 Petrofina (Gt. Britain) Ltd. v. Martin [1966]Google Scholar Ch. 146.
17 Esso Petroleum Co. Ltd. v. Harper's Garage (Stourport) Ltd. [1966]Google Scholar 2 W.L.R. 1043.
18 Cf. Diplock L.J. at p. 187F and Lord Denning M.R. at p. 170A–B.
19 Diplock L.J. at p. 187.
20 At p. 169.
21 At p. 179.
22 At pp. 190–191.
23 Supra, note 17.
24 At p. 1058.
25 At p. 1063.
26 At p. 1054.
27 February 26, 1966, p. 822. An appeal to the House of Lords is pending in the Harper's Garage case.
28 [1966] 1 W.L.R. 1210.
29 p. 1215.
30 See Professor Barna's Note of Dissent, paras. 36–38.