Whether suppliers can resist Iceland's demands depends on their relationship with the retailer, according to legal expert Richard Matthews, partner at Eversheds.
If there are no written terms and conditions underpinning the trading relationship then the supplier has little hope of forcing Iceland to back down, he says. "In my experience of the food industry, terms and conditions are quite often not written down , so a retailer can propose changes , and it's for the supplier to decide if it wants to live with that."
It may be possible for a supplier that has a long-standing relationship with Iceland to claim there is a binding contract through a 'course of conduct', adds Matthews.
However, it is hard to make this stick because the informal nature of food and drink supply means each transaction is likely to constitute a new contract. A supplier could have a case against a retailer if it is trying to impose new terms retrospectively, though this does not appear to be the case as Iceland has given a month's notice of the changes.
If a company has written terms , it would be in a much stronger position, says Matthews. "If there were a fixed-terms supply arrangement covering prices, volumes and payment it would not be open to the retailer to change these unilaterally," he says.
"If the matter cannot be resolved, the supplier could bring proceedings against the retailer for breach of contract. But ideally, you don't want to be suing your customers."
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