HR-2026-280-A: Duty of loyalty in commercial contracts (Norway)

In HR-2026-280-A (judgment of 5 February 2026), the Norwegian Supreme Court considered the duty of loyalty in commercial contractual relationships, both as an interpretative factor and as a potential independent source of obligations between professional parties.

Background

The dispute arose between Isola AS (Norway) and Dural GmbH (Germany) over whether Dural had materially breached the parties' agreement, entitling Isola to terminate.

Since 2002, Isola manufactured and supplied decoupling mats to Dural, who resold them under its own brand in Europe and the USA. In November 2015, the parties entered a short form supply agreement, which imposed exclusivity on Isola (subject to exceptions) but did not contain an express exclusivity obligation for Dural. Instead, Dural assumed a volume obligation, with annual growth of 10%. 

In 2019, Dural approached an Italian company to develop a similar product and resold then under the same brand as Isola's mats, without informing Isola or customers of the additional manufacturer. 

Isola believed that the agreement, properly interpreted, imposed exclusivity on Dural, and that Dural had in any event breached the unwritten duty of loyalty. Isola therefore terminated the agreement for breach. Dural sued Isola for wrongful termination and claimed damages before Norwegian courts.

The District Court interpreted the agreement as containing exclusivity for Dural, and that Isola's termination was lawful. The Court of Appeal reversed the District Court's decision, considering the termination to be unlawful and ordering Isola to pay about NOK 36 million in damages to Dural. Isola appealed to the Supreme Court.

The Supreme Court decision

The first question for the Supreme Court was whether the agreement could be interpreted to include exclusivity for Dural.

• The Supreme Court reiterated that commercial agreements are generally interpreted objectively, with primary weight on the wording. The purpose, structure and context of the agreement may also be relevant, and loyalty considerations may be considered. If a party can show that the parties had a common understanding that departs from the wording, this will be decisive, but rather clear evidence of such an understanding is required.
• In applying these principles, the Supreme Court emphasized that the agreement imposed exclusivity on Isola (with exceptions) but did not expressly impose exclusivity on Dural. Dural instead assumed a volume obligation ensuring Isola meaningful sales, which the Supreme Court considered balanced. The Supreme Court therefore did not interpret the agreement to include any exclusivity obligation for Dural. 

The next question was whether Dural had breached any implicit contractual duties of loyalty towards Isola.

• The Supreme Court noted that a duty of loyalty is generally implicit in contractual relationships and could be both an interpretative factor and an independent basis for obligations. In professional relationships, however, the duty of loyalty should not be used to reallocate a commercially agreed distribution of risk and burdens. It primarily supplements the agreement where the contract is silent.
• The Supreme Court agreed that aspects of the contractual relationship could lead to a somewhat stricter duty of loyalty. It nevertheless held that this could not justify implied exclusivity for Dural.
• The Supreme Court also held that Dural did not breach its duty of loyalty by sending Isola's mat to the Italian manufacturer for copying. The mat was available on the market and was neither patented nor otherwise protected by intellectual property rights.
• Finally, the Supreme Court considered whether the duty of loyalty required Dural to inform Isola earlier that it would move away from a long-standing sole-supplier relationship. The agreement contained no notice or information obligation for Dural, so the question was whether such a duty could be implied. The Supreme Court held that Dural had to inform Isola once an alternative supplier was in place, which it did in 2020. It was not required to inform as early as 2019, among other reasons because it was still uncertain whether the Italian manufacturer would succeed and because loyalty considerations should not eliminate the parties' legitimate strategic room for maneuver.

The Supreme Court therefore unanimously held that the agreement did not impose exclusivity on Dural and that Dural had not breached any duty of loyalty by cooperating with Isola's competitor as it did. The decision confirms that the wording of agreements between professional parties is the basis for construing the parties' obligations, and that there is a rather high threshold to impose implied contractual obligations.