A recent agency case in the English High Court highlights, once again, the need for English contracts to be clear and certain in their terms.
The claimant in the case was Winlink Marketing Limited (‘Winlink’), who entered into an agency agreement (called an ‘Introduction Agreement’) with the defendant, Liverpool Football Club (LFC), in 2013. The purpose of the agreement was for Winlink to try and find a sponsor on behalf of LFC. The Introduction Agreement referred to Winlink as ‘the Introducer’. Under the agreement, Winlink was entitled to a commission payment if a ‘Relevant Contract’ (defined in the agreement as “a legally binding agreement for the grant of Sponsorship Rights entered into during the Introduction Period…”) was entered into.
The main problem in this case was that the parties had not included a definition of ‘Introduction Period’ in the agreement.
In late 2013, Winlink introduced a betting company called BetVictor to LFC. BetVictor made sponsorship offers to LFC in 2014, but LFC rejected these. However, in 2016, LFC and BetVictor began to negotiate a sponsorship deal. In July 2016, they signed a sponsorship deal. Winlink then claimed a commission payment of £1.12 million. LFC claimed that the sponsorship deal was not a ‘Relevant Contract’ because the ‘Introduction Period’ had expired.
There was, of course, no definition of ‘Introduction Period’ in the Introduction Agreement. The High Court held, however, that the Introduction Agreement contained an implied term. This implied term was that the introduction of BetVictor to LFC had to be an ‘effective cause’ of LFC entering into the Sponsorship Agreement with BetVictor. On the facts of the case, the High Court held that the introduction (for which the commission was claimed) was not the ‘effective cause’ of the Sponsorship Agreement.
One of the crucial points for legal practitioners here is that, once again, it highlights the importance of making sure all key terms – for example, time periods, as in this case – are carefully defined and incorporated into a legally binding agreement. If this is not done, there is a danger that a court may imply a term which is not in your favour if a significant, and costly, dispute arises at a later stage.
commission – a sum of money paid to an agent – usually as a percentage of the value of a transaction – for their services.
expire – In relation to a document, it means to come to the end of the period it is valid for.
hold – Here, ‘held’ means ‘decided’ or ‘ruled’.
implied term – Words or provisions that a court may presume was intended to be expressly written into a contract, but were not.
crucial - Very, very important.
costly – Very expensive.
In the following sentences, which of the three words or phrases in each sentence (in bold) is the most appropriate?
1. We have decided to enter in/on/into a sponsorship agreement with BetVictor.
2. In/Upon/Under the contract, we are entitled to a 7% commission payment.
3. The sponsorship agreement is for the giving/grant/sale of sponsorship rights to WellBet.
4. We need to ensure that a termination clause is incorporated into/in/on the contract.
5. If a dispute happens/emerges/arises, it could be very costly.
© Cambridge Legal English Academy 2020