Reveille Independent LLC v Anotech International (UK) Ltd [2016] EWCA Civ 443
Background
The Court of Appeal were required to consider whether a provision which required parties to sign a contract for it to be legally binding (an express term) can actually be waived by their conduct.
The matter concerned negotiations for a licence by Reveille, owners of “Masterchef” and Anotech, a UK cookware distributor. Anotech wished to market its products in the US under the “Masterchef” brand and have their products integrated into three episodes of the television series.
A contract was drawn up and the terms of the negotiations were set out in a deal memo by Reveille. One such term in the memo, was that the contract would only be legally binding once both parties have signed.
However, upon receipt of the Deal Memo, Anotech made amendments and sent a signed copy to Reveille, thus creating a counter offer.
The revised memo was never signed by Reveille and the l agreement broke down before any agreements were made. Despite this, Reveille performed all its obligations as set out in the amended deal memo through its conduct; but Anotech refused to pay the invoice as a contract was never made.
Outcome
The question here was then, was a contract ever made?
The possibility of being able to waive a prescribed mode of acceptance has already been set out from previous case law, such as RTS Flexible Systems v Mokeroi Alois Muller GmbH. This case demonstrated that acceptance can occur where terms are agreed in an unsigned draft. Moreover, further case law such as shows that a prescribed mode of acceptance can be waived by conduct (see MSM Consulting Ltd v United Republic of Tanzania).
The Court of Appeal therefore found in favour of Reveille. They held that despite the signature requirement, the terms of the amended Deal Memo had been accepted by Reveille through its conduct. Reveille integrated the products in its television series and shown approval by using its IP in press releases. Moreover, Anotech was also acting as though they were bound by the terms laid out in the amended deal memo and was not seen to be put in any disadvantage.
Comment
This should serve as a reminder to all parties seeking to negotiate long-term agreements of any sort; Ensure the terms of the agreement are fully agreed and signed prior to commencing work. Failing this, a legally binding contract may be formed dictated by the other parties’ conduct.
The above is a general position of the law and does not constitute legal advice. Please contact Nath Solicitors for further information.
