20th May 2015
The Commercial Court has served a salutary reminder that parties should not become complacent towards the close of contractual negotiations. Written contracts can become binding by virtue of conduct, even regardless of apparent completion formality requirements.
In Reveille Independent LLC v Anotech International UK Ltd  the claimant US TV company negotiated terms with the defendant British distributor of cookware for the licensing of intellectual property rights in the MasterChef brand and the integration and promotion of the defendant’s products in the programme. The parties negotiated a short form written agreement (“the Deal Memorandum”), which was never signed and which was intended to be replaced by long form agreements. The long form agreements were never agreed and negotiations between the parties broke down. In the meantime, the cookware had been integrated during MasterChef episodes; the defendant had acknowledged that it was liable to pay for such promotion; and the defendant had marketed products and literature bearing or referring to the MasterChef logo. When the claimant subsequently brought a claim for breach of the Deal Memorandum, the defendant argued that there was no binding contract as (1) the Deal Memorandum stated that it was not to be binding until signed by both parties and it had not been signed by the claimant; and (2) any steps taken had merely been in anticipation of a binding agreement being concluded either under the Deal Memorandum or pursuant to the long form agreements.
The Commercial Court did not accept the defendant’s arguments. It decided that a binding contract had come into existence.
Commercial clients, contract managers and anyone involved in commercial negotiations should note that binding agreements can arise easily, and often inadvertently.
  EWHC 726 (Comm)