Distribution Agreement in UK Law

Victory Partnership expended capital of $3,250,000.00 for the purpose of producing and exploiting a commercial film. The production and exploitation of a film is a trading activity. The expenditure of capital for the purpose of producing and exploiting a commercial film is a trading purpose. The section is not concerned with the purpose of the transaction but with the purpose of the expenditure.

Another aspect of good faith which overlaps with the first is what may be described as fidelity to the parties' bargain. The central idea here is that contracts can never be complete in the sense of expressly providing for every event that may happen. To apply a contract to circumstances not specifically provided for, the language must accordingly be given a reasonable construction which promotes the values and purposes expressed or implicit in the contract.

Such "relational" contracts, as they are sometimes called, may require a high degree of communication, cooperation and predictable performance based on mutual trust and confidence and involve expectations of loyalty which are not legislated for in the express terms of the contract but are implicit in the parties' understanding and necessary to give business efficacy to the arrangements.

The fact that a particular construction leads to a very unreasonable result must be a relevant consideration. The more unreasonable the result the more unlikely it is that the parties can have intended it, and if they do intend it the more necessary it is that they shall make that intention abundantly clear.

We heard a great deal of detailed argument on such matters as the meaning of "film", the nature of copyright interests and the exact effect of particular provisions of the Distribution Agreement and other documents, and some of these matters we deal with below. It seems to us, however, that in deciding whether or not Micro Fusion's activities amounted to the exploitation of the film Mrs Henderson Presents, a broader view gives a sense of perspective.

But it seems to me that, while all relevant facts should be given their due weight in assessing these questions and the burden of proof rests on the person who alleges that the original contractual obligations have changed, the standard of proof is and remains the balance of probabilities throughout. I would prefer not to adopt the use of "strong evidence" or "a very high evidential burden" since there is a danger that they may be treated as affecting the burden or standard of proof.