Reveille Independent LLC v Anotech International (UK) Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Cranston,Lord Justice Underhill,Lord Justice Elias |
| Judgment Date | 06 May 2016 |
| Neutral Citation | [2016] EWCA Civ 443 |
| Docket Number | Case No: A3/2015/1099 |
| Court | Court of Appeal (Civil Division) |
| Date | 06 May 2016 |
[2016] EWCA Civ 443
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE QUEEN'S BENCH DIVISION, COMMERCIAL COURT
HIS HONOUR JUDGE MACKIE QC
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Elias
Lord Justice Underhill
and
Mr. Justice Cranston
Case No: A3/2015/1099
Mr Matthew Cook (instructed by Goodman Derrick LLP) for the Appellant
Mr Turlough Stone (instructed by Bryan Cave) for the Respondent
Hearing date: 13/04/2016
Introduction
In what circumstances will a contract result when a written offer document states that it is not binding until signed by the offeree and the offeree does not sign but performs in the manner contemplated by its terms? The question arises in this appeal in the context of a dispute between the appellant, Anotech International (UK) Limited ("Anotech"), part of a corporate group manufacturing and marketing home cookware utensils under the name "The Cookware Company", and the respondent, Reveille Independent LLC ("Reveille"), a United States corporation producing television programmes, including the cooking programme, MasterChef US. At the time the dispute arose Reveille was owned by the Shine Group ("Shine"). Shine was closely linked through the Murdoch family to the Fox Network, which broadcast MasterChef in the United States and Canada. The main presenter of the MasterChef programmes was the celebrity chef, Gordon Ramsay.
The dispute concerns whether a binding contract came into existence between the parties in 2011 by which Reveille agreed to integrate and promote The Cookware Company's products in three episodes of Season 2 of MasterChef US, as well as license Anotech the right to use the MasterChef brand on its products for sale in the United States and Canada. Long form agreements negotiated between the parties were never completed. However, following a five day hearing in the Commercial Court, HHJ Mackie QC ("the judge") held in March 2015 that there had been a binding contract between the parties, formed by Reveille accepting through conduct a relatively short written agreement ("the Deal Memo") which had been signed by Anotech but not Reveille.
In this appeal, Anotech contends that the judge was wrong to conclude that there was a contract reached in circumstances in which the Deal Memo expressly stated that it would not be binding on Reveille until Reveille signed. Given that the standard wording was designed to ensure certainty and that Reveille would not be bound informally, Anotech contends that the judge should not have concluded that there were clear and unequivocal acts on Reveille's part leading to a binding contract.
There were other issues before the judge which do not arise on appeal but are worth mentioning. One was whether there was a condition precedent to the contract coming into existence concerning a brand conflict with Gordon Ramsay, in that he was marketing his own brand of cookware in the United States. The judge held that there was no brand conflict and that both sides realised they could not prevent Gordon Ramsay from selling his own products so long as he did not infringe Reveille's intellectual property rights in the MasterChef brand. Another issue was whether Reveille was entitled to payment for what it did in a claim in unjust enrichment if, as Anotech had contended, there was no contract. Although the judge discussed the issue he did not find it necessary to reach a final conclusion. Nor, as will become evident, do I.
On the issues which do arise for decision in this appeal there is no need to recount in detail the evidence the judge discussed. The judge's findings of fact, about which there is no dispute, means that that would be redundant. Consequently, the only person I have found it convenient to identify by name in this judgment is that of the managing director and sole director of Anotech, Mr Stevens. He was the principal point of contact for Reveille at Anotech and the negotiator of the Deal Memo and the long form agreements. By the time of the trial he had left the company. He did not give evidence to the judge.
Facts
The parties began negotiations in early January 2011 regarding the terms under which Reveille would license Anotech to use its intellectual property rights in the brand MasterChef in marketing its products in North America, and would integrate Anotech's products into three episodes of the television series, MasterChef, for broadcast there on the Fox Network ("Fox"). On 16 February 2011 Reveille sent a Deal Memo to Mr Stevens of Anotech containing relevant terms. It was envisaged that eventually its terms would be replaced by detailed, long form agreements, which the parties were to negotiate.
The Deal Memo appeared to be Reveille's standard form. It contained a series of boxes. It named Anotech as the licensee company. The licensed articles were identified as including cookware, metal bakeware, and metal kitchen utensils for cooking and serving, but excluding products designed primarily for or directed primarily at children and teenagers up to 18 years in age. The licence territory was the United States and Canada and the licence term was five years, from 24 February 2011 to 23 February 2016.
There were several boxes in the form covering payment. Box 20 provided for payments of $1,410,000 over 5 years, with an advance of $52,500 due on signing. The schedule of payments was contained in Box 21, including $157,500 due on 1 May 2011 and then an increasing schedule of payments from 1 March 2012 to 1 March 2015. The royalty rate, in Box 22, was 7%, escalating to 8% in the fourth and fifth years. Box 27 stated: "Marketing Commitment 2% advance on signature unless approved."
A Comments/Special Instructions section in the Deal Memo had a subheading "License term requirements". It included provision for the agreement to terminate early if the show was not recommissioned after the summer 2011 season, allowed sub-branding and set out how products were to be integrated into Season 2, including a $300,000 integration fee in addition to the advance fee for the licence.
An Additional/Special Provisions box at the bottom of page 2 stated: "Non-refundable Advance is due upon signature of this Merchandising Deal Memo." That box continued that unless otherwise agreed by Reveille, the parties had 45 days from the date of the Deal Memo to conclude the long form agreement. If the parties were unable to conclude and execute the long form agreement within that period, all negotiations would terminate if Reveille so notified the licensee.
On page 3 of the Deal Memo the text above the signature box stated: "This Merchandising Deal Memo shall not be binding on Reveille until executed by both Licensee and Reveille".
On 23 February 2011, Reveille emailed Mr Stevens on a number of matters. One was to explain that the Deal Memo would need to be sent to Fox for approval, but that there were "[n]o concerns on the approval" from them. Later the same day Mr Stevens returned an amended version of the Deal Memo. After internal discussions within Reveille, a revised version was sent to him the following day, 24 February 2011.
Over two days, 24 and 25 February 2011, there were discussions between the parties about the use of the MasterChef brand for Anotech's stand (using the name 'The Cookware Company') at the Chicago International Homes + Housewares Show. Reveille told Mr Stevens that it could not approve its use unless Anotech signed the Deal Memo. Mr Stevens also had discussions about images of MasterChef presenters that could be used. Reveille made clear that it was not possible to use the name or likeness of Gordon Ramsay but it did approve use of the MasterChef brand at the Chicago show.
A few days later, on 28 February, Mr Stevens raised his concern about Gordon Ramsay's description on the website of QVC, the online and television shopping company. Gordon Ramsay was promoting other cookware on the website and was described there as "The Master Chef". Reveille accepted that this was impermissible and Mr Stevens was copied into Reveille's emails, sent to Gordon Ramsay's representatives. Meanwhile, 120 boxes of Anotech's products were delivered to the MasterChef set for use in the television programmes. They weighed 2340lbs. Reveille made clear that it could not integrate these into production unless the Deal Memo was signed.
Mr Stevens returned a signed version of the Deal Memo to Reveille, with amendments, on 28 February 2011. In Box 27, Mr Stevens wrote "Approved no marketing advance". Mr Stevens also made a handwritten addition in the Comments/Special Instructions section which stated "Branding Conflict with Gordon Ramsay to be concluded." The version Mr Stevens returned, as received by Reveille, no longer included the Additional/Special Provisions box. The judge accepted that this was because in transmission this section had been cut off by mistake.
In very early March, Reveille swapped Anotech's products into the production of the television episodes of MasterChef US, which were shortly to be recorded. Anotech also sent Reveille the final, approved "talking points" to be incorporated into the episodes, alongside its products. Episode 213 was filmed on 10–11 March 2011, and episodes 215 and 217 on 15 and 18 March 2011.
The Chicago International Home + Housewares Show took place in the second week of March. The Cookware Company's stand at the show had a tower with the sign "MasterChef, as seen on the television series MasterChef". Mr...
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