Fasil Hussain, Commercial Solicitor at Neves in MK, uses the case involving Marouane Fellaini to emphasise the importance of revisiting commercial agreements.
It’s common for companies to enter into a legally binding contract to govern a relationship with a third party.
However, with the passage of time and through the conduct of business, the need to revisit that original contract or indeed to renew that contract on expiration can be given less importance.
A recent case involving Belgian international footballer and Manchester United midfielder Marouane Fellaini has shown why this can be a bad idea.
Under the original agreementm Rosalina Investments, a company representing Mr Fellaini, had granted New Balance Athletic Shoes exclusive right to some of Mr Fellaini’s image rights which included him wearing their boots.
Following expiry of the original agreement the parties were in negotiations to renew the contract.
During these negotiations the Manchester United midfielder continued to wear the boots supplied by New Balance.
The negotiations proved unsuccessful and New Balance ended the negotiations.
Rosalina alleged: (i) that a contract had been concluded late in 2016 by an exchange of emails, and that New Balance breached that contract by breaking off negotiations; or alternatively (ii) that New Balance breached an obligation (said to arise from the original contract) to negotiate in good faith.
The judge acknowledged that both sides had continued to communicate beyond the date of expiry of the original contract as if a contract was in place.
However, the judge in the case described Mr Fellaini’s refusal in December 2016 to attend any further personal appearances until a new contract was signed as paramount.
The judge, having considered the full run of communications, ruled that the parties only intended to be bound when all parties had signed a new contract.
As they had not, there was no binding agreement. Attempts to rely on an open end due to negotiate in good faith was void for uncertainty.
The judge concluded that the Rosalina’s claims were bound to fail, and that as such they should be struck out.
This case serves to reinforce the importance for companies to regularly revisit their commercial agreements with third parties and to ensure that they are up to date and enforceable at all times.
Call Fasil at Neves Solicitors on 01908 304560.