1. Study the chapters related to "Contract Law: litigation" (77, 78, 79, 80, 83, 84) in
Glossaire the droit anglais, or the document summarising these chapters that you will have received by email.
(Be prepared to answer a quiz...)
2. Study the two texts below : B 10 and B 11. Note that we will listen to two presentations next week, that we will discuss and comment afterwards.
PRESENTATION 1: Mr TRUMER, Mr BERGERET
|
B10
BREACH OF CONTRACT
Forstater
and another v Python (Monty) Pictures Ltd and another company: Chancery
Division
5
July 2013
|
The proceedings
concerned the profits related to the comedy film Monty Python and the Holy
Grail (the film). The Monty Python members (together, the Pythons) incorporated
the first defendant company (PMP) to manage the making of the film. They
identified Chippenham Films, which was a partnership between D and the first
claimant, F, as the film production unit. In an agreement of April 1974 (the MF
agreement) PMP and F agreed that PMP was entitled to the exclusive services of
F. In addition to a fixed payment, F was entitled to 5.6875% of the profits of
the film.
The
profits were defined in the third schedule to the MF agreement (the third
schedule) as including, among other things, 'any and all so-called
"merchandising" and other "spin-off" rights arising therefrom'.
However, a number of additional agreements made at the same time affected the
attribution of funds derived from merchandise. One of those agreements stated
that investments into the film would be made under a scheme run by the second
defendant National Film Trustee Company (NFTC) (later renamed Freeway Cam (UK)
Ltd), and that PMP would, simultaneously with the making of those investments,
enter into a trust deed with NFTC providing for the assignment by PMP to NFTC
of the intellectual property rights in the film and the payment to NFTC of all
the proceeds of exploitation of the film.
In
particular, if income from merchandising into which the Pythons had put special
creative effort (over and above simple exploitation of the existing creative
content of the film) was treated as 'mainstream income', then the Pythons would
have received 34.125% of it. Of that income, 50% (the 'Top Half') was paid to
PMP directly before the residue was divided between all the participants,
including the Pythons for distribution between themselves and F in accordance
with the terms of the MF agreement, and they shared in the remaining 50%
forming part of the mainstream income pot along with everyone else in their
stated profit shares.
When
divided up, F and each of the Pythons received 5.6875% of the PMP sum. In
August 1975, F assigned whatever was his then entitlement to participate in the
mainstream profits to the second claimant production company (MFPL), which he
controlled. In December 1997, PMP engaged a sales agent (FSM) to exploit the
rights in the existing body of Python material. A dispute arose as to the
remuneration of F who was entitled to a fourteenth of the Top Half.
F
submitted that he was entitled to a seventh of the Top Half, in the same way as
each of the Pythons. Four issues arose: (i) whether the true meaning of the MF
agreement so far as regards merchandising and spin-off income was that F should
share equally with individual Pythons in that income, or whether he should
receive a lesser proportion of the Top Half (the construction argument); (ii)
if the true meaning was that F should receive a lesser proportion, whether the
MF agreement should be rectified so that he received the same share of the Top
Half as each of the Pythons (the rectification claim); (iii) who was entitled
to advance the construction argument and the rectification claim (the
assignment issue); and (iv) whether the person or body able to advance that
claim was entitled to damages from PMP or equitable compensation from NFTC in
respect of the alteration in the terms upon which FSM operated as sales agent
(the expenses argument). In that argument, F contended that NFTC had, in breach
of duty, agreed, and PMP in breach of contract had acceded to, a change in the
fee structure by which FSM was remunerated. He contended, among other things,
that terms should be read into the agreement between PMP and FSM dealing with
all sums receive by PMP of NFTC from the exploitation of the film.
The
court ruled: (1) On the true construction of the agreements between the
parties, and as a matter of commercial logic, the MF agreement was to be taken
as meaning what it said. As a result, the construction issue would be decided
against F (see [80], [81] of the judgment).
(2)
Regarding the rectification claim, the real issue was whether there was
convincing evidence that established to the requisite standard an agreement
different from the one actually embodied in the third schedule. There was no
counterclaim that the MF agreement should be rectified entirely to exclude F,
so the logical starting point was that the MF agreement correctly included F as
entitled to some participation in the Top Half. As a result, the question was
whether the documented participation embodied a mistake that would have been
objectively ascertainable by an observer from the dealings of the parties. That
rested on F's evidence. Overall, there was evidence of a sufficiently
convincing quality to persuade the court that, on the balance of probabilities,
that immediately prior to the signature of the MF agreement there had been a
consensus that F should be entitled to a 1/7th share of the Top Half. The fact
that the third schedule did not so provide was not evidence of there having
been a change of mind. It would be appropriate for the MF agreement to be
rectified by doubling the percentage of the Top Half to which F was entitled
[...].
(3)
On the evidence, F's rights arose under the third schedule to the MF agreement.
Choses in action arising under that contract belonged to F. PMP had never
received notice of any assignment of F's rights: so it was from F that they
could have obtained a good receipt and to F that they were bound to account for
payments due under the third schedule. So in August 1975, F had been entitled
to the entirety of those rights, which at the instant time would vest in MFPL
[...].
Relief
in respect of the MF agreement had to be granted to MFPL [...].
(4)
Regarding the expenses argument, on the true construction of the MF Agreement,
it was not to be read as including either of the implied terms for which F
contended. The terms of the FSM agreement had not been unreasonable and no
negligence had occurred [...].
The
claim against NFTC would be dismissed [...].
PRESENTATION 2: Ms DOMINGUEZ AIRIOLA / MS SPIESS
|
B11
EMPLOYMENT, WORKPLACE, BREACH OF CONTRACT
Sunrise
Brokers LLP v Rodgers: responding to an employee's breach of contract
by
Paul Callegari, Emma L. Thomas
5
September 2014
|
[...]
the High Court decided that an employer could refuse to allow an employee to
resign in breach of contract and instead hold him to the terms of his contract.
This meant that the individual remained an employee and continued to be subject
to the restrictions in his employment contract. Mr Rodgers was a key employee
of Sunrise Brokers and established Sunrise's precious metals trading desk in
October 2011. Mr Rodgers entered into a new employment contract which he could
only terminate by giving 12 months' notice after September 2014. Mr Rodgers’s
contract also included post-termination restrictions and a requirement for him
to inform Sunrise if he received an offer of employment from elsewhere.
Following
a deterioration in the parties' relationship, Mr Rodgers signed an employment
contract with one of Sunrise's competitors to commence on 1 January 2015. Mr
Rodgers then informed Sunrise on 27 March 2014 that he wanted to leave Sunrise
immediately and did not tell Sunrise about his job offer. Sunrise reminded Mr
Rodgers that he could not give notice before September 2014 and explained that
his resignation was in breach of contract and told him to return to work. Mr
Rodgers took a period of annual leave but then failed to return to work, at
which point Sunrise stopped paying his salary.
When
Mr Rodgers failed to return to work, Sunrise sought a declaration that Mr
Rodgers was still an employee and an injunction preventing him from working
elsewhere. The High Court decided that Sunrise was entitled to choose whether
or not to accept Mr Rodgers's resignation in breach of contract and not to pay
his salary when he did not work. The High Court also granted an injunction
upholding the terms of the contract until 16 October 2014 (the date on which
Sunrise had offered Mr Rodgers an early release from his contract) and
preventing him from breaching his restrictive covenants until 26 January 2015.
[...]
The
Supreme Court has previously made it clear that where one party has committed a
serious breach of an employment contract that could bring the contract to an
end, the “innocent” party can either accept the breach, at which point the
employment contract would terminate or, where it has good reason (e.g. to stop
the employee from joining a competitor), it can ignore the breach and continue
with the employment relationship.
In
this case, the High Court was satisfied that Sunrise was entitled to ignore Mr
Rodgers’s breach of contract as it wanted to prevent him from joining a
competitor. The High Court also reiterated that an employee's willingness to
work and payment of wages by the employer are, in general, mutual obligations.
Sunrise was therefore entitled to stop paying Mr Rodgers when he did not work
and did not breach Mr Rodgers's employment contract by doing so.
The
High Court granted an injunction requiring Mr Rodgers to observe the terms of
his contract. This had the effect of preventing Mr Rodgers from working for a
competitor of Sunrise or contacting Sunrise's clients until 16 October 2014,
but without going so far as to require Mr Rodgers to actually work. [...]
When
an employee breaches his or her contract, either by not giving the requisite
notice of termination or by refusing to work, the first reaction is often to
accept the employee’s conduct as terminating the contract or for the employer
to move straight to a dismissal for gross misconduct. This case shows that that
initial reaction may not always be the right one, and that in some cases the employer’s
interests may be better served by holding the employee to the contract.
Employers must ensure that they carefully consider the situation and adopt the
right response in all cases. Employers should also consider including a
provision in the contract which makes it clear that they are under no obligation
to pay an employee who refuses to work, to avoid any breach of contract claims
by the employee.
