“creditor delay”, “tu quoque” and “unperformed contract”
“(a) all issues between the parties relating to the subsistence and ownership of copyright in the Lingubot software; and (b) all issues between the parties relating to the alleged termination of the Distribution Agreement by the Claimant on17 May 2007 .”
“Recitals WHEREAS, the Distributor is currently employed as the managing director of Kiwilogic.com Ltd, a subsidiary of the Manufacturer; WHEREAS, the Distributor has terminated his employment agreement with Kiwilogic.com Ltd WHEREAS, the Distributor intends to establish and operate his own business in order to sell Kiwilogic products and offer services related to these products in the United Kingdom … WHEREAS, the Manufacturer has so far distributed its products and services in the United Kingdom and Ireland only via its own subsidiary, Kiwilogic.com Ltd, London. WHEREAS, the Manufacturer intends to grant to the Distributor the exclusive right to distribute Kiwilogic products and provide services related to these products in the United Kingdom and Ireland; … §1 Appointment of Distributor 1. Manufacturer hereby appoints the Distributor to sell the Products, as further defined in Enclosure 1, and provide for the Services, as further defined in Enclosure 2 pursuant to the terms and conditions of this Distribution Agreement. 2. The territory exclusively assigned to the Distributor shall be the United Kingdom of Great Britain and Northern Ireland as well as the Republic of Ireland (hereinafter referred to as the ‘Territory’). 3. The Distributor shall buy and sell the Products directly from the Manufacturer in his own name and on his own account, and he shall then sell the Products and provide the Services to third parties residing in the Territory in his own name and on his own account. The Distributor shall not sell the Products and provide the Services to third parties residing outside the Territory without the prior written consent of the Manufacturer. … §4 Duties of Manufacturer 1. The Manufacturer agrees to sell to the Distributor, during the terms of this Distribution Agreement, upon his request and in compliance with his operational capacities, the Products for the resale to third parties in the Territory. 2. The Manufacturer may at all times extend or limit its range of products, particularly, but not limited to, modify the Products, develop new Products, discontinue the distribution of Products, determine the number of copies of products and decide which and how many products are submitted for resale. 3. During the term of this Distribution Agreement the Manufacturer grants to the Distributor the non-assignable right to present himself as the exclusive distributor of Kiwilogic.com AG in the Territory. For this purpose, the Distributor may designate his position as an exclusive distributor on his letterhead and in his correspondence…. §6 Prices and Conditions as between the Manufacturer and the Distributor 1. Lump sum fee: a) The Distributor shall pay to the Manufacturer a non-refundable monthly lump sum fee of EUR 8,500.00 in consideration of Distributor’s entitlement as an exclusive distributor in the Territory, of the substantial customer base that Kiwilogic has established in the Territory, as well as the right to use the trade name ‘Kiwilogic’ and the use of the SMS application (‘Megabase’) that Kiwilogic created and established in the Territory. Such lump sum fee shall be due on the 15th day of each month, the first payment shall be due on15 January 2004 . The monthly lump sum fee will rise to EUR 10,000.00 beginning with Jan. 2007: … 3. The Distributor shall prepare statements regarding the distributed Products and Services, the revenues, the issued invoices and all other payment claims against his customers as well as detailed information about margins or payments to third parties, bad debt and invoices in dispute pursuant to para 2 on a monthly basis. Such monthly statements shall be submitted to the Manufacturer until the 15th day of each month, the first monthly statement shall be submitted to the Manufacturer until20 February 2004 . … §8 Exclusivity and Competition 1. During the term of this Distribution Agreement the Manufacturer shall not be entitled to appoint any other distributor or commercial agent for the sale or distribution of the Products and Services in the Territory. … §9 Term and Termination 1. This Distribution Agreement is entered into until 20.09.2010 (‘initial period’). It will be extended for an indefinite period if not terminated by either party with 12 months notice to the end of the initial period. After that the Agreement can be terminated by either party with 12 months notice to the end of the calendar month. 2. The right to terminate the agreement for good cause without notice shall remain unaffected. The right to terminate this Distribution Agreement for good cause shall particularly, but limited to, exist, if a) The Distributor fails to pay the remuneration pursuant to Sec. 6 para. 2 or any other due payments to the Manufacturer; … c) The Distributor is in default with the payment of monthly lump sum fees pursuant to Sec. 6 para. 1 amounting to the equivalent of 2 monthly fees; … If one party fails to exercise his right to terminate for good cause, this shall not result in a waiver of the right to terminate for good cause. In case of a continuing violation and in case of a repeated violation the right to terminate for good cause shall remain unaffected. §11 Miscellaneous 1. All claims arising out of or in connection with this Distribution Agreement shall be exclusively governed by German substantive law. … 4. Any changes or amendments to this Distribution Agreement shall be made in writing unless mandatory provisions provide for further requirements as to the form. This shall also apply to the agreement not to require that modifications be made in writing. The transmission via telecopy, but not via e-mail, shall satisfy the requirement of writing…. Enclosure 1: Products Product Description Lingubot Creator Authoring tool for Lingubot knowledgebases Lingubot Engine Server application for Lingubot knowledgebases … Enclosure 2: Services … 3) Implementation of Lingubot software and knowledgebases 4) Integration of Lingubot technology into existing technical environments, including integration into websites and development of customized interfaces 5) Design of visual characters to be used in conjunction with Lingubut applications including – but not limited to – graphic design, characterization, photography, animations, and the creation of audio and video data 6) Hosting and maintenance of Lingubot applications 7) Data analysis based on Lingubot technology, i.e. analysis of dialogue transcripts, including development of customized tools for such analysis 8) All other services that might be required by customers in order to design, set up, operate or maintain Lingubot applications”
“§1 Assets 1.1 With economic effect as of June 30, 2005, 12.00 p.m. midnight, Seller sells and Buyer purchases the Business as a going concern, including all assets currently used in the Business (with the exception of the Excluded Assets listed in Exhibit 2), free of any encumbrances. The assets sold from Seller to Buyer are hereinafter referred to as the ‘Assets’. Buyer is aware of that the assets listed in Exhibit 3 hereto are being used in the Business but not owned by Seller but leased from third parties. 1.2 In particular, Seller sells and Buyer purchases the following assets: … (c) all of Seller’s title to, interest and rights in patents, trade marks, trade names, service marks, logos, domain name, design rights, copyright, rights in computer software and databases, trade secrets and Seller’s title to, interest and rights, if any, in other confidential information, know-how and other intellectual property rights, in each case whether registered or unregistered and including applications for the grant of any such rights and all rights having equivalent or similar effect anywhere in the world, and rights in the nature of unfair competition rights (‘Intangible Assets’), particularly the Intangible Assets listed in Exhibit 4b. …. (k) all rights and causes of action, law suits, judgments, claims and demands of any nature made by or on behalf of Seller; (l) all of Seller’s rights under contracts, agreements and other commitments entered into in the ordinary course of business prior to the execution of this Agreement; (m) other assets as listed in Exhibit 8; … §3 Agreements 3.1 Subject to the approval of the other party(ies), Seller transfers the agreements listed in Exhibit 10 to Buyer. 3.2 In the event that the other party(ies) do not agree to this transfer of the agreement, Seller and Buyer agree as follows: (a) Buyer shall fulfil all liabilities and other obligations of Seller vis-à-vis the respective contractual partner and immediately indemnity Seller from any claims…. … §6 Transfer of Title 6.1 Seller and Buyer agree that title to the Assets is transferred to Buyer as of the execution of this Agreements under the condition precedent of the payment of the full escrow amount from Buyer to escrow account. … §8 General 8.1 This Agreement contains the entire understanding of the Parties, supersedes all prior agreements and understandings relating to the subject matter hereof and shall not be amended (including any of the schedules) except by a written instrument hereafter signed by the Parties hereto. This written form requirement shall only be amended by a written instrument signed by the Parties hereto. 8.3 This Agreement shall be governed by the laws of the Federal Republic of Germany…”
“A licence granted by a copyright owner is binding on every successor in title to his interest in the copyright, except a purchaser in good faith for valuable consideration and without notice (actual or constructive) of the licence or a person deriving title from such a purchaser; and references in this Part to doing anything with, or without, the licence of the copyright owner shall be construed accordingly.”
“Overview Creative Virtual started in January 2004 – exclusive distributors for the UK and Ireland; looking after other English language markets. … Market focus UK, Ireland and US.”
“As we discussed in London a few weeks ago, Artificial Solutions has purchased the assets of Kiwilogic, including all rights to the Lingubot software. The partner deal between Kiwilogic and Creative Virtual is however not part of that asset purchase contract. As Artificial Solution sees the UK as one of our target markets we will take a more active role but would as we discussed somehow find a solution where Creative Virtual and you fit in to the picture. Thanks for the information you sent me regarding Creative Virtual. However I had expected something a bit more detailed and also with some input on how you yourself look at the future and your role. In any case, thanks. As you can imagine there are many things going on at Artificial Solution at the moment – therefore this is a somewhat slow process. We had a board meeting last week. After reviewing the various options we have decided that the best would be for Artificial Solutions to, if possible, acquire Creative Virtual. This would, we believe, be the best way to continue building on what you have achieved during these years and make the transition for the customers as smooth as possible. It would also allow for you to have a role within the Artificial Solutions group. The first step in this process is obviously to find out if you find this to be a good option and to know if you are interested in selling and in that case at what price level. We would also like to better understand how you in such case see your role within Artificial Solutions. So please give us your feedback on this possibility. Additionally, as Artificial Solution now owns all rights to the Lingubot software solutions and there is no active partner agreement between Artificial Solution and Creative Virtual, Creative Virtual is not entitled to resell any of the Lingubot solutions. In order to manage the present situation in the best way possible, I suggest that we in the mean time establish a similar partnership as the one earlier existing between Kiwilogic and Creative Virtual, but on a month to month basis and with the limitation that a permission from Artificial Solution is required in order for Creative Virtual to offer or distribute any of the Lingubot solutions.”
“First of all, I’m surprised to read the statement about the agreement between Kiwilogic and Creative Virtual not being part of the purchase; my understanding is that if Artificial Solutions has purchased the assets of Kiwilogic then this would be an integral part of those assets. I think we should discuss this point further as a matter of urgency. In terms of the information I sent across – the reason it was brief was because I wanted to use it as notes for a meeting between us (as I explained in the email); we have only had a discussion over dinner since the Artificial Solutions/Kiwilogic deal, and I think we need a proper meeting where I can fully understand these changes and your future plans. In terms of the future where Creative Virtual and myself fit it, I suggest we meet and discuss this fully (again, I only put together brief notes as I felt there were lots of questions up in the air – and felt I needed a better understanding as to the Artificial Solutions plans in order to answer these questions). In terms of Artificial Solutions acquiring Creative Virtual – again, I think the first step should be to meet up to discuss all of these issues together.”
“I met with Johan yesterday and he explained that my agreement with regards to the distribution of the Lingubot software is no longer valid (apparently there was a mistake and this was not listed as one of the assets to be purchased). As you can imagine, I am very concerned about this; when you called me to inform me of the Kiwilogic/Artificial Solutions deal, and request that I give my voting authority to Olaf, you made it clear that my agreement would not be affected (obviously I would not have given Olaf the authority to vote in favour of the deal if the distribution agreement was not going to continue). Could you please let me know the situation as you see it – and what can be done to address the problem.”
“As we discussed in London last Friday, and as described in my earlier e-mail October 18, 2006 as well as discussed during our meeting in London on August 23, 2006 the situation is as follows: • Artificial Solutions is now the sole owner of all intellectual property related to the Lingubot Creator and Lingubot Web Engine. • The partner agreement between Kiwilogic and Creative Virtual was not taken over by Artificial Solutions in the asset deal. • I also understand that Creative Virtual has a ‘licence code generator’ that would make it possible to generate the software codes needed to install the Lingubot Creator and Lingubot Web engine on additional computers. • The above described situation means that Creative Virtual does at this stage not have a partner agreement with Artificial Solutions and has also not the right to resell the Lingubot solutions or to use the brand names in your marketing. Creative Virtual does also not have the right to use the ‘licence code generator’. As discussed in London last Friday, and as described in my earlier e-mail October 18, 2006 as well as discussed during our meeting in London on August 23, 2006 I suggested that we establish a temporary partnership for the UK market, with the same economical terms as the previous partner agreement between Kiwilogic and Creative Virtual. Thus 20% of the revenue (but not less than 9200 euros per month) shall be paid to Artificial Solutions. However, with the requirement that each new or extended Lingubot Web Engine license or Lingubot Creator license must be approved by Artificial Solutions before it is sold. Without such approval the license is not valid. Also, Creative Virtual will not have exclusivity in the UK market. Such temporary partnership will be in place during our current discussions regarding the possible acquisition of Creative Virtual by Artificial Solutions or the possible alternative partnership between Creative Virtual and Artificial Solutions. The temporary partnership can be cancelled by either party with 30 days notice. I did not receive any feedback on my suggestion e-mailed to you October 18, but have noticed that the 9200 euros have been transferred each month to the Artificial Solutions account, which I will interpret as your agreement to this temporary solution. The purpose of this email, as we discussed last Friday, is to make sure the legal situation is clear. In the mean time I am looking forward to the information regarding Creative Virtual and your thoughts of your personal position in Artificial Solutions, that we need in order to give you an initial offer. I also expect, as discussed, your idea on how a possible alternative partnership between Creative Virtual and Artificial Solution could look like. As we want to get this in place as soon as possible it would be very much appreciated if you could send me this information within the next few days.”
“First of all, I would like to state clearly that I believe the existing agreement remains valid. Since our meeting on 24th November I have contacted Gunther Hering and he has confirmed (as you have also acknowledged at the meeting) that a mistake had been made during the finalisation of the deal between Kiwilogic and Artificial Solutions. Gunther made it clear that the transaction was designed to transfer ALL operating assets to Artificial Solutions including the Creative Virtual agreement. As yourself and Gunther both agree that a mistake was made with regards to the documentation associated with the transaction, I don’t see any reason why this cannot be resolved between Kiwilogic and Artificial Solutions (I would be happy to participate in any discussions if you think it would [be] useful). At our meeting on 24th November I said that it would take a couple of weeks to put together the information on Creative Virtual (financials, customers, plans etc.). However, following discussions with yourself and Gunther, and after receiving your latest email, there is now clearly a dispute between our two companies and I think it’s extremely important that this is resolved prior to any work on a possible new agreement. To address the specific point about your email dated 18th October and the monthly payments: I provided a response to this email (see email thread attached), and with regards to the monthly payments, I have continued to make these based on the existing distribution agreement.”
“I do not understand how you have interpreted our discussion on the 24th. I was very clear in that Artificial Solution had no intention of ‘taking over’ the partner ship agreement with Creative Virtual. That partner agreement was therefore intentionally excluded from the list of agreements taken over. We would like to have this situation resolved with no further delays, i.e. at the latest by January 8, 2007. The two options available are, as discussed, Artificial Solutions acquiring Creative Virtual or us finding an alternative partner deal where Creative Virtual focuses e.g. on a particular market segment. In order for us to give you an offer regarding any of these options we need the information earlier requested from you. I would appreciate if you let us know if you are still interested in any of these two solutions. If no agreement has been reached between Creative Virtual and Artificial Solutions before January 8, then Creative Virtual will no longer be entitled to market or sell the Lingubot Solutions. Artificial Solutions will take in this case any legal action necessary to prevent Creative Virtual from marketing or selling the Lingubot Solutions.”
“I do not understand your comments about the meeting on the 24th November. Let me outline the meeting in more detail: You made it clear to me at that meeting that there had been a mistake and that the agreement hadn’t been listed for transfer. I expressed my concern about the situation and went on to ask why the deal was done on the basis of a list of assets (instead of purchasing Kiwilogic.com AG) – and you explained that the reason that Artificial Solutions proceeded in this particular way was because of the complex tax/commercial setup of Kiwilogic.com AG. You also said that you thought it was to my advantage to agree to a new agreement very quickly as Artificial Solutions was in discussions with potential investors and that the new investors were unlikely to offer the same terms to Creative Virtual as would be offered by Artificial Solutions. I explained that I had been contacted by Gunther prior to the deal; Gunther requested that I give Olaf the power of attorney to vote on my behalf in favour of the transaction – and he confirmed that the Creative Virtual distribution agreement would not be affected by the transaction – and it was on this basis that I went ahead and gave Olaf the power of attorney (obviously I would not have given Olaf the authority to vote in favour of the deal on my behalf if the distribution agreement was not going to continue). At the end of the meeting on 24th November I said to you that I was going to contact Gunther to express my concern and to find out how this situation could be resolved. As explained in my email to you on 5th December, Gunther confirmed that there had been a mistake. Gunther informed me that the transaction was designed to transfer ALL operating assets from Kiwilogic.com AG to Artificial Solutions including the Creative Virtual agreement. In summary: • I received a call from Gunther informing me of the proposed deal between Kiwilogic.com and Artificial Solutions – and saying that our distribution agreement would not be affected. On that basis I gave my power of attorney to Olaf to vote in favour of the transaction. • In your email dated 18th October – you mentioned that Artificial Solutions had purchased the assets of Kiwilogic and that the Creative Virtual agreement was not part of this. I responded on 18th October stating that I was surprised that the Creative Virtual agreement was not part of the purchase; Artificial Solutions had purchased the assets of Kiwilogic and the Creative Virtual agreement was an integral part of those assets. I requested that we should discuss this as a matter of urgency. The next time I heard from you was on 5th November - at this point there was an exchange of emails to setup a meeting. • When we met on 24th November, you informed me that a mistake had been made and that my agreement was not part of the take over of the assets. When I asked the question about why the deal was done in this way you said that this was because the tax/commercial situation of Kiwilogic was too complex to simply take over Kiwilogic.com AG. In an email following the meeting you suggested that I should continue to make the same monthly payment – but on revised terms (including the removal of our UK exclusivity) - which is completely unacceptable. • I contacted Gunther querying the mistake – he confirmed your comments that a mistake had been made and said he would contact you (he also confirmed that the transaction was designed to transfer ALL operating assets from Kiwilogic.com AG to Artificial Solutions including the Creative Virtual agreement). • You now say that Artificial Solutions had no intention of taking over the Creative Virtual distribution agreement and that you will take legal action against Creative Virtual unless I sell the company to you or agree to a different agreement. To reiterate Creative Virtual’s position: there is now clearly a dispute between our two companies and I think it’s extremely important that this is resolved prior to any work on a possible new agreement. I would be happy to work with yourself and Gunther to resolve this dispute. Any legal action will be vigorously contested.”
“Regarding your e-mail; I really do not understand how you have interpreted our discussions during the meeting 24/11. What you write below has little to do with what we discussed… There was certainly no mistake from Artificial Solutions side regarding the transfer of the Creative Virtual partner agreement. We had no intention what so ever to take over that agreement. As I told you, this was one of the issues we raised with Kiwilogic (together with the complex tax situation in Kiwilogic). The Creative Virtual partner agreement was intentionally left out from the list of agreements. My understanding is that you are now not willing to give us the information we need in order to either offer an alternative partner agreement or acquiring Creative Virtual. We are therefore not willing to extend the January 8 deadline and Creative Virtual will no longer be entitled to market or sell the Lingubot Solutions. Do let me know if I am interpreting you incorrectly.”
“As you know I have met with Chris and have also had some email correspondence with him. I clearly explained to him that the Creative Virtual partner agreement was not taken over by Artificial Solutions. As you might remember, this was together with the complex tax issues and the administrative board related things the main issues we discussed that final week in Hamburg. I guess we were all stressed and focusing on getting the deal in place those final days and did not focus on issues such as the Creative Virtual agreement. In any case, we had no intention on taking it over (e.g. considering the exclusivity clause) and it was clearly not listed in the attachment with agreements. … I therefore suggest that Kiwilogic terminate the Creative Virtual partner agreement (or exclude the Lingubot solutions), based on the fact that you can no longer supply Creative Virtual with the Lingubot solutions. (Just as we discussed a while ago.) This is to protect Kiwilogic from claims from Creative Virtual.”
“We have an open issue and obviously a different understanding of the rights and obligations arising from the exclusive partnership agreement with Creative Virtual in the UK. We have never agreed to take this agreement from the asset purchase contract. It was always and still is out intention that Artificial Solutions acquire all the assets and the obligations attached to them. We have not and never would have agreed to any carve outs since we could no longer support such partners after we sold the technology to you. Any other interpretation or declaration is in our view erroneous and not factual. We do not dispute that the Creative Virtual partnership agreement was not listed in the attachments to theasset purchase agreement. However, this was clearly a mistake or oversight if you will. It has nothing to do with the intention of the parties to the contract. We were and are also aware of the fact that you had misgivings about accepting the Creative Virtual contract in this deal since you wanted to pursue other plans in the UK. I have always clearly stated to you that we will not and cannot make any exceptions to the transfer of the partnership agreements. Therefore this cannot be construed as a port [sic] mortem fact to exclude the CV contract. We are as much interested to find an amicable solution as you are. … The action suggested by you on the part of Kiwilogic does not offer a solution. We have asked our lawyers to review the case…”
“I do not understand how your interpretation of the meeting on 24th November is different. I obviously haven’t seen any of the documentation relating to the transaction between Artificial Solutions and Kiwilogic – but at the meeting on 24th November you certainly indicated that there had been a mistake; you went on to be critical about the way the deal was handled by Kiwilogic. As I say I haven’t seen any of the documentation relating to the deal and I left the meeting feeling very confused about what had actually taken place (you will recall my questions about why the deal was done in this way as opposed to a simple take over of Kiwilogic). Following the meeting I contacted Gunther and he confirmed that there had been a mistake with regards to the Creative Virtual agreement not being transferred. He informed me that the transaction was designed to transfer ALL operating assets to Artificial Solutions including the Creative Virtual agreement. In your latest email you seem to be saying that you explicitly raised the issue of excluding the Creative Virtual agreement from the transaction with Kiwilogic – is this correct? (If it is, then there is clearly a discrepancy between yourself and Gunther on this issue). For the reasons I have already given, I am continuing to operate under the terms of the existing agreement. I believe that I have made my position clear: I would be prepared to discuss a possible new agreement, but only after the acceptance that the existing agreement remains valid. I have continued to make the monthly payments in accordance with Creative Virtual’s obligations (the only change has been to the recipient bank account: back in September Marina asked me to change the bank details to Artificial Solutions). I do not accept your statement about Creative Virtual not being entitled to market or sell the Lingubot solution after January 8th. As stated in my previous email: there is now clearly a dispute between our two companies and I think it’s extremely important that this is resolved prior to any work on a possible new agreement. Again, as stated in my previous email, I would be happy to work with yourself and Gunther to resolve this dispute.”
“Accordingly Artificial Solutions also requested, and accepted, the monthly payments to be made by Chris Ezekiel/CV under the obligations of the distribution agreement. Already this proves that – even in the view of Artificial Solutions – the contractual relationship with Chris Ezekiel/CV passed to Artificial Solutions without restrictions.”
“I am a German attorney at law and I would like to officially inform you that I am representing the interests of the Artificial Solutions Group (“AS”) and, in particular, of Artificial Solutions Germany GmbH. AS submitted to me the correspondence between you, Mr. Hering and AS. I carefully reviewed any document submitted to me and came to the conclusion that the UK partner agreement was not transferred from Kiwilogic AG to AS and therefore, at the latest on January 8, 2007, Creative Solution’s right to use, market or resell the Lingubot terminated. Therefore, I request from you on behalf of and in the name of AS that you stop using the Lingubot software with immediate effect and that you confirm in writing that you will not use, market or resell the Lingubot software any more. If I do not receive such declaration by Wednesday, January 17, 2007, I will without further reminder take any legal actions which are necessary or helpful to prevent Creative Solutions from using the Lingubot software.”
“Referring to your email I would like to point out that I disagree with your statements due to the following reasons: 1. It was specifically discussed and agreed between Mr Hering and Mr Ahlund that the UK partnership agreement shall not be transferred to Artificial Solutions Germany Gmbh (‘AS’), formerly Kim Vermogensverwaltung Gmbh. Further, it was specifically discussed between Mr Hering and Mr Ahlund how the partnership agreement can be terminated by Kiwilogic after the transfer of Kiwilogic’s business to AS. 2. Mr Hering admitted in his email of January 5th that he was aware of the fact that AS did not want to take over the UK agreement. 3. The Asset Purchase Agreement (‘APA’) clearly reflects this agreement because the UK partnership agreement is not listed in Exhibit 10 to the Asset Purchase Agreement. Accordingly, this agreement was not transferred to AS. 4. There is a legal assumption under German law, that a notarial deed as well as any other writing is complete and that there are no oral side agreements. This is another strong argument for the agreement described in no.1. Kiwilogic AG was advised by a reputable German law firm. If the agreement had been different from what is described in no. 1, Dr Irrgang would have certainly made sure that such agreement was correctly reflected in the APA. 5. We have chosen an asset deal structure instead of a sale of the shares because it was the clear intention of the parties not to transfer all of the liabilities and the agreements. In particular, the UK partnership agreement was not to be transferred. 6. It is clearly the structure of the agreement that only the liabilities and agreements are transferred which are specifically listed in the Exhibits. The language of the agreement does not allow any doubts. The Preamble of the agreement does not say anything else, in particular the reference to the transfer of the ‘business as a going concern’ does not constitute an argument for the transfer of the UK agreement. First, the Preamble does not contain binding provisions but simply describes the background of the agreement. Second, the clause only refers to assets but not to agreements and liabilities. 7. The UK agreement was not taken out ‘in last minute’ from Schedule 10. Rather, the agreement was never ‘in’ before. To my recollection, there was no previous draft in which the UK partnership agreement was listed as an agreement to be taken over by AS. There might have been lists of agreements in which the UK agreement was contained but such lists cannot be considered draft Schedules. 8. As you know, according to German law assets which shall be transferred need to be specified individually (Bestimmtheitsgrundastz). This is another reason why the UK agreement was not transferred to AS, already as a matter of law. 9. AS did never accept any payments from CV on the basis of the partner agreement concluded between CV and Kiwilogic. Rather, Mr Ahlund made it always very clear to CV that AS would accept the payments only on a new temporary agreement and preserved AS’ right to terminate the preliminary agreement without any notice period.”
“As you know our client has repeatedly offered to comprehensively fulfil the distribution agreement. However, this has constantly been refused by your client.”
“It appears from 7.2 of your counsel’s skeleton argument, that you will be contending that our client refused payment tendered by your client. This is the first time that such an allegation has been aired. It is also untrue.”
“We are surprised by your reference that our client has not previously raised the issue that your client refused payment. Our client expressed to your client on numerous occasions that it was willing to pay the sums due in accordance with the distribution agreement if your client was willing to accept it under the terms of the distribution agreement and not under the terms of its own temporary proposal.”
“At no time did [Mr Ezekiel] say that payment was conditional upon Artificial accepting his belief that the Distribution Agreement was in force.”
“[Mr Ǻhlund] is correct and I agree with this statement. I did not state that payment must be on the basis that Artificial Solutions must accept that they are bound by the distribution agreement. My position was that the payment must be received on the basis that Artificial Solutions would accept it in accordance with the distribution agreement and not under the temporary agreement which they had proposed. I did not require Artificial Solutions to accept that the distribution agreement had been transferred to it. I only require it to recognise that my actions, specifically the payments, were being made in accordance with my obligations under it. By contrast, I did require Artificial Solutions to accept the validity of the distribution agreement as a condition precedent to any negotiations between us concerning a possible new distribution agreement. I stated this in my email of7 January 2007 …”
“§133 Interpretation of a declaration of intent When a declaration of intent is interpreted, it is necessary to ascertain the true intention rather than adhering to the literal meaning of the declaration. §157 Interpretation of contracts Contracts are to be interpreted as required by good faith, taking customary practice into consideration.”
“(b) the restriction of the territory into which, or of the customers to whom, the buyer may sell the contract goods or services except – - the restriction of active sales into the exclusive territory or to an exclusive customer group reserved to the supplier or allocated by the supplier to another buyer, where such a restriction does not limit sales by the customers of the buyer … ” - the restriction of active sales into the exclusive territory or to an exclusive customer group reserved to the supplier or allocated by the supplier to another buyer, where such a restriction does not limit sales by the customers of the buyer … ”
“§314 Termination, for a compelling reason, of contract for the performance of a continuing obligation (1) Each party may terminate a contract for the performance of a continuing obligation for a compelling reason without a notice period. There is a compelling reason if the terminating party, taking into account all the circumstances of the specific case and weighing the interests of both parties, cannot reasonably be expected to continue the contractual relationship until the agreed end or until the expiry of a notice period. (2) If the compelling reason consists in the breach of a duty under the contract, the contract may be terminated only after the expiry without result of a period specified for relief or after a warning notice without result. Section 323(2) applies with the necessary modifications. (3) The person entitled may give notice only within a reasonable period after obtaining knowledge of the reason for termination. (4) The right to demand damages is not excluded by the termination.”
“§293 Default in acceptance The obligee is in default if he not accept the performance offered to him. §294 Actual offer The obligee must actually be offered performance exactly as it is to be rendered. §295 Verbal offer A verbal offer by the obligor suffices if the obligee has declared to him that he will not accept the performance, or if effecting the performance requires an act by the obligee, in particular if the obligee must collect the thing owed. Equivalent to an offer of performance is a demand to the obligee to undertake the action required. §296 Dispensability of the offer If a period of time has been specified according to the calendar for an act that the obligee is to undertake, the offer is only necessary if the obligee undertakes the act in good time. The same applies if the act must be preceded by an event and a reasonable period of time is specified for the act in such a way that it can be calculated from the event onwards according to the calendar. §297 Inability of the obligor The obligee is not in default if the obligor at the time of the offer or, in the case of §296, at the time determined for the action of the obligee, is not in a position to effect performance.”
“The core question is whether a creditor who accepts payment, but stresses that, in so doing, he does not want to accept the debtor’s legal position, has to be seen as ‘refusing’ to accept performance in the meaning of §295 BGB. In my view, the answer under the relevant case law is clearly no. If the creditor makes this proviso, he still does not refuse to accept performance. He rather accepts it under a proviso which he is perfectly entitled to make – and this is even more evident if he never has sent back payments received before.”
“If ASOL, however, was only willing to accept payments based on a temporary agreement, then they refused at the same time the acceptance of the ‘performance’ according to paragraph 295 S. 1 BGB. The concept of performance § 295 BGB refers to the concept of performance in § 241 section 1 BGB. A performance exists only in the context of an ‘obligation’. In the present case the only potential ‘obligation’ is the distribution agreement, because the temporary agreement proposed by ASOL did not come into existence at any time because it was never accepted by the defendants. Hence, even though ASOL was willing to accept a money payment, a mere money payment does not represent a ‘performance’ if not based on an ‘obligation’. However, ASOL refused to accept the only potential ‘performance’ in form of a payment of 9,200 eur based on the distribution agreement.”
“§241 Duties arising from an obligation (1) By virtue of an obligation an obligee is entitled to claim performance from the obligor. The performance may also consist in forbearance.”
“§812 Claim for restitution (1) A person who obtains something as a result of the performance of another person or otherwise at his expense without legal grounds for doing so is under a duty to make a restitution to him. This duty also exists if the legal grounds later lapse or if the result intended to be achieved by those efforts in accordance with the contents of the legal transaction does not occur. (2) Performance also includes the acknowledgement of the existence or non-existence of an obligation.”
“§242 Performance in good faith An obligor has a duty to perform according to the requirements of good faith, taking customary practice into consideration.”
“Under the rule of law, every party is, of course, allowed to challenge the validity of a contract or contest that he himself is bound by the contract – without being blamed for beaching the contract … on condition that it still complies with the duties under the contract. … A careful reading of the case law invoked in [Prof Mansel’s] report – and as well the other relevant case law on the tu quoque principle of the last few years – makes this distinction clear. In none of the cases in which one party fully performed the contract but at the same time challenged its legal basis, has the tu quoque principle ever been applied. … There is only one very extreme limit to challenging the validity or binding force of a contract i.e. when in fact such challenging constitutes also a breach of the contract. This is whenever a party the denial was made arbitrarily, without plausible cause.”
“On12 March 2007 , Artificial hired a UK sales manager named Conrad Hoe. As it happens, he carried out no significant sales activity in the UK prior to the ‘termination’ in May. This is because he spent some weeks training in Barcelona, before preparing his sales strategy. He has also been carrying out market research to establish who would be potential clients and how best they might be approached. As our first UK sales representative, there was a great deal of preparatory work to do. Now, Mr Hoe is in the process of contacting potential clients and following up on leads he has generated. He has also been contacted by a number of interested potential customers.”
“Artificial Solutions acquired the company Kiwilogic in July 2006. Kiwilogic is the company that has developed the Lingubot solutions that manages the natural language processing in our solutions. Kiwilogic has been present on the UK market since 2001, initially directly and then via a partner. We are currently discussing how this collaboration will continue. Artificial Solutions will in any case open up a UK subsidiary in January 2007 (we are now in the middle of the recruitment), so there will be no problems giving you the support you need.”
“§320 Defence of unperformed contract (1) A person who is a party to a reciprocal contract may refuse his part of the performance until the other party renders consideration, unless he is obliged to perform in advance. If performance is to be made to more than one person, an individual person may be refused the part performance due to him until the complete consideration has been rendered. The provision of section 273(3) does not apply. (2) If one party has performed in part, consideration may not be refused to the extent that refusal, in the circumstances, in particular because the part in arrears is relatively trivial, would be bad faith.”