Reveille Independent LLC v Anotech International (UK) Ltd [2015] EWHC 726 (Comm)

Case No 2013 FOLIO 1137[2015] EWHC 726 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 19/03/2015
Before
HIS HONOUR JUDGE MACKIE QC
Between
REVEILLE INDEPENDENT LLCClaimantANOTECH INTERNATIONAL (UK) LIMITED Defendant
Turlough Stone (instructed by Bryan Cave) for ClaimantMatthew Cook (instructed by Goodman Derrick LLP) for DefendantHearing Hearing dates: 9 to 12 and 16 February 2015
JudgmentJudge Mackie QC :
[1]This dispute is mainly about whether a binding contract came into existence in the world where TV shows about cooking meet the manufacture of cookware. The Claimant, Reveille Independent LLC, a US television company, brings this claim against the Defendant, Anotech International (UK) Limited, a distributor of cookware, for debt and damages for breach of contract, quantified at US$1,710,000, together with interest and costs.[2]The claim arises from the Claimant’s alleged agreement to licence to the Defendant US intellectual property rights (the “MasterChef US” brand) in the United States and Canada for a five year period and to permit the integration and promotion of the Defendant’s home cookware and bakeware products into three episodes of the television series “MasterChef US”, broadcast on the FOX Network in the USA in late July and early August 2011.[3]The Claimant contends that in March 2011 it entered into a binding agreement with the Defendant for the licensing and integration on the terms set out in a Deal Memorandum signed by the parties (“the Deal Memo”), and that, having fully performed its obligations, it is entitled to payment of : -an advance of US$52,500, payable upon signing. - US$300,000 for the integration of the Defendant’s products into Series 2 of “MasterChef US”. - US$157,500, US$250,000 and US$250,000 on 1st May 2011, 1st March 2012, and 1st March 2013.[4]These sums, totalling US$1,010,000, are claimed as a debt, alternatively as damages. The Claimant also claims damages of a further US$700,000, representing the sums of US$350,000 that would have been payable under the Deal Memo on 1st March 2014 and 1st March 2015, had the Claimant not accepted the Defendant’s repudiation and terminated the contract on 24th July 2013.[5]Alternatively, the Claimant contends that, having granted the relevant licences to the Defendant and integrated the Defendant’s products into its television shows, it is entitled to reasonable consideration for doing so, valued at US$1,710,000. This is advanced as an unjust enrichment claim.[6]The Defendant says that no contract was reached between the parties and therefore the claim fails. It says that the Deal Memo executed by the Defendant on 28 February 2011 was not, as the Claimant alleges, signed by Mr Friedman of the Claimant on 2 March 2011. The Defendant claims that there was never a binding contract between the parties, either on the terms of the Deal Memo or otherwise, that even if there was such a contract, it was subject to a condition precedent which was never fulfilled (“the Brands Conflict Term issue”). If that be wrong the Defendant says that the Claimant failed to perform its obligations under any contract, a claim that has rather fallen away. The Trial.[7]The court has numerous bundles in electronic form and heard evidence from three witnesses for the Claimant.[8]Ms Lori Heiss was the Global Brand Manager for Shine 360, a sister company of the Claimant. Ms Heiss negotiated the alleged agreement with Mr Chris Stevens the then Managing Director of the Defendant through a series of emails and telephone conversations in late January to early March 2011. By the time she gave evidence Ms Heiss was no longer working for any company on the Claimant’s side. She was a transparently honest and frank witness with no axe to grind.[9]Mr Jeffrey Friedman was until April 2014, the Claimant’s Vice President and then Senior Vice President for Business & Legal Affairs. Mr Friedman approved the proposed terms of the agreement and claims to have signed the Deal Memo on 2nd March 2011. He was then involved in the Claimant’s implementation of the agreement between the parties between March and August 2011. Mr Friedman too was an honest witness doing his best to assist the court, the issue being the quality of his recollection of having signed a relatively routine document, now lost, almost four years ago.[10]Mr Chad Bennett was Vice President, Brand Development and Production for the Claimant. Mr Bennett was also involved in the approval, negotiation and implementation of the alleged deal. He too was an honest and credible witness most of whose evidence was closely supported by contemporaneous documents.[11]The Defendant called two witnesses. Mr Jan Helskens is a director and majority shareholder of Anotech International Limited, the parent company of the Defendant and has been a director of the Defendant since August 2012. Mr Helskens was not directly involved in most areas of controversy in this case. Mr Helskens too was an honest witness, not giving evidence in his first language. Not being close to the detail or to many of the events some of his evidence was more advocacy for the Defendant’s case than relevant evidence. I was not persuaded by much of that advocacy.[12]Mr Wim de Veirman was Managing Director of GreenPan Inc from May 2007 until May 2012 and is now CEO of The Cookware Company. In 2011, there was an informal joint venture between Anotech International and GreenPan Inc which led to a formal merger in 2013. This witness did his best to assist the Court but had little of real relevance to say apart from providing helpful background information about how this industry works.[13]The Claimant points out that there has been no evidence from its principal point of contact at the Defendant, Mr Stevens, who was the Managing Director (and its sole director) until August 2012. Mr Stevens negotiated the alleged deal with the Claimant and signed the Deal Memo on the Defendant’s behalf and was responsible for its implementation. The Claimant attaches importance to what it sees as the deafening silence from Mr Stevens, who although no longer working for the Defendant, is alive, well and in the UK. The Defendant says that, on analysis, evidence from Mr Stevens was unnecessary because, as it sees things, the only real disputes of fact are, as it were, on the Claimant’s side of the line. That is correct to a degree. Nevertheless the Defendant was hampered by the absence of a witness to those events which were not internal to the Claimant. Mr Stevens was central to the Brands Conflict issue with the Claimant. He was the principal point of contact on the licensing of the relevant intellectual property. He also wrote accepting that the Claimant’s invoices for sums due under the alleged contract would be “paid by return”. Facts agreed or not much in dispute.[14]In early 2011 the parties began negotiations for a legally binding short form agreement which became the Deal Memo. Once concluded, this would set out the terms which would be replaced by detailed long form agreements which the parties would negotiate. The real dispute between the parties is whether a binding agreement on the terms of the Deal Memo was entered into, since subsequent negotiations broke down at a late stage. It is accepted that if the Deal Memo was entered into it was otherwise a legally binding commitment. On 19 January 2011 there was a Conference call between Chris Stevens (Defendant) and Lori Heiss, Chad Bennett and Lee Rierson (Claimant). Thereafter the parties negotiated proposed terms.[15]Unfortunately the chronology of events produced by the Claimant is neither full nor neutral. I have therefore tried to assemble the more important events by reconstructing that chronology. Without it examination of the witness evidence in a case of this kind will either be inadequate or too long. 19 January 2011 Conference call between Chris Stevens (Defendant) and Lori Heiss, Chad Bennett and Lee Rierson (Claimant). Thereafter the parties negotiated proposed terms 16 February 2011 Ms Heiss sends a first draft deal memorandum to Mr Stevens 23 February 2011 Mr Stevens returns an amended version of the Deal Memo. Claimant informs Defendant that the approval of Fox, the network which broadcast MasterChef US is required. 24 February 2011 Mr Bennett and Mr Friedman approve the revised deal memorandum. Ms Heiss sends a clean revised copy of the deal memorandum to Mr Stevens. 24/25 February 2011 Mr Stevens asks whether the Claimant had “any images of presenters we can use”. The reply said that a colleague would respond “though note we cannot use GR’s name or likeness”. Mr Stevens requests logos and information about the use of the Claimant's intellectual property for the Chicago Show. This was provided by the Claimant via email. 120 boxes of the Defendant's products are delivered to the “MasterChef” set. They weigh 2340 lbs. 28 February 2011 Telephone call between Ms Heiss and Mr Stevens regarding Gordon Ramsay. Ms Heiss sends an internal e-mail which says:
“Got a panicked call from Chris Stevens this morning about Gordon Ramsay's QVC positioning in the US - on the website he is listed as The Master Chef in the marketing copy at the top of his page (see below). Obviously problematic. I already had scheduled in a meeting with GR's people here in London to talk about working together / avoiding conflicting positioning so will bring this up with them then. Chris was meant to have sent the deal memo via fax over the weekend, but hasn't because of this apparently. I have talked him off the ledge and still expect the deal memo today, but he's indicated he wants to add language re this - will share when I receive.”
Mr Stevens sends to Ms Heiss by fax a copy of the Deal Memo signed by him with the handwritten words “Branding conflict with Gordon Ramsay to be concluded and with other minor amendments.” 1 March 2011 Ms Heiss forwards to Mr Stevens copies of her email communications with Mr Ramsay’s representatives. Mr Bennett contacts QVC about the use of the “MasterChef” brand for the promotion of Mr Ramsay's cookware range. Claimant swapped Defendant’s products into production of integration episodes. 2 March 2011 Ms Heiss sends to Jeff Friedman by e-mail a copy of the Deal Memo signed by Mr Stevens. Mr Friedman recalls that he signs and dates a hard copy of the Deal Memo on 2 March 2011 and puts it in his internal desk file. Mr Friedman appears to have originally received only the first page of the Deal Memo (see email 1 March 2011:
“We only received a scan of page 1 ---please send page 2 as well. Thanks.”
Ms Heiss forwarded a faxed copy of the version of the Deal Memo signed by Mr Stevens stating:
“This one definitely has 3 pages – let me know if you don’t see it that way and I can fax”.) On 2 March 2011 Mr Friedman responded “Ok – I am missing part of the bottom of page 2 and the top of page 3. Would it be possible to send the complete deal memo as a pdf file or fax it to me…..Also, has the “branding conflict with Gordon Ramsay to be concluded” been resolved?. Mr Stevens sends two e-mails to Ms Heiss amending and approving a press release which includes, the following: “Shine Group and Reveille LLC continue to build on the success of their hit cooking competition series MASTERCHEF with a host of new partners who will introduce a range of quality products for the home chef at the 2011 International Home +Housewares Show in Chicago. The Cookware Company (Stand S3413) will present its range of MasterChef branded Cookware for the first time.” 4 March 2011 Jan Helskens sends the Claimant final approved verbal talking points to be incorporated into episodes of MasterChef US alongside the Defendant’s products. 5 March 2011 Mr Stevens sends an e-mail to Jan Helskens confirming details of where the Defendant’s MasterChef-branded products will be displayed at the International Home & Housewares Show in Chicago. 5-7 March 2011 7 March 2011 The Defendant attends the International Home and Housewares Show in Chicago. The Defendant’s sign for its stall includes a heading which reads “MasterChefas seen on the television series MasterChef”
. Ms Heiss emails Mr Friedman:
“Converting [the Deal Memo] to PDF and sending through, but yes the branding with [Gordon Ramsay] has been resolved as we have made him take “The Master Chef” off the QVC website ….”
. Mr Friedman responded the same day:
“Thanks. Since [Gordon Ramsay] issue is now resolved, can I send him a clean version of the deal memo to sign and cc you?”
. Mr Solaris of Fox approves the deal in a short email subject to (minor) amendments. 9 March 2011 10th March 2011 Mr Friedman sends to Mr Stevens an e-mail attaching a first draft longform integration agreement. Email addressed to Mr Helskens in which Mr Christophe Lambertz, a sales manager at GreenPan (with whom the Defendant had just launched a joint venture with the Defendant’s parent under the name of The Cookware Company), stated that The Cookware Company had a 5-year licence from MasterChef. 10-11 March 2011 Episode 213 is filmed 14 March 2011 Mr Friedman sends to Mr Stevens an e-mail attaching a first draft longform merchandising agreement. 15 March 2011 Episode 215 is filmed 18 March 2011 23 March 2011 Episode 217 is filmed Mr Rierson of Claimant asks Mr Friedman “Jeff where are we with this deal memo and long form? tx.” Mr Friedman responded to his boss:
“Deal memo was signed a while back but I never got the full text from Lori so I didn’t countersign.” 24 March 2011 Press release from the Defendant announcing that MasterChef has been added to its list of brands. 11 April 2011 12 April 2011 Mr Stevens sends an e-mail to Mr Friedman attaching a revised draft longform merchandising agreement. Mr Friedman asks Mr Stevens whether he was willing to sign a new version of the Deal Memo without the Brand Conflict Term amendment. Mr Stevens responds “Not been resolved to my knowledge”. 10 May 2011 Dieter Naessens (GreenPan Inc) sends an e-mail to Macys which states,: “We have a license agreement for Master Chef Cookware … that will be broadcasted on Fox in the spot of American idol…”
Jurgen Degrande of GreenPan Inc sends an e-mail to Macys, copying Mr Helskens and Dieter Naessens which states:
“We for example bought the license for MasterChef which will be Launched in June on FOX…” 23-30 June 2011 Emails between the parties about the final approval of the integration episodes. 1 July 2011 13 July 2011 In response to a question from the Claimant as to the “Properties for which you already hold a licence”, Mr Stevens replies “MasterChef UK and US”
. In an email Ms Heiss states:
“Whilst the ratings are goodish and [Gordon Ramsay] definitely raises its profile, I think that is a double edged sword as we have been discussing all along – do people really identify with the MasterChef brand as distinct from Gordon? I am not sure they do and think that because [Gordon Ramsay] has 3 shows on FOX they all get a bit mixed up together.” 26 July 2011 July 2011 Episode 213 airs on the Fox Network Mr Ramsay launches a new range of cookware products through another retailer. 2 August 2011 Episode 215 airs on the Fox Network 9 August 2011 25 August Episode 217 airs on the Fox Network Invoice #6740 sent to Defendant for “Masterchef Product Integration – Advance” in sum of $300,000. 6 September 2011 Mr Stevens sends an e-mail to Ms Heiss, Mr Bennett and Mr Friedman which states that he will arrange for the invoices for the “first payments” (namely the US$52,500 advance, US$152,500 minimum guarantee payment and US$300,000 integration fee) to be “paid by return”
. The message asks for the invoices to be addressed to “The Cookware Company (HK) Limited” which is to be party to the long form agreement. 9 November 2011 November 2011 Mr Stevens sends Mr Bennett an email setting out the “feedback from the team re key retail meetings”. Chain of emails between Mr Helskens, Mr Stevens and Mr Naessens, a sales representative of GreenPan Inc, regarding payment of the Claimant’s invoices with apparent acceptance by all that these are due. Mr Naessens acknowledges that the integrations had been performed. 24 January 2012 Mr Friedman sends revised draft Longform Agreements to Mr Stevens (of the Defendant) and Mr Degrande (sales manager of GreenPan Inc) stating: “Until the attached agreements are signed and payment has been received by the 2/15/2012 deadline, all terms of the agreement entered into on February 24, 2011 remain in full force and effect and we respectfully reserve all rights.” 4 June 2012 24 July 2013 Mr Friedman (Claimant) sends an e-mail to Mr Stevens (Defendant) attaching a countersigned copy of the Deal Memo. Mr Friedman acknowledges that he only signed this version in June 2012. Claimant writes to Defendant treating contract as repudiated.

The text of the Deal Memo

[16]I adapt this summary from the helpful analysis in the Defendant’s opening submissions. The deal memo apparently follows the Claimant’s standard form and has a series of boxes of which the following are relevant: Box 8 gives the Licensee company name as Anotech International (UK) Limited, the Defendant. Box 14 sets out the licensed articles which include cookware, metal bakeware, and metal kitchen utensils for cooking and serving, but excluding products designed primarily for or directed primarily at children/teenagers up to 18 years in age. Box 20 provides for payments of US$1,410,000 over 5 years, with an advance of US$52,500 due on signing. Box 21 sets out the schedule of payments, including US$157,500 due 1 May 2011 and then an increasing schedule of payments from 1 March 2012 to 1 March 2015. Box 22 sets out the Royalty Rate as 7%, escalating to 8% in 4th and 5th Year. Box 23 sets out the licence territory as the United States and Canada. Box 25 sets out licence term as February 24, 2011 to February 23, 2016. Box 26 deals with the “Option Term” providing that:
“For year 4 to trigger, royalties will have to have earned out 710k by February 24, 2014 which is the combination of the guarantees of the three previous years outlined below. For year 5, royalties for year 4 will have to have earned out 350k. If triggered years 4 and 5 royalties escalates to 8%. 210k in yr 1 250 k in yr 2 250k in yr 3 350 k in yr 4 350 k in yr 5”
Box 27 states “Marketing Commitment 2% advance on signature unless approved.” A Comments/Special Instructions section includes provision for the agreement to terminate early if the show is not recommissioned post the summer 2011 season, allows sub-branding and sets out how products are to be integrated into Season 2, including a US$300,000 integration fee in addition to the advance for the licence. An Additional/Special Provisions box at the bottom of page 2 states:
“Non refundable Advance is due upon signature of this Merchandising Deal Memo. Unless otherwise agreed by Reveille, Reveille and Licensee shall have forty-five (45) days from the date of issuance of this Merchandising Deal Memo to conclude and execute the long-form agreement. If the parties are unable to conclude and execute the long-form agreement within such period, all negotiations between the parties shall terminate if Reveille notifies Licensee in writing of Reveille’s election to terminate. If Reveille notifies Licensee in writing of Reveille’s election to terminate, Reveille will have no further obligation to Licensee.”
On page 3, the text above the signature box states “This Merchandising Deal Memo shall not be binding on Reveille until executed by both [the Defendant] and Reveille.[17]Mr Stevens returned a signed version of the Deal Memo on 28 February 2011 with amendments. In box 27, Mr Stevens has written “Approved no marketing advance”. Without this handwritten amendment, an advance of 2% would have been payable on signature.[18]The version returned by Mr Stevens as received by the Claimant no longer included Additional/Special Provisions 1 and 2 which had been present in the draft provided by the Claimant but I accept that this is because in transmission these had been cut off by mistake. Mr Stevens made a handwritten addition in the Comments/Special Instructions section which stated “Branding Conflict with Gordon Ramsay to be concluded”. This is the “Brands Conflict Term”. Issues to be decided.[19]The main points requiring decision are first whether the Claimant signed the Deal Memo after it had been returned by the Defendant, secondly whether the Claimant’s conduct amounted to acceptance of the Deal Memo, thirdly what the Brands Conflict Term means and fourthly what if any sums the Defendant should pay to the Claimant.

Was the Agreement signed by the Claimant in March 2011?

[20]The Deal Memorandum stated that it was not to be binding on Reveille until signed by both parties. It was signed by the Defendant but there is dispute about when it was signed by the Claimant. The burden of proof lies on the Claimant to prove that it was signed in March 2011. Mr Friedman recalled that he had read the document when received, signed it and then placed it in a folder on his desk. I accept that Mr Friedman was an entirely frank and honest witness but I am not convinced that his memory of a minor administrative task carried out four years ago is accurate. On this issue the absence of evidence from Mr Stevens is irrelevant. The contemporaneous documents indicate one very short message from Mr Friedman to the effect that it was signed but a longer and more explicit one recording that it was not. Of course these documents have to be seen in the context of people receiving numerous emails every day about what may have been many deals. But on balance the contemporaneous documents conflict with Mr Friedman’s recollection. What about the commercial probabilities? The Claimant had a reason not to sign it when it was received by Mr Friedman. The deal could not go ahead without the agreement of Fox. I accept that refusal would be unlikely given the Murdoch family links between Shine and Fox. Further the terms of the short relevant email on 7 March 2011 confirm that this seems to have been a formality. Another reason not to sign the Agreement was that it had been received in an incomplete state and with the new handwritten Brands Conflict Term. Mr Friedman later sought to persuade Mr Stevens to sign a new copy, on the face of it an indication that the previous document was unsatisfactory in some way. Unfortunately at a later stage the circumstances of the signing of the Agreement became very confused as Mr Cook’s detailed written analysis makes clear. While I agree that the ins and outs of that are irrelevant the fact is that the Claimant lost the original document and never sent a signed copy to the Defendant. The Claimant cannot produce it. Further the Claimant’s message on this subject in June 2012 was regrettably not a candid presentation of what had happened thus causing further uncertainty about what happened. For these reasons I do not consider that the Claimant has shown that the Agreement was signed by Mr Friedman in March 2011.

Was there communication of acceptance?

[21]The Defendant says alternatively that even if Mr Friedman signed the Deal Memo there was no binding contract because the Claimant did not notify the Defendant that it had signed the Deal Memo or provide it with an executed copy – see Chitty at para 2-045, “The general rule is that an acceptance has no legal effect until it is communicated to the offeror. Accordingly, there is no contract where a person writes an acceptance on a piece of paper which he simply keeps…The main reason for the rule is that it could cause hardship to the offeror to be bound without knowing that his offer had been accepted.”[22]There is no suggestion that the Claimant did communicate acceptance – except arguably by conduct - so there will only be a contract if the Deal Memo was accepted by conduct. Was there acceptance by conduct?-the law.[23]The signature of the parties to a written contract is not a precondition to the existence of contractual relations, as a contract can equally be accepted by conduct - see for a recent statement of the law MSM Consulting Ltd v. United Republic of Tanzania [2009] EWHC 121 (QB) at [119] per Christopher Clarke J.[24]The Claimant also argues that the signature provision within the Deal Memo was for its benefit alone so that it could waive it. The rules relating to prescribed modes of acceptance are based on the assumptions that(i) the offer was drawn up by the offeror, and(ii) the stipulations as to the mode of acceptance were made by him for his benefit. However, it is also possible for the terms of an offer to be drawn up by the offeree, which is what happened here, when Mr Stevens amended the Claimant’s draft Deal Memo. In such a case, the stipulations as to the mode of acceptance are to be treated as being for the benefit and protection of the offeree, and not the offeror. Ordinarily in such circumstances an acceptance by a method other than that prescribed will be effective unless it can be shown that the failure to use the stipulated mode has prejudiced the offeror (and no such prejudice is pleaded in this case). The Claimant’s position is that, if the mode of acceptance was for its benefit only, the requirement to return a copy of the executed Deal Memo did not constitute a pre-condition to contractual relations.[25]The Defendant accepts that where a provision in a contract is for the benefit of a party that party is entitled to waive it. In the present case, the requirement in the Deal Memo that it would only be binding on the Claimant when signed by the Claimant. The Defendant also accepts that this could be waived by the Claimant. However, it is still necessary for the Claimant to show that it did in fact waive it. The fact that the stipulation is for the benefit of the Claimant does not mean that the Claimant can simply decide, after the event, to ignore it.[26]These points are rightly described by Mr Stone as ‘formalistic’. The substance is that the Defendant would not be bound by the Deal Memo until the Claimant’s acceptance of it was communicated - not a mere formality given that it contained the Defendant’s hand written formulation of the Brands Conflict Term. The Claimant did not communicate acceptance by signing and returning the document designed for the purpose. There is force in the submission that one reason for having such a requirement is to remove the uncertainty which otherwise might arise and has done so in this case. As I see it those factors may make it more difficult to show that acceptance has been validly communicated by conduct but they do not affect the principle. The evidence must be clear and, when considered as a whole and in context, unequivocal. Was acceptance communicated to the Defendant by conduct? - the facts.[27]In order to decide whether there was acceptance by conduct I have to consider what the Claimant actually did, mainly as regards carrying out the alleged contract with the Defendant. So I look first at the tasks envisaged by the Deal Memo mainly integration and licensing.[28]Integration. The Claimant says that it did everything that it was required to do to integrate the products supplied by the Defendant citing in particular the evidence of Mr Bennett. This sets out his direct knowledge of the integrations in impressive detail from paragraphs 27 to 140 of his witness statement and is fully supported by the documents he exhibits - such as records of weekly telephone meetings. Some aspects are set out in the chronology above.[29]The Defendant’s main evidence on this point was four paragraphs in the statement of Mr Helskens. It is not to the point that he personally did not approve the talking points submitted on the Defendant’s behalf or that the branding shown in a programme was unsatisfactory to him when these matters do not seem to have occurred to his subordinates at the time. In evidence however Mr Helskens said of the integration services “they were given to us, yes” and that his complaint that promotional credits were not given properly wasnot accurate. Mr Helskens also on reflection accepted that the Claimant was not at fault for naming “The Cookware Company” in the promotional credit, since that is what Mr Stevens had told the Claimant to do.[30]The lengthy and well documented evidence of the Claimant makes the position extremely clear. There is nothing in the complaints now made. They were not made at the time and are unsupported by the documents. In September 2011 Mr Stevens, the Defendant’s managing director, acknowledged both externally and internally that his company was liable to pay for the integrations. If the Claimant had failed in its commitments, or was alleged to do so, the Defendant would have said something about it by then.[31]Licensing. The Claimant says, correctly,that the Defendant was both given the right to use, and did and/or attempted to use the Claimant’s intellectual property. In internal communications the Defendant acknowledged that it had a licence to use the Claimant’s intellectual property -for example Mr Lambertz’ email of 10 March 2011albeit that he worked for GreenPan.Similar acknowledgments were made in communications with the Claimant listing MasterChef US as one of its licences on a proposal form. The Defendant marketed cookware bearing the Claimant’s intellectual property, samples of which were displayed at the Chicago Show and provided to US retailers.[32]The Defendant used the Claimant’s intellectual property in promoting itself at the Chicago Show. The Defendant’s sale representatives used the MasterChef name in their email footers, when corresponding with third party retailers. GreenPan’s sales representatives informed US retailers that they had “bought the licence to MasterChef” and “have a licence agreement for Master Chef”. The Defendant’s sales literature and press releases referred to the fact that the Defendant had the licence for MasterChef US. The Defendant was brought into round-table monthly conference calls with other licensees. In the accompanying emails which it saw, the Defendant was referred to as a licensee. The picture that emerges from the documents was supported and amplified by the witness evidence of Ms Heiss who, as I have said, was an obviously reliable witness. Mr Helskens was and is in a senior position above the day to day dealings which were left mainly to Mr Stevens and his team. He attributed apparent admissions to the hyperbole of sales people “promising the sky, you know how it works with salespeople”. He accepted that the Defendant used MasterChef-branded product in the USA for marketing purposes and that only a US licence conferred by the Deal Memo could have permitted that. In reality there was no evidence from a witness for the Defendant who could contradict the picture presented by the Claimant’s witnesses and confirmed by the documents.[33]It is overwhelmingly clear that the work envisaged by the Deal Memo was carried out by the parties. That does not of itself mean that there was acceptance by conduct but it goes a long way.

Was any acceptance by conduct too late?

[34]The Defendant contends that the offer in the Deal Memo was not capable of acceptance after 9th March 2011, alternatively 14th March 2011 the dates on which Mr Friedman sent draft Longform Agreements to Mr Stevens. It is alleged that these were in different terms from the Deal Memo, and therefore amounted to a counter-offer on the part of the Claimant, rejecting the offer contained in the Deal Memo. This suggestion is misconceived. The drafts (and they were only drafts) presupposed the existence of the Deal Memo as a binding contract. They were not a counter offer, they were part of the chain of negotiation leading (or in this case not leading) to a contract superseding the Deal Memo.[35]This argument enabled Mr Cook to advance a better one based on the submission that the early examples of alleged performance were in the same category as the pre contractual work which undoubtedly took place. As I see it the acts from early March onwards were much more significant and consistent only with the parties recognising that they were contractually bound.[36]As both parties have devoted attention to this point I should address it in a little more detail. Mr Stone points out that the draft Longform Agreements sent out in March 2011 were in substance in the same terms as the Deal Memo apart from the Brands Conflict Term (a separate issue but this, on the Claimant’s case, had been resolved on or around 1st March 2011). The first amendment of substance (but it is not clear to me that it was) was on 11th April 2011, when Mr Stevens sent back the drafts, amended to provide for promotional consideration to be “paid for by Cookware Company Ltd”. Mr Stone says thatthe Claimant had (to the Defendant’s knowledge and with its assistance) begun to perform its obligations well before those cut-off dates. As the chronology, and more significantly the evidence of Mr Bennett, show he is right about that.[37]Mr Cook points out that on 28th February 2011, the Claimant approved the Defendant’s request to use its intellectual property when designing the tower for the Chicago Show. He says that it cannot sensibly be suggested that the Claimant was thereby unequivocally representing that it was bound by the version of the Deal Memo returned by Mr Stevens. He makes similar points about the early work none of which he says could, before at least 7 March 2011, be seen as unequivocal acceptance of the Deal Memo any more than the other steps which had previously been taken in anticipation of a deal being done. As I see it this overlooks the change in nature between what was done in February and what was done in March and also overstates the significance of the approval from Fox, about which the Claimant was content to take a risk. Further the context in the early stages included Ms Heiss making it clear that the release of materials was on the basis that the Deal Memo would be signed and returned. Unsurprisingly, to anyone who had not studied the document closely, what mattered was not the Claimant’s signature on the Deal Memo but that of the Defendant. - that approval was not a condition of the Deal Memo. Acceptance by conduct –Decision.[38]Mr Cook says that given the clear language in the Deal Memo, it is difficult to see how anything done by the Claimant can be seen as an unequivocal representation that the Deal Memo had become binding since no conduct could trump the fact that the Deal Memo had not been signed and returned, a deliberate decision by Mr Friedman. Approval of any contract from Fox, even if a comparative formality was clearly still a procedure which had to be gone through. Although Mr Solares of Fox did approve the deal on 7 March 2011 no one from the Defendant was ever told that approval had been obtained. Both parties had already taken a number of steps in anticipation of a deal being done because of time pressure generated by the start of filming and the Chicago show. There was no suggestion by either party that a binding contract had been entered into as a result, despite the fact that a draft contract was then under discussion. In summary, the Defendant’s position is that each of the matters relied upon by the Claimant are consistent with the parties acting in anticipation of agreement being reached either on the Deal Memo or subsequently on the long-form agreements, which were on increasingly different terms from the Deal Memo.[39]Mr Stone responds that even Mr Helskens accepted in evidence that there was a deal:
“The deal was to produce MasterChef cookware, to bring it on the show, to bring it to retail and to sell it, just like we did in the UK. That was the deal”
. More fundamentally he points to the scale of acknowledgment by the Defendant that the parties had worked together on the project and that it had to pay the sums provided for in the Deal Memo. In June and August 2011, the Claimant invoiced the Defendant for the integration episodes (US$300,000), the advance payable upon entering into the agreement (US$52,500), and the first payment due under the Deal Memo (US$157,500). On 5th September 2011, Ms Heiss emailed Mr Stevens to inform him that the Claimant intended to invoice the Defendant for the integrations, now that they had been fully performed (not realising that invoices had already been sent to the Defendant). On 6th September 2011, Mr Stevens responded to Ms Heiss, asking for the invoices to be sent to him, albeit addressed to another company and stating that they would be “paid by return”. The re-addressed invoices were sent by Mr Friedman to Mr Stevens on 6th September 2011. The internal emails of the Defendant between Mr Stevens, Mr Helskens and others confirm the position. As Mr Stone points out there could be no plausible explanation for the Defendant, through its managing director, agreeing to arrange for payment of the invoices if it did not consider that it was bound to do so by the Deal Memo.[40]This is a familiar situation in which parties act commercially but in a way which sits uneasily with established principles of the law of contract. The parties did preparatory work before any contract could have come into effect because they judged that terms would in time be reached. A starting point therefore is the recognition that at least some work might be done without the parties entering into a contract. Once the Defendant had signed and sent in the Deal Memo it must have recognised that the deal was there or almost so. Work continued and intensified. The Defendant worked and communicated with others on the basis that a deal was in place. It is unattractive for the Defendant to try to explain away claims that it had a licence on the basis that its sales people cannot be expected not to exaggerate. The Claimant’s witnesses appeared to be willing to take the risk that Fox’s consent would not be forthcoming. So it does not follow that there could be no acceptance by conduct before consent arrived on 7 March 2011 (and in brief terms which support the perception that it was always going to be a formality).[41]The negotiation of the long form agreements was envisaged by the Deal Memo. It does not follow that negotiation of those terms (which were of course never entered into) was a step inconsistent with acceptance by conduct of the Deal Memo. The pattern of activity continued over the summer as did the acknowledgement and assertion by the Defendant that it had a licence. Most significantly the Defendant through Mr Stevens acknowledged the existence of a binding commitment by agreeing to get paid invoices on the basis of the Deal Memo. It is true that there is ambiguity in one of Mr Stevens’ emails but his other communications are clear. As I see it the Claimant communicated its acceptance by conduct in early March and thereafter as the Defendant recognised when acknowledging its obligation to pay. What more powerful evidence of the fact that the Defendant had received notice of acceptance and, like the Claimant, had performed the contract could there be? Ultimately the position was straightforward and this has been obscured by the conspicuous ability and ingenuity of Mr Cook’s submissions. Brands Conflict Term.[42]Having decided that the Deal Memo binds the parties the next issue, a question of construction, is the meaning of the Brands Conflict Term. Clause 2(a), inserted in manuscript into the version of the Deal Memo signed and returned by Mr Stevens on 28th February 2011, states “Branding Conflict with Gordon Ramsay to be concluded”.[43]The Defendant says that the Brands Conflict Term constituted a condition precedent to the agreement which required the Claimant to stop Mr Ramsay selling his own range of cookware products in the USA. That condition was not fulfilled so the agreement between the parties never came into effect.[44]The Claimant says that the Brands Conflict Term was not a condition precedent and only obliged the Claimant to take reasonable steps to stop the QVC website from using the MasterChef brand to promote Mr Ramsay’s own range of cookware. The Claimant did comply with the “Brands Conflict Term”, so construed (whether it was a condition precedent or not). Alternatively the “Brands Conflict Term” is insufficiently clear in meaning to bind the parties and should be severed from the Deal Memo.[45]The meaning of the written term depends upon what a reasonable person, having all the background knowledge which would reasonably have been available to the parties would reasonably have understood it to mean (see Investors Compensation Scheme v. West Bromwich Building Society [1988] 1 WLR 898, HL at 912F-913F per Lord Hoffmann), and by giving appropriate regard to the nature of the contractual relationship that was contemplated by the parties (Rainy Sky SA v. Kookmin Bank [2011] UKSC 50, [2011] 1 WLR 2900). Excluded from the factual matrix of course is evidence of pre-contractual negotiations, the parties’ subjective intentions and anything which the parties said or did after it was made. The lawyers are very familiar with the other relevant cases so I do not cite them. Mr Stone seeks to rely on contra proferentem but it is an aid of last resort and does not arise in this case.[46]The application of these basic principles excludes a number of points made by Mr Stone, notably evidence of what happened after the contract was allegedly made. He seeks to rely on the complete absence of any claim throughout the parties’ later dealings, even when the Defendant was probably looking for a way out, that there had been any failure by the Claimant to comply with the term let alone that it was a condition precedent. Like the material said to point the other way – the email exchange of 12 April 2011- this is inadmissible and I put it out of consideration.[47]Mr Cook seeks to exclude, as evidence of negotiations, what Ms Heiss says about the discussions with Mr Stevens. I do not accept that all this material has to be excluded. The internal email of 28 February from Ms Heiss describes what further issue the parties had decided to address. It describes the subject a proposed amendment was intended to address not anyone’s understanding of the meaning of the words. Ms Heiss records in her evidence that she had a telephone call from Mr Stevens, concerning the QVC website. This and the content of the relevant email enquiry from Mr Stephens is part of the relevant factual background that was known to both parties.[48]Mr Stone points out that whatever the provision means it cannot assist the Defendant unless it is a condition precedent because otherwise the alleged contract would still take effect subject to the Defendant’s right to claim damages. There is no counterclaim. That is correct but I prefer to look at the meaning of the clause in one exercise not two.[49]The Defendant’s construction. Mr Helskens’ evidence does not help much as most of it comes from what he says Mr Stevens told him. He asserted unconvincingly and in no detail that the Claimant had told his company that Mr Ramsay’s cookware would be taken off the market. More broadly the Defendant says that The MasterChef US deal was negotiated against the backdrop of a similar deal which had involved the Defendant and the Claimant’s UK sister company. In the UK, the presenter of the show worked with the Defendant and MasterChef to reinforce the whole contract. Mr Ramsay was the public face of MasterChef US. This was acknowledged by the witnesses and demonstrated by an advertisement for the show in Times Square, the way the Claimant presented the show to the Defendant initially and in the fact that the press reporting of the show was “mainly due to Gordon”. As a result, MasterChef US did not have any real brand separate from Mr Ramsay. As Mr Helskens put it “Ramsay was MasterChef and MasterChef was Ramsay”. As Ms Heiss put it in an internal email on 13 July 2011:
“Whilst the ratings are goodish and [Gordon Ramsay] definitely raises its profile, I think that is a double edged sword as we have been discussing all along – do people really identify with the MasterChef brand as distinct from Gordon? I am not sure they do and think that because [Gordon Ramsay] has 3 shows on FOX they all get a bit mixed up together.”
Mr Cook says that this is a clear recognition that the MasterChef US did not have any real brand separate from Mr Ramsay. (As I see it, it is equally a recognition of the limits to the asset held by the Claimant which in turn obviously limited what it could licence.)[50]Mr Cook argues that the Brand Conflict Term cannot be understood on the basis of information about the actual rights of the Claimant, since there is no suggestion that the Defendant had any detailed knowledge of this at the time. Mr Bennett accepted in his evidence that the Claimant did have a measure of control over Mr Ramsay stating:
“So in this case we can control Gordon and we can control MasterChef….What we do have control over is Gordon, who has a backing interest in the show, in MasterChef.”
Ms Heiss also confirmed that Mr Ramsay had a “back end participation” in the show and so would financially benefit from money received from licensees. Clearly, therefore, the Claimant was in a position to engage with Mr Ramsay, with whom it had a contractual relationship as the presenter of the show and the Defendant’s proposed construction of the Brand.[51]Claimant’s construction. The Claimant’s case is that the term should be construed as relating solely to the issue of Mr Ramsay being marketed on the QVC website as “The Master Chef”. On that construction, the conflict would be “concluded” for the purposes of the term if and when QVC removed the offending reference from its website. Ms Heiss’s evidence was that the “branding conflict” was first raised by Mr Stevens in a telephone call to her on the morning of 28th February 2011. Mr Stevens was concerned that Mr Ramsay was named as “The MasterChef” on the QVC website. Mr Stevens directed Ms Heiss to the relevant section of the QVC website, which advertised Mr Ramsay’s personal range of cookware under the heading “The Master Chef”. Ms Heiss sent an internal email to other members of the Claimant’s team, in the terms set out in the chronology including:
“Got a panicked call from Chris Stevens this morning about Gordon Ramsay’s QVC positioning in the US – on the website he is listed as The Master Chef in the marketing copy at the top of his page … [Chris has] indicated that he wants to add language re this …”
[52]There is in contrast no written or oral evidence that both parties had a wider concern in mind. There is nothing from the internal or external documents of the Defendant to show any such concern at all. Mr Stone points out the Deal Memo concerns the grant of a licence to use the cookware and the integration of the Defendant’s products. There is no sign in the Deal Memo that it is a contract by which the Defendant was to buy the right to Mr Ramsay’s image or his promotion of its products. The Deal Memo dealt with the licence, nothing more. Mr Stone says that his interpretation accords with the commercial purpose of the contract is sensible and consistent with the admissible relevant background as set out by Ms Heiss. I agree.[53]Decision. The resolution of this issue seems to me to be straightforward. Mr Ramsay was closely connected to the US Masterchef programme itself and might therefore be well disposed towards it. But both sides seemed to know full well from the start of discussions that the Claimant could not prevent Mr Ramsay from marketing his own range of cookware in the United States provided that he did not infringe its intellectual property. There is no direct evidence from the Defendant but Mr Helskens seemed to acknowledge that when saying that the Claimant “couldn’t have any control over [Gordon Ramsay] commercially”. The email of 12 August 2011 cited by the Defendant as evidence of the risk of confusion between the two brands from the outset is equally an indication that the competition was something that the Claimant could not (and would not logically agree to) control.[54]As I see it the Defendant’s further analysis is flawed. First if the Defendant did not know the limits on the rights of the Claimant (and I was not convinced by the evidence that it did not) it would or should have made enquiry as most businesses in that position almost always do. Secondly there is a distinction between having some influence over Mr Ramsay in one aspect of his activities, of the kind Mr Cook elicited from the witnesses by able cross examination, and the right which the Claimant clearly did not have to stop him from engaging in the major projects said by the Defendant to be the subject of the Brands Conflict Term.[55]The Defendant’s counter to Ms Heiss’s account of what led immediately to the term is an email exchange on 24 February 2011 in which Mr Stevens asked simply whether the Claimant had “any images of presenters we can use”. The reply said that a colleague would respond “though note we cannot use GR’s name or likeness”. It is specious for the Defendant to suggest, particularly in the absence of Mr Stevens as a witness, that this was some sort of bombshell relating to what is now suggested to be the wider issue of competition from Mr Ramsay. Another factor is that if the wider issue had been in the minds of the parties one would have expected the term to have come in earlier, not in manuscript at the last minute precisely when the parties were considering QVC.[56]Furthermore the Claimant would not have assumed an obligation that both sides knew it could not meet. It is even more unlikely that the parties would have agreed to make the existence of the entire contract dependent upon fulfilment of a condition that could not be met. I therefore prefer the Claimant’s construction of this term. Resolution of the Branding Conflict Term.[57]Mr Bennett says that in a telephone conversation on 28th March 2011 he told Mr Stevens that Mr Ramsay’s line of cookware on QVC would no longer be connected to the MasterChef brand. He says that Mr Stevens did not demur, and indicated that he wanted to move forward selling through QVC. Ms Heiss gave similar evidence and sets out the relevant emails between Paragraphs 89 to 97 of her statement. I have no reason to doubt that and there is no evidence from the Defendant to contradict it. On 12th April 2011 Mr Stevens said of the issue briefly in an email “not resolved to my knowledge”. Ms Heiss addresses that in her statement. Neither Mr Stevens nor anyone else at the Defendant raised the matter again. I conclude therefore that the matter was indeed resolved. Another indication that the issue had gone away is its absence from the drafts and negotiations for the Longform Agreements and from the other later written exchanges between the parties. Conclusion on liability.[58]I therefore conclude that the Deal Memo did constitute a legally binding contract between the parties which was accepted by the Claimant after it had been signed and returned by the Defendant. That acceptance was communicated by conduct even though I am not satisfied that the Claimant signed the Deal Memo. The meaning of the Branding Conflict Term is that claimed by the Claimant. It follows that the Defendant was in breach of contract and I next consider the claim for damages.

Damages

[59]The Claimant seeks as a debt the fixed sum of US$1,010,000 payable under the Deal Memo by the Defendant in return for the performance by the Claimant of its licensing and integration obligations. That is not as a principle in dispute.[60]The Claimant also claims damages of $700,000 based on the payments set out in the Deal Memo for Years 4 and 5 accepting that it must give credit for any losses that it is able to mitigate. Mr Stone points out that the Defendant has not alleged a general failure to mitigate on the part of the Claimant and has adduced no evidence on this point even though the burden of proof is upon it to show that the Claimant ought to have taken certain steps to mitigate its loss. That submission is disingenuous in that the case does not concern, for example, an oil trade with a market price, but matters entirely within the knowledge of the Claimant.[61]Mitigation. The issue is what if any credit should be given to the Defendant to reflect income that may have been derived from the licensing of the Claimant’s intellectual property and/or the integration of other manufacturers’ products into Series 3 of “MasterChef US”. The Claimant says that the answer is none because although the Claimant did find a replacement manufacturer to provide it with cookware for use in Series 3 of “MasterChef US” any income derived from alternative integrations does not fall to be taken into account for the purposes of quantifying damages. This is because for integration the parties’ obligations extended only to Series 2. As to licensing the Claimant took steps from early 2013 to source alternative partners for the MasterChef brand. The Claimant engaged an advertising agency, Brand Central, to source off-air licensing opportunities and/or retail placement for the brand but without success.[62]On 12th July 2013 the Claimant entered into a Merchandising Deal Memorandum with Ballarini for a global licensing deal by which the Claimant licensed to Ballarini its intellectual property in “MasterChef” for use in the manufacture and distribution of cookware. This licence is apparently narrower in scope than the Deal Memo. The Claimant says that no products have yet been released by Ballarini into the US or Canadian markets, and no royalties have been earned which are attributable to the US and Canada. Accordingly, there is no credit to be given against the US$700,000.[63]The Defendant strenuously disputes this. It points out that the relevant period for mitigation when the Claimant had the opportunity to mitigate its loss by selling the rights that were otherwise contracted under the Deal Memo is 24 July 2013 to 24 February 2016. Mr Friedman accepted in evidence that the Deal Memo was terminated in order to allow the Claimant to proceed with the potentially very valuable cookware deal with Ballarini. Mr Friedman’s knowledge of this issue was gained from what others had told him and was sketchy. In particular he had no knowledge of events after 14 November 2014 even though the target launch date for Ballarini in the US was 31 December 2014. These are fair points and at the end of the trial there was still uncertainty about the facts. I would not have decided this issue without further evidence.[64]Years 4 and 5. It seems however unnecessary for me to deal with the issue of mitigation because of another aspect of the damages claim.[65]Box 26 of the Deal Memo provides as I have already mentioned that:
“For year 4 to trigger, royalties will have to have earned out 710k by February 24, 2014 which is the combination of the guarantees of the three previous years outlined below. For year 5, royalties for year 4 will have to have earned out 350k. If triggered years 4 and 5 royalties escalates to 8%. 210k in yr 1 250 k in yr 2 250k in yr 3 350 k in yr 4 350 k in yr 5”
[66]Mr Cook says that the effect of this provision is to make the continuation of the Deal Memo into the fourth year and then in turn into the fifth year dependent on royalties having been generated at particular levels in previous years. For the Deal Memo to continue into the fourth year, royalties of $710,000 had to have been earned by 24 February 2014. As set out in box 22 of the Deal Memo, for the first three years royalties were to be generated at a rate of 7% on sales. It is not in dispute that the Defendant has not sold a single MasterChef US product and consequently no royalties were ever generated. It consequently follows that year 4 (and in turn year 5) of the Deal Memo would never have been triggered. There is therefore no valid claim for damages for sums which the Claimant would have received in years 4 and 5 of the Deal Memo.[67]The Claimant responds that to deprive the Claimant of damages reflecting or calculated by reference to years 4 and 5 would be unjust, given that the reason why the triggers would never have been met is the fact that the Defendant consciously took a decision to walk away from the MasterChef brand. It is a well-established principle that a person shall not be allowed to take advantage of a condition brought about by it.[68]I disagree with the Claimant’s response. The issue is what would have happened but for the breach? The Defendant would presumably have tried hard to generate sales for itself with the incidental benefit that the Claimant earned royalties throughout. It is however quite clear that the decision to enter into this contract was disastrous for the Defendant and may have been part of the reason why Mr Stevens lost his job. The execution of the contract did not go well either. The deal seems not to have been preceded by much research or due diligence. The Defendant was able to make little or nothing of the rights and it seems extremely unlikely that it ever would have done, even if the deal had limped on to its conclusion. The triggers would not have been met because the sales by the Defendant would not have reached the required level. That shortfall would have been caused by lower than hoped for sales not by breach of contract or wilful default by the Defendant. It follows that damages are not recoverable for what would have been the year 4 and 5 payments had sufficient revenue been generated.[69]There was little discussion at the trial about the question of damages. It is possible that I have overlooked some aspect of this. If so either party may raise it at the hand down of this judgment. Quantum Meruit, “reasonable consideration” and related remedies.[70]As I have found that there was a contract it is unnecessary to consider these interesting issues. I will however make what I appreciate is an obvious point. In broad terms the Defendant, literally, signed up to a deal by which it was to receive benefits in return for specified payments it agreed to make. The benefits were provided but the Defendant failed to pay for these the price it had initially agreed to pay and later acknowledged to be due. It seems to be inevitable that, had the Claimant lacked a contractual remedy, it would have succeeded on one of the alternative grounds. Both in this context and also standing back to review findings on other matters it is worth bearing in mind what Lord Steyn (as he later became) said in the Court of Appeal at the start of his judgment in First Energy (UK) Ltd v Hungarian International Bank Ltd [1993] BCLC 1409 “A theme that runs through our law of contract is that the reasonable expectations of honest men must be protected. It is not a rule or a principle of law. It is the objective which has been and still is the principal moulding force of our law of contract. It affords no licence to a judge to depart from binding precedent. On the other hand, if the prima facie solution to a problem runs counter to the reasonable expectations of honest men, this criterion sometimes requires a rigorous re-examination of the problem to ascertain whether the law does in deed compel demonstrable unfairness.” He said this more than once – see for example Associated Japanese Bank (International)-v-Credit du Nord - [1989] 1 WLR 255. The Defendant entered into a deal and should be held to it. Conclusion.[71]There will be judgment for the Claimant for its claim in debt but no other award of damages, subject to possible clarification on one aspect which I have mentioned above.[72]I shall be grateful if Counsel will, not less than 72 hours before hand down of this judgment, let me have corrections of the usual kind and a draft order, preferably agreed, and also a note of any matters which either party wishes to raise at the hearing.[73]I am grateful to Counsel and solicitors on both sides for the admirable way in which this case was prepared and presented.

Cited in 1 later judgment