22 May 2018 - Post by:Jason Rix
In Rosalina v New Balance the court found that, having considered the full run of communications, the parties only intended to be bound when all parties had signed. As they had not, there was no binding agreement. An attempt to rely on an open-end duty to negotiate in good faith was void for uncertainty.
Under a written agreement, Rosalina granted New Balance the exclusive right to some of Marouane Fellaini’s image rights which included him wearing their boots. This agreement expired. Over the next six months the parties exchanged emails about an extension. During this time, the Manchester United midfielder continued to wear boots provided by New Balance. Ultimately, New Balance ended the negotiations, paying a final sum in recognition of services provided.
Rosalina argued that a new contract had come into existence when a draft had been drawn up and the parties had discussed the arrangements for its execution. They claimed over £2m in lost retainer and damages, pointing to the fact that they had signed the contract and sent it out for signature. However that version of the contract was subsequently amended, each time with the need for signature still at the forefront of the parties’ minds.
Existence of a contract
The court noted that the fact that both parties had generally continued to act as if a contract was in fact in place was “powerful evidence” of intention for there to be a contract. However, the actions continued equally before the date when Rosalina contended there was no contract as after. There were repeated references in the correspondence to the need for the document to be signed. Throughout the negotiations both parties spoke of “amendments/changes” and not “variations,” which the court said was “highly suggestive of a contract that is not yet over the finishing line”. The decisive factor for the court, however, was Mr Fellaini’s refusal to attend any appearances on behalf of New Balance until the new contract was signed.
Duty of Good Faith
Rosalina also argued that, in the absence of a new contract, New Balance had a duty to negotiate in good faith under the original contract which they had breached by withdrawing from negotiations. The Court held that the clause in question only imposed an obligation on the Rosalina or Mr Fellaini, as they were the parties “with something to sell.” There was neither need nor cause to imply mutuality. Even if there had been, it could not be open-ended. Without a time limit it was void for uncertainty.