Personality clashes can obviously cause difficulties in business, but they are rarely serious enough to justify cancelling commercial contracts. In one striking case, a television channel was ordered to pay substantial damages to a production company after an agreement to produce a number of reality TV shows was terminated.
The contract was cancelled after the company's sole director had a falling out with a celebrity who was to play the central role in the shows. The director had published a number of offensive tweets relating to the celebrity and his agent, and the celebrity had informed him through his solicitors that he wished to have no more to do with him.
However, in ruling that the channel had no right to terminate the agreement, the High Court found that the impact of the tweets had been exaggerated. They were not such as to destroy the company's relationship of trust and confidence with the celebrity and fell a long way short of threatening to ruin his image. Claims that the director had made death threats to the agent were also decisively rejected.
The company had not shown any intention to abandon the agreement or to fail to perform its obligations under it. The channel's cancellation of the contract therefore amounted to a repudiatory breach. The channel had also terminated an agreement in respect of another celebrity on grounds that an exclusivity clause had been breached. However, the Court found that it had not been entitled to do that either.
The amount of the company's damages award has yet to be assessed. However, it had estimated its loss of profit, arising from the cancellation of the shows, at £6-7 million. The Court also found that the channel was obliged to pay an outstanding invoice from the company for almost £550,000.
Fallings out between business associates are regrettably not uncommon, and failure to resolve such disputes quickly can be very much to the detriment of the business as well as those in dispute.
For advice on resolving any business disagreement before it becomes a disaster, contact Roy Colaba on 0121 698 2200 email, r.colaba@sydneymitchell.co.uk or complete our online enquiry form.
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