It was a case of new media but old principles in this media industry dispute over whether an email stating that the deal was approved committed the sender. For the facts, the verdict and the lessons.
Who: Pretty Pictures -v- Quixote Films Limited
Where: The Queen’s Bench Division of the High Court of Justice, London
When: July 2003
With an increasing number of deals in the media world being done over the internet, it was only a matter of time before the Court would have to wrestle with the question that was live in this particular case. This was whether a contract had been formed by way of an exchange of e-mails.
The contract, or alleged contract in question was between film distributor Pretty Pictures (PP) and film production company Quixote Films Limited (Q). The deal being discussed was for distribution of PP’s movie over a 12 year term.
On 26 April PP e-mailed Q with terms, ending the message “I hope we now have a deal. I look forward to your confirmation and receiving a deal memo by fax”.
No deal memo materialised from Q, but 12 days later Q e-mailed PP saying “The deal is approved” and that PP would receive the contracts by e-mail.
No contracts materialised and it ended up in Court, with Q denying that there was a deal and PP arguing that “The deal is approved” in Q’s e-mail concluded a contract between the parties.
The verdict of the Court was that there was no binding contract.
The decision did not need the appliance of rocket science. PP’s 26 April e-mail made it quite clear, by implication, that in PP’s contemplation a “deal memo” setting out the salient terms of the deal had to be produced by Q before a contract could be concluded. This never occurred. Indeed, by responding 12 days later saying that a full form contract would be sent by e-mail, Q clearly showed that it was not in favour of the “deal memo” approach to concluding the arrangement in any event.
Other factors militated against PP, including the fact that the terms set out in the e-mails that had been exchanged did not cover anything like the number of areas that one would expect a long-term film distribution deal to go into. Also PP’s offer included a term that required acknowledgement of receipt of a down-payment on conclusion of the contract and no such payment had been made.
Why this matters:
Q could have made life even easier for itself by stating clearly on the “deal is approved” e-mail that it was all “SUBJECT TO CONTRACT”. In a case reported on marketinglaw in June 2003, we noted that the inclusion of those magic words was sufficient to prevent a contract being concluded in a case that was not terribly different except for the fact that e-mail was not used for the relevant communications. Whatever the medium, however, this judgement shows that the Court’s approach will be the same, namely to examine carefully the terminology used in the communications in question, so as to establish whether there really was the meeting of minds and intention to create business relations that are the essential building blocks of binding contracts.