The Importance of Clarity within a Contract

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25 November, 2020

It is becoming increasingly more important to ensure that the terms within a contract are clear and address all the necessary points and provisions. Any areas of uncertainty, no matter how minor, provide opportunity for disputes to arise between the parties.

In September 2020, Liverpool FC won a High Court battle against Winlink Marketing Limited ("WML"), after WML sought to claim outstanding commission from the football club amounting to £1.125 million.

The relationship between the two parties commenced in October 2013 when Liverpool FC engaged WML under an introduction agreement to find a sponsor for the club. The pool of potential sponsors including Betfred, Stan James and BetVictor. Later that year, one of WML's senior executives introduced Liverpool FC to their contact at BetVictor.

In both 2014 and 2015 BetVictor put sponsorship offers forward, however both were rejected by the club. By 2016, BetVictor had terminated its agreement with WML and Liverpool FC was dealing with the betting firm directly via a new employee of the club, which led to a £15 million training kit sponsorship deal. WML did not take part in any aspect of the negotiation process and consequently Liverpool FC did not pay them any commission in respect of the deal.

WML argued that an introduction had been made by them in 2013 which was the "effective cause" for the sponsorship deal and therefore they were owed commission. Liverpool FC sought to rely on the argument that the "Introduction Period" within which WML must mean an introduction had expired, however this was rejected by the Court. The Court focused on the issue of "effective cause" and whether this term imposed an obligation for the agent to be an effective cause or whether it should be an implied term.

Due to the lack of clarity and ambiguity of the contract, the non-exclusive nature of the contract between Liverpool FC and WML and the way the deal was struck between Liverpool FC and BetVictor, the Court found that the introduction by WML was not an effective cause for the sponsorship deal and therefore dismissed the claim. Not only did WML fail to receive any commission, they were also ordered to pay a percentage of Liverpool FC's legal costs.

The law is now clear that an introducer needs to be directly involved in the deal for commission to become payable, unless there is a clear express term in the agreement which says otherwise. If the terms had been drafted more clearly in support of WML, the decision could have quite easily been found in their favour. This case highlights the importance of ensuring that all terms within a contract are clear and reflect the true agreement between the parties. Any uncertainty can lead to costly and lengthy disputes, which could have been avoided with a well written and precise contract.

For more information contact David Filmer in our Corporate department via email or phone on 0333 207 1132. Alternatively send any question through to Forbes Solicitors via our online Contact Form.

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