DNA Productions (Europe) Ltd v Manoukian & Anor (t/a DNA Productions)

Where parties hold fundamentally different beliefs about the contractual terms, a contract is formed only if the objective and subjective requirements for holding one party to the other’s apparent agreement are satisfied. If one party reasonably believes that the contract is on one basis, while the other knows that the proposed terms are understood on a materially different basis, there may be no agreement.

A party claiming payment must establish the contract relied upon. The court will not award additional sums on a quantum meruit where that alternative claim has not been pleaded or supported by evidence.

DNA claimed £201,073.25 and interest from Mr Manoukian for the balance allegedly due under an agreement for arranging and supplying a large private event. Manoukian contended that the arrangement was a cost-plus contract, under which DNA would obtain suppliers’ best prices and receive a 12.5% management fee. DNA contended that it had supplied the event under an all-in contract at the prices stated in its proposals.

Manoukian also pleaded an alternative defence under section 2(1) of the Misrepresentation Act 1967. He counterclaimed in relation to the event and sought delivery of master tapes and a copyright assignment, but the latter claim was not pressed.

1. The claim failed. DNA did not establish an enforceable contract governing the supply of its services for the event. The court reserved the consequential order for further submissions.

2. The applicable contractual principles were accepted. Where the parties are not actually agreed, a claimant may establish contractual terms if the defendant’s words or conduct would have led a reasonable person in the claimant’s position to believe that the defendant agreed to those terms, and the claimant in fact held that belief. The defendant may rebut that conclusion by showing that the claimant’s words, conduct or silence would have led a reasonable person in the defendant’s position to believe that the claimant agreed to materially different terms.

3. Manoukian believed that DNA would charge the suppliers’ actual and best obtainable costs, together with a 12.5% fee representing DNA’s remuneration and profit. DNA intended to contract on an all-in basis, while knowing that Manoukian understood the arrangement as cost-plus. The negotiations, the references to the total cost including discounts, the earlier 2001 arrangement and DNA’s concealment of supplier discounts supported that conclusion.

4. Because the parties’ understandings were materially inconsistent, no contract was agreed on the terms relied upon by DNA. DNA bore the burden of proving the contract forming the basis of its claim, and that burden was not discharged.

5. The court did not determine the alternative defence under section 2(1) of the Misrepresentation Act 1967. It observed that the defence appeared unlikely to assist without evidence of loss caused by entering an all-in contract. No quantum meruit claim for the suppliers’ costs less discounts and a management fee had been pleaded or supported by evidence.

6. The counterclaim for the master tapes and copyright assignment was not pressed, since DNA had contracted only to provide an edited film and that film had been delivered.