CDV Software Entertainment Ag v Gamecock Media Europe Ltd & Ors

A commercially negotiated termination clause must be construed in light of its language and commercial purpose. Where a contract gives a right to terminate for delay, the relevant delay may arise from conduct which effectively amounts to agreement to revised delivery dates; a formal variation is unnecessary. Ordinary approval time must be included when calculating delay, subject to genuinely manufacturer-caused delay. A contractual right is not lost by mere delay where the agreement preserves it, although affirmation or waiver may arise from inconsistent conduct. A mistaken invocation of a contractual right does not ordinarily amount to repudiation where the party remains willing to perform the contract.

The claimant entered into a publishing and distribution agreement with Gamecock concerning seven video games. The agreement required delivery of approved Gold Masters by dates set out in its schedules and gave the claimant a right to terminate in respect of an individual product delayed by more than 45 days, with repayment of the relevant advance and wasted costs.

The claimant purported to terminate four products. Gamecock disputed the contractual delivery dates, contended that the termination right had been lost by waiver or delay, and purported to terminate the agreement for repudiatory breach. The principal issues concerned construction of the delivery and termination provisions, waiver and affirmation, and repudiation.

1. Delivery dates. The agreement incorporated Schedule 7. The reference to the release schedule in the definition of “Delivery Dates” meant the Euro GM dates in that schedule. Gamecock was therefore required to obtain approval and deliver the Gold Masters by the latest date specified there. The Schedule 1 quarterly dates did not displace that obligation.
2. Operation of the termination clause. Clause 3.1(b) was to be construed commercially and strictly as a termination provision. “Agreement” to revised delivery dates could be inferred where Gamecock allowed a developer to miss contractual milestones without enforcing its rights. Otherwise Gamecock could defeat the partial termination right simply by never formally agreeing a revised date. CDV did not first have to refuse approval to revised dates, and the right could be exercised after the 45-day period had expired.
3. Calculation of delay. The ordinary period required for console approval counted towards the 45-day period. Only abnormal delay caused by manufacturer-requested changes or approval issues was excluded. A contrary construction would permit Gamecock to prevent the contractual remedy by submitting an unfinished product shortly before the deadline.
4. Individual products. CDV waived its right to terminate Dementium by placing and pursuing a substantial binding order, paying the final advance and otherwise acting on the basis that the agreement continued. CDV did not waive its right concerning Velvet Assassin, because it consistently required delivery in 2008 and was not informed of Gamecock’s revised arrangements with the developer. Termination of Mushroom Men was valid: the right applied to the product as a whole, not merely to an individual format, and the Wii delay exceeded 45 days.
5. Other issues. Clause 11.6 prevented mere delay from operating as waiver, although delay combined with other conduct could constitute waiver or affirmation. No term requiring exercise within a reasonable time was implied. CDV’s mistaken termination of Dementium was not repudiatory because it relied on, and sought to preserve, the agreement. CDV was not in repudiatory breach of its payment or financial-notification obligations.
6. The claimant succeeded in relation to Velvet Assassin and Mushroom Men, with repayment of the relevant advances and wasted costs to be assessed. The defendants’ counterclaim was dismissed.