Seyfried v Euro-IB Ltd.

A contractual discretion to determine remuneration must be exercised in good faith, fairly and rationally. Separate contracts are not treated as incorporating one another merely because they concern related services or parties. Termination of a contract may discharge rights to payment that had not unconditionally accrued, while preserving rights already accrued. On the evidence, the remuneration arrangement was discretionary and generally excluded retainers; only an unpaid directors’ fee was recoverable.

Manfred Seyfried claimed €263,831 from Euro-IB Ltd for services provided between March 2004 and March 2007. He relied principally on alleged oral consultancy agreements, together with claims under a separate directorship contract and an alleged agreement concerning Euro-IB’s Frankfurt office.

The court considered the parties to the consultancy contract, the terms of the remuneration arrangement, whether the consultancy and directorship contracts were separate, the effect of their termination, and the individual project claims.

1. Consultancy contract. The consultancy contract was originally made by Dr Seyfried on behalf of Advantage. Its terms gave Euro-IB a discretion as to whether and how much to pay for Dr Seyfried’s work. That discretion had to be exercised in good faith, fairly and rationally. The arrangement generally excluded payment calculated by reference to retainers.
2. Separate contracts. The consultancy contract and the directorship contract were concluded at different times, between different parties and for different services. The later substitution of Dr Seyfried for Advantage did not incorporate the directorship contract into the consultancy contract.
3. Directors’ duties. Dr Seyfried’s directorship involved fiduciary duties, including a duty not to place himself in a position where there was a real possibility of conflict between his interests and Euro-IB’s interests. It was unnecessary to determine whether he had in fact breached those duties because Euro-IB neither challenged the remuneration discretion on that basis nor advanced a counterclaim or set-off.
4. Termination. Dr Seyfried’s resignation terminated both the directorship and consultancy contracts. Termination discharged any right to payment which had not unconditionally accrued by that date, but did not remove accrued rights. The termination clause in the directorship contract concerned the directors’ fee, not remuneration under the separate consultancy contract.
5. Disposition. Dr Seyfried recovered €12,250 for unpaid directors’ fees. His claims concerning Projects Heidi, Neckar, Meistersinger, CBB, Wolfsburg and Funkschneise, the Frankfurt office, and the alleged percentage-based remuneration arrangement failed.

First-instance decision. No appellate history was stated in the judgment.