Acer Investment Management Ltd & Anor v The Mansion Group Ltd

A contract may arise from the parties’ conduct and agreement even where a contemplated formal document remains unsigned. An agent’s label does not determine whether fiduciary duties arise; the contractual terms and commercial context define the relationship. A term preventing an agent from marketing competing products will not be implied where the agreement and its context show a non-exclusive sales arrangement. Nor will a general obligation of good faith be implied without a relational character requiring it. Dishonesty unrelated to contractual performance does not ordinarily amount to repudiation. Commission earned before termination remains payable, and contractual notice requirements must be observed.

The claimants, Acer Investment Management Ltd and Quantum Investment Management Solutions LLP, claimed unpaid commission and damages from The Mansion Group Ltd in connection with the distribution of investment funds. The principal disputes concerned the identity of the contracting party, whether an agency agreement had been concluded, whether commission for introducing Global Wealth Management Solutions was payable and capped, whether the claimants had repudiated the agreement by marketing another fund and then lying about it, and whether trail commission remained payable for two independent financial advisers.

The court also considered the implication of contractual terms, fiduciary obligations, good faith and the effect of repudiation on accrued commission.

1. Contract and authority. The parties concluded a contract at the meeting referred to in the email of 31 October 2011. Its terms were those in the attached draft. Signature was an inessential formality. Adam Davis had actual or, alternatively, ostensible authority to bind Mansion. Acer, rather than Quantum, was the contracting party.
2. Commission. The claimants introduced Global Wealth Management Solutions to Mansion. The agreed override commission was 0.2% of all business placed by that distributor. The agreement contained no cap. The commission provisions related back to the introduction and were not defeated by any argument based on past consideration.
3. Agency and implied terms. Describing Acer as an agent did not establish fiduciary duties or a general duty of loyalty. The nature and extent of any such duties depended on the contract and its commercial context. The arrangement was a non-exclusive sales agreement, not a relational contract. No term preventing the claimants from marketing competing property funds, and no relevant general term of good faith, could be implied.
4. Blackmore and repudiation. Mansion had no contractual right to prevent the claimants marketing the Blackmore fund. The lie about that marketing concerned activity which the claimants were contractually entitled to undertake and was unrelated to contractual performance. It therefore could not amount to a repudiatory breach. The claimants had not repudiated the agreement.
5. Termination and trail commission. Mansion could terminate only in accordance with the contractual notice provisions. It had failed to do so and was in breach. Acer remained entitled to trail commission in respect of Thompson Cavendish and Incisive Wealth. Mansion was ordered to pay £10,000 on account, with the remaining financial consequences to be resolved after proper disclosure and further submissions.