Mr H TV Ltd v ITV2 Ltd

A commercial contract will not ordinarily contain an implied term requiring one party to preserve a third party’s trust and confidence, particularly where the proposed term is broad, subjective and unnecessary to give effect to the parties’ agreement. A party’s conduct amounts to renunciation only where, viewed objectively, it clearly demonstrates an intention no longer to be bound. A breach is repudiatory only if it deprives the other party of substantially the whole contractual benefit. Contractual frustration cannot be established by relying on a party’s own breach or refusal to perform. In assessing contractual damages, the counterfactual assumes performance in accordance with the contract and commercially realistic conduct in good faith.

The claimant was the production company for reality television programmes commissioned by the defendant. The defendant purported to terminate the production agreement after disputes concerning the claimant’s director’s Twitter activity, the involvement of personnel in production, the availability of Peter Andre, and Kerry Katona’s proposed appearance in Celebrity Big Brother.

The claimant alleged wrongful termination and claimed lost profits and an unpaid invoice. The defendant relied on implied contractual terms, repudiatory breach, frustration and, alternatively, an exclusivity breach concerning Kerry Katona. The central issues were whether the defendant was entitled to terminate and what losses followed.

1. Contractual framework. The ITV General Terms and Conditions were not incorporated into the production agreement for future series because no relevant licence agreements had been concluded. The claimant was nevertheless subject to the statutory term implied by Supply of Goods and Services Act 1982, section 13, requiring reasonable care and skill.
2. Implied term. Applying A-G of Belize v Belize Telecom Ltd [2009] UKPC 10, as qualified by the Court of Appeal authorities, the proposed term protecting the relationship between the claimant and Peter Andre was neither necessary nor sufficiently objective. It was not implied into the commercial agreement.
3. Renunciation. The claimant’s tweets, considered individually and cumulatively, did not objectively evince an intention not to perform the agreement. The claimant remained ready, willing and able to perform, and continued to produce programmes professionally.
4. Kerry Katona. The agreement contained an absolute obligation to procure her exclusive television services. Her proposed appearance in another programme would have been a breach, but it was not repudiatory because the agreement was severable and ITV2 would retain substantial contractual benefit. In any event, negotiations about a compromise had not concluded, so termination on that ground was premature.
5. Frustration and damages. The contract was not frustrated. Peter Andre’s refusal to perform was his own contractual breach and did not constitute a supervening event. The defendant’s causation argument was unpleaded and misconceived; the counterfactual assumed commercially realistic performance. The purported termination was therefore ITV2’s repudiatory breach. The claimant was entitled to damages and payment of the outstanding invoice. The counterclaim was dismissed.