Janus Capital Management LLC v Safeguard World International Ltd

A contract must be construed objectively by reference to the meaning conveyed to a reasonable person with the relevant background knowledge available at the time of contracting. A payroll-processing agreement does not necessarily include foreign exchange or payment services merely because it contemplates timely payments. A contractual claim for alleged overcharges requires identification of a breached contractual promise. Fiduciary duties and implied duties to charge commercially reasonable rates do not arise in an ordinary arm’s-length relationship without the necessary undertaking, agency or contractual basis.

Safeguard provided international payroll processing to Janus and arranged foreign exchange and payment services through Travelex and later Corporate FX. Janus claimed that those services formed part of the parties’ agreement and sought repayment of foreign exchange margins.

Alternatively, Janus alleged fiduciary duties and a contractual duty of care. Safeguard relied on estoppel and a contractual limitation period. The issues concerned construction of the agreement, the contractual basis of the payment services, the existence of fiduciary or implied duties, and the operation of the limitation clause.

1. Claim dismissed. The agreement defined Safeguard’s services by reference to Article II, clause 3.1. Those provisions concerned payroll processing and did not require Safeguard to provide foreign exchange or payment services.
2. Even if those services had been contractual, the agreement did not regulate the foreign exchange margin. The transaction charges in Exhibit A did not specify an exchange rate or margin. Janus identified no contractual promise that Safeguard had failed to perform.
3. The parties formed individual contracts whenever Janus accepted Safeguard’s offer of a completed foreign exchange transaction. Janus had not pleaded any collateral contract and had expressly denied one. Its claim was in substance restitutionary, but no unjust enrichment claim had been pleaded.
4. Safeguard was not Janus’s agent when it contracted with Travelex or Corporate FX. Those providers were Safeguard’s subcontractors. The relationship was arm’s length and did not involve an undertaking giving rise to fiduciary duties.
5. No contractual duty of care could be implied. The alleged term was neither necessary for business efficacy nor obvious. In any event, the evidence showed that the margins were commercially reasonable.
6. Clause 15.3 referred to knowledge of the relevant facts, not knowledge of a legally viable claim. Janus had that knowledge by 27 July 2010, or alternatively by early 2011. All claims were dismissed.