International Media Advertising Ltd v Ministry of Culture And Tourism of the Republic Of Turkey

A contract must be construed as a whole. An intermediary is not entitled to charge an undisclosed margin where the contract provides for reimbursement of media costs and expressly identifies the commission payable to another contracting party. Contractual obligations to provide genuine supporting invoices cannot be displaced by an alleged informal practice without proof of an agreed variation.

A person who knowingly makes fraudulent representations through a company remains personally liable for his own deceit, even where the company is also liable. A company director acting within the scope of his authority is not, without more, liable for inducing the company’s breach of contract.

The claimant media-buying company sought payment of unpaid advertising invoices and, alternatively, remuneration in restitution or on a quantum meruit basis. The defendant counterclaimed for breach of contract and deceit, alleging that the claimant had included undisclosed uplifts in media plans, overcharged for advertising, and submitted altered media-provider invoices. A third-party claim alleged personal liability against the claimant’s director for inducing breach of contract and deceit.

The central issues were the proper construction of materially identical advertising contracts, whether they had been varied by an informal practice, whether the alleged representations were fraudulent, and the director’s personal liability.

1. Construction of the contracts. The advertising contracts entitled the claimant to reimbursement of amounts incurred and paid to media providers, but did not entitle it to an additional fee or margin. The contracts expressly provided for a 5% commission payable to DDF and contained no clear provision for a separate commission payable to the claimant. The definitions of “Media Plan” and “Net Media Cost” did not create such an entitlement. The contractual scheme required the Ministry to receive the benefit of discounts and the best price secured.
2. The contracts required the claimant to confirm that third-party invoices were correct and proper and to provide certified copies of invoices issued by the media organisations. They therefore did not permit altered or fabricated media-provider invoices to support the claimant’s invoices.
3. Variation. The claimant failed to prove any agreement varying the written contracts. Requests by Ministry staff to correct dates, minor discrepancies or supporting material did not establish agreement to an arrangement permitting undisclosed uplifts, overcharging or the alteration of third-party invoices. The alleged practice would also have involved deceiving the Ministry’s head office, making the suggested agreement inherently improbable.
4. Deceit. The figures in the 2011 media plan objectively represented the costs supplied by media providers without an uplift. Submitting inflated figures and altered invoices constituted false representations. The claimant knew the representations were false, intended reliance, and caused the Ministry loss. The claimant and its director were liable in deceit.
5. Personal liability. A director acting bona fide and within the scope of his authority is not liable for inducing his company’s breach of contract. The director was therefore not liable on that tort. However, a person who personally commits all the elements of deceit is liable for his own fraud, regardless of attribution to the company.
6. The claimant’s unjust-enrichment or quantum-meruit claim could not be used to subvert the valid contractual bargain. The claimant recovered only £12,450 and €950. The Ministry obtained judgment against the claimant and the director for £367,261.18 and €14,987.83.