SDI Retail Services Ltd v The Rangers Football Club Ltd

Where a contractual matching mechanism provides for a further agreement on the same terms as the existing agreement, only variations required to give effect to the defined material terms, and to identify the rights matched, may be made. The court should not remove contractual rights or mechanisms merely because they were absent from the third-party offer or appear commercially inconsistent with the matched rights. The original contractual framework remains in place unless a necessary consequential amendment is established. The court will not rewrite the parties’ bargain or postpone the effective date of an agreement already formed.

In earlier Part 8 proceedings, the court held that SDI Retail Services Ltd had matched material terms in an offer made to The Rangers Football Club Ltd. A further agreement therefore came into existence under paragraph 5.7 of Schedule 3 of the parties’ agreement, and the parties were directed to agree its precise wording.

The parties could not agree the wording. Rangers proposed removing or amending various rights, payment provisions and matching mechanisms, and sought terms postponing the agreement’s operation until execution or the outcome of a possible appeal. The central issue was the proper construction and application of paragraph 5.7 of Schedule 3.

1. The application was granted. The further agreement formed on 25 July 2018 was on the terms of SDI’s draft agreement provided at the hearing, without Rangers’ proposed deletions or additions. It took effect on 11 August 2018.

2. Paragraph 5.7 required the further agreement to be on the same terms as the existing agreement, subject only to variations required to give effect to the material terms and to determine whether it related to some or all of the offered rights. The earlier findings on the purpose of the matching scheme were binding and were respectfully adopted.

3. Rights to manufacture branded products and to exercise ancillary rights were not offered rights and were not material terms. Their removal was therefore outside the permitted variations.

4. The matching-right provisions were not terms concerning the duration of the original agreement and were not material terms. They remained part of the further agreement. The court did not need to decide whether they created a rolling right to a contract in perpetuity; the parties had agreed those provisions and the court could not rewrite their bargain.

5. The payment provisions which Rangers sought to remove dealt with the process and timing of payments. They were not inconsistent with the material terms and could not be amended without SDI’s agreement.

6. The disputed amendments concerning SDI’s right to deal with the Official Rangers Kit were consistent with the agreed amendments and were included.

7. The proposed terms postponing effectiveness until execution, or recording the pending application for permission to appeal, were not variations required by paragraph 5.7. The agreement had already come into existence on 25 July 2018, and any later breach issues could be determined separately.

The judgment followed earlier Part 8 proceedings in which the court determined that a further agreement had been formed and ordered the parties to agree its wording. This judgment determined the wording after agreement proved impossible.