SDI Retail Services Ltd v The Rangers Football Club Ltd

Contractual matching rights must be construed by reference to the language of the agreement read as a whole and its commercial context. Where an agreement identifies specific material terms, a matching right does not ordinarily require the holder to match every term of a third-party offer. “Full details” requires comprehensive information about the specified terms, but does not enlarge their subject matter. A connected commercial arrangement is distinct from a term of the offered right and must be separately identified. A compliant offer and acceptance can create the further agreement even though its precise wording remains to be settled.

The claimant held contractual rights to operate retail activities and sell branded products and replica kit for the defendant football club. The agreement allowed the defendant to accept third-party offers for defined offered rights, provided the claimant received a notice of offer and could match specified material terms and any applicable connected commercial arrangements.

After a third-party offer, the defendant sent a notice containing provisions for the offered rights. The claimant stated that it was willing to match the material terms. The parties disagreed about which provisions were material terms, the meaning of connected commercial arrangements, and whether a further agreement had resulted. The central issues were the proper construction of the matching mechanism and its effect on the parties’ rights.

1. The claimant was entitled to declarations, modified in accordance with the judgment. The parties were directed to agree the wording of the further agreement; the court was not persuaded that it should determine that wording at this stage.

2. Applying the principles of contractual interpretation identified in Wood v Capita Insurance Services Ltd [2017] UKSC 24 and Arnold v Britton [2015] UKSC 36, the agreement had to be read as a whole and in its commercial context. Its background as a settlement, and its careful drafting, indicated an intention to create a certain and relatively simple matching process.

3. “Material terms” meant only the terms falling within paragraph 5.3.1 to 5.3.3 of Schedule 3: payment terms, revenue-share or royalty terms, and duration terms. “Full details” required a comprehensive description of those terms but did not extend the definition to terms merely affecting payment, revenue or duration.

4. The term requiring the third party to meet the cost of specified works was a material payment term. The provision concerning responsibility for Megastore employees was a performance term, not a payment term. Provisions concerning reporting, pricing, product launches, marketing, gift vouchers, set-off and termination consequences were not material terms merely because they could affect revenue, facilitate verification, or arise on breach.

5. A connected commercial arrangement was a relationship or understanding forming part of the same overall deal and connected to an offered right. It was distinct from a term of that right. The notice therefore had to state separately the details of the offered right and any connected commercial arrangement.

6. The 12 July notice did not identify connected commercial arrangements separately. They were therefore not available for matching within the contractual scheme. The claimant’s written notice of 25 July expressly matched the material terms. That constituted contractual offer and acceptance, and a further agreement came into existence immediately on expiry of the original agreement, although its precise wording remained to be determined.