Aston Martin MENA Limited v Aston Martin Lagonda Limited

A contractual payment obligation defined by reference to a business plan does not continue by reference to the previous year where no new business plan has been agreed. A court will not imply a term fixing the previous figure unless the strict requirements of necessity, obviousness and commercial coherence are met.

The scope of an express good-faith obligation depends on the language and context of the particular contract. A general obligation to consider the counterparty’s financial interests should not be inferred from a limited obligation concerning transition arrangements.

An indemnity for losses connected with termination did not extend to settlement costs where the dealership was not ultimately terminated. A party validly terminated for non-payment of accrued minimum profit.

The claimant had appointed the defendant as its agent for the distribution of Aston Martin vehicles and related services in the MENA region. The claimant terminated the Agency Agreement on 19 April 2021 after alleging non-payment of Manager Committed Minimum Profit.

The court determined claims for 2021 minimum profit, the effect of termination and the agreed transition period, the defendant’s indemnity counterclaim concerning the HHA dealership, and alleged express or implied duties of good faith during transition. Causation and quantum arising from any transition-period breach had been remitted to arbitration. The central issues were the proper construction of the Agency Agreement and whether the claimant’s termination was valid.

1. MCMP. Under clauses 1.1, 4.5 and 4.7, Manager Committed Minimum Profit was calculated by reference to the Projected AMMENA Net Profit shown for the relevant year in a business plan agreed from time to time. If no business plan was agreed for a year, the defendant was not obliged to pay MCMP for that year, and the previous year’s figure did not carry forward (paras [28]-[40], [62]-[64]).
2. The proposed term fixing MCMP by reference to the last year of the Initial Period failed the requirements for implication. It contradicted the express definition and was neither necessary to give business efficacy nor so obvious as to go without saying (paras [41]-[46], [162]-[184]).
3. Transition period. Clause 2.3 applied to notice under clause 2.2, involving the contractual notice period, and not to immediate termination under clause 6.1. No term requiring continued MCMP or a general duty to cooperate during an ad hoc transition period could be implied (paras [121]-[131], [180]-[184]).
4. Good faith. Clause 3.2 required the defendant honestly and reasonably to pass on the benefit of experience and structures it had developed, so as to assist the claimant to commence and continue operations. It did not extend to preserving a particular pricing structure, profitability or margin, or to a general duty to have regard to the claimant’s financial interests. On the evidence, no breach of clause 3.2 or any assumed implied duty was established (paras [140]-[152], [185]-[221], [244]-[327]).
5. HHA indemnity. Clause 5.2 covered losses connected with assignment or termination of the dealership arrangements. Although “termination” could include non-renewal, the clause did not extend to losses arising from a notice that was withdrawn where the dealership continued. The defendant therefore could not recover the HHA settlement costs (paras [85]-[111]).
6. Termination and disposition. The claimant was entitled to terminate for non-payment of the 2019 MCMP, notwithstanding that the precise sum demanded was disputed and part of the counterclaim succeeded. The claim for 2021 MCMP failed, the HHA settlement counterclaim failed, and the validity of the claimant’s termination was upheld. Interest was left for agreement or consequential determination (paras [329]-[342]).

First-instance decision in the High Court (Commercial Court). No prior appellate decision is stated in the judgment.