Force India – two cases on agency commission reaching opposite conclusions

Background

Two contrasting cases against Force India Formula One Team Limited turn on agency commission and usefully illustrate how the courts approach commission disputes.  In the first – Sports Mantra v Force India – an agency agreement had been put in place between the parties, but the claim for contractual commission was rejected on proper interpretation of the contract terms, and summary judgment was given against the claimants.[1] In the other – AMP Advisory & Management v Force India – there was held to be no contract under which the claimant would be entitled to commission for introducing a sponsor, but it was still found due to be paid for its introduction services, on the basis of quantum meruit.[2]

Comment

In practice, agency arrangements are often agreed on a handshake or agreed on sketchy terms that may fail to cover all the eventualities. So cases like these are instructive, even if they essentially apply principles of law that are long established: similar situations are surprisingly common, and the outcomes are worth noting where parties who fall out cannot reach an amicable resolution – and indeed the lessons learned from cases like these could help in shaping an acceptable compromise.

Clearly, while the principle of quantum meruit may be helpful in scenarios where time pressures have prevented the conclusion of a formal contract, or where the nature and value of any services provided is under dispute, the doctrine should not be relied on to remunerate an agent at a level commensurate with whatever sum the agent might otherwise be expecting by way of commission. Naturally, then, the preferable position is to have a written agreement in place.

Even then, as demonstrated by the Sports Mantra case, it is critical for the terms on which commission is payable to be clear and to reflect what the parties believe will happen in practice. This is arguably of even greater importance where an agent is providing introduction services, where there can often be grey areas in terms of the extent and value of the agent’s input. Given that the courts have once again shown themselves reluctant to move away from literal interpretations of provisions in agreements when their meaning is clear (even if that results in a bad deal for one of the parties), precise drafting remains of paramount importance – especially for remuneration clauses.

Article written for Entertainment Law Review. To read the full article, click here.