Aston Martin Lagonda Limited v Premier International Motors Group Co WLL
[2024] EWHC 284 (Comm)
Aston Martin MENA Limited v Aston Martin Lagonda Limited
20 December 2023
[2023] EWHC 3285 (Comm)
High Court
Two Aston Martin companies argued about money. One company (AMMENA) said the other (AML) didn't pay them enough, so they ended their business deal. The judge agreed that AML didn't pay enough, so AMMENA was right to end the deal. The judge also said AML didn't have to pay for something else they claimed, because the contract didn't say they did.
Key Facts
- •Aston Martin MENA Limited (AMMENA) terminated an agency agreement with Aston Martin Lagonda Limited (AML) due to alleged material breaches of payment obligations.
- •The dispute centered around Manager Committed Minimum Profit (MCMP) payments and AML's counterclaim under an indemnity clause.
- •A transition period was agreed after termination, but the parties' obligations during this period were disputed.
- •The case involved the interpretation of several clauses in the Agency Agreement, including clauses relating to MCMP calculation, termination, indemnity, and good faith.
- •The court heard evidence from multiple witnesses representing both parties.
Legal Principles
Contractual interpretation is a unitary exercise, considering the contract as a whole and the factual matrix.
Wood v Capita Insurance Services Limited [2017] UKSC 24
To imply a term, it must be reasonable and equitable, necessary for business efficacy, obvious, clearly expressed, and not contradict express terms.
Marks and Spencer plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd [2015] UKSC 72
A good faith obligation requires acting honestly and not in a way commercially unacceptable to reasonable and honest people.
Yam Seng Ptd Ltd v International Trade Corp Ltd [2013] EWHC 111 QBD
Outcomes
AML was not obliged to pay MCMP for 2021 in the absence of an agreed Business Plan.
The court interpreted the Agency Agreement's clauses to require an agreed Business Plan for MCMP calculation; defaulting to a prior year's figures was not supported by the contract's language or business common sense.
AMMENA validly terminated the Agency Agreement.
AML was in breach of its payment obligations for 2019 MCMP, even considering AML's counterclaim; the notice to remedy the breach and subsequent termination were valid.
AML did not breach its duties of good faith during the Transition Period.
The court narrowly construed the express and implied duties of good faith, finding that AML's actions, while perhaps commercially questionable, did not breach the contract's specific requirements.
AMMENA was not liable to indemnify AML for costs associated with the HHA Settlement.
The court interpreted the indemnity clause to apply only to costs incurred in connection with the actual termination or assignment of a dealership, not merely the sending of a termination notice that was later withdrawn.
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