The Importance of Written Agreements, Even Between Friends

19th November 2015 | Written by Tariq Sayfoo

A recent case  reminds us how important it is to put commercial understandings or arrangements in writing, even where this involves dealings with friends or well-known acquaintances.

Background

In this case, the owner of a jewellery business (Mrs Helme) sought to enter into a joint venture with someone she had known for about 15 years (Mr Maher) and his associate. The intention was to expand Mrs Helme’s existing jewellery business by offering franchises.
The parties agreed certain matters, including setting up a new company to operate the franchise business and that the business would be publicised via newspaper advertisements.
Mr Maher progressed with the joint venture, setting up a new company, registering a domain name for a new website and advertised jewellery for direct sale in a number of newspapers as well as on the website. In so doing he used the business’ trade name “Hidden Gem”, its logo and a photograph of some jewellery (each commissioned by Mrs Helme prior to entering into the venture).
Subsequently the relationship between the parties broke down. Mrs Helme objected that the business’ website was being used to promote only online sales rather than the franchise business – as she believed they had agreed. Mrs Helme alleged that Mr Maher’s actions amounted to passing off and/or copyright infringement.

Findings

The Judge found in favour of Mr Maher and his associate on the basis that:
(i)    Mrs Helme had granted a licence to use the trade name, the logo and photograph for any purpose which they might reasonably consider to be for the advancement of the joint enterprise, even though nothing had been put in writing;

(ii)    the actions taken by Mr Maher fell within the licence granted; and

(iii)    after relations soured, Mrs Helme could not argue retrospectively that Mr Maher should not have used the business’ trade name, logo and/or photograph when performing certain acts.

Comment

It might seem trite but, where there is a distinct absence of any formal agreement, the facts will dictate the findings.
If parties are looking to enter into a commercial arrangement, it is advisable to set out the obligations in a written agreement or, at least, some statement of intent or binding heads of terms would be recommended to provide a flavour of their intentions.
The same applies where a party is granting a licence to another. In this case it was deemed that a licence had been granted to use the business’ trade name, the logo and the photograph. The scope of the said licence was open to interpretation based on the facts and (as interpreted by the judge) it was considered to be quite broad. Had there been a written licence, the chances are the scope of the licence would have been clearer, which from Mrs Helme’s perspective could have provided a level of comfort knowing that she had limited the use of the business’ trade name, logo and photograph.

For more information about  entering into commercial relationships or joint ventures, commercial agreements, binding heads of terms or intellectual property licences, please contact Tariq Sayfoo, a Solicitor in our Corporate and Commercial team in our Brighton & Hove office on 01273 766917 or via e-mail tariqsayfoo@rixandkay.co.uk.