On Friday 25 October 2019 the Commercial Court (Teare J) handed down judgment in New Balance Athletics Inc v Liverpool FC [2019] EWHC 2837 (Comm). The case is believed to be the first time the English courts have considered the operation of an increasingly prevalent matching provision found in a sports contract which provides for an opportunity to match the “material, measurable and matchable terms” in a third party offer. The principal argument at trial concerned the extent of the obligation of good faith in a relational contract and whether New Balance was in breach of the obligation of good faith as regards a distribution obligation. The secondary issue dealt with whether New Balance had validly exercised the matching provision in respect of a marketing obligation.
As to the principal issue the Court rejected the argument that New Balance was in breach of the obligation of good faith on the facts and on the law. New Balance was not reckless as to whether it could meet the distribution obligation. Further the Court held at §69, “if New Balance honestly believed that it could meet the distribution obligation but its grounds for so believing were unreasonable then I do not consider it would be acting in breach of the duty of good faith.” The Court concluded that: “New Balance matched the distribution obligation in good faith” (at §72). As to the secondary issue the Court held that New Balance was required to match but had not matched the Nike marketing obligation and that accordingly the claim should be dismissed.
Daniel Oudkerk QC and Edward Brown acted for New Balance, instructed by John McElroy and Duran Ross of Hausfeld & Co LLP.
