"Touchstone: A basalt or slate rock used for assaying precious metals. Before accurate analysis was possible gold and silver was struck against the touchstone to test for quality against a known standard."

Advertising Puff or Downright Lies?

January 28th, 2010

BSkyB claimed that EDS had fraudulently misrepresented their ability to deliver a customer management relationship system (for which Sky was prepared to pay £48m).  The contract had a limitation of liability clause but if Sky could prove fraud then the limitation did not apply.  EDS claimed they had just mistakenly pre-estimated their ability to deliver within the timetable set.  The Court found that not only had they not taken enough care over evaluating the timetable, they knew the timetable could not be met, so their representations were false (deceitful) and the cap on liability fell away.

The truth is it is far better to raise any “difficult” issues during contract negotiations as falling out over them later on can be very costly.  If you realise that more than mere advertising puff has crept into the negotiation when it is clear the situation cannot sustain it, then raise it, as it is far more likely to be resolvable if the parties are still working closely together to achieve a common aim, than when they have fallen out due to failure or delay.  If a particular requirement is very important to you get it down in writing, better to be said than left unsaid and uncertain.  The purpose of a contract is to set out commercial and legal terms but it must be a workable document which each party understands and fairly represents their rights and obligations.

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Financing Football

January 22nd, 2010

Read an interesting item on IP Finance blog:  In the documents submitted for the Manchester United bond issue was a note that it was under investigation by HMRC for payments made in realtion to players “image rights”.  Many top flight clubs have been paying players’ companies (often offshore) for exploitation rights to their “image” (probably includes the name, photographs, voice, activities etc..).  The players would licence these rights to their companies and from there they would be licenced to the club.  As far as the clubs are concerned these are capital payments not wages and taxed as transactions without the requirement for payment of UK income tax and National Insurance contributions.  HMRC see them as tax avoidance schemes.  It is said that the downside for Manchester United could be as much as £5.3 million plus grossed up wage costs going forward.

So what is the legal status of Image Rights?  Denis Bergkamp and David Platt won their argument to entitle them to set up offshore companies to licence image rights to their club (Arsenal) but with new requirements for non-dom disclosure and the need to recoup all the public finance possible this investigation (and possible court action) could have far-reaching affects in football but may also bring to light the reality of rights afforded to sporting personalities regarding their images and answer the question as to whether they fall into the arena of proprietary rights subject to intellectual property protection.  I will be watching this with interest.

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