Court of Appeal provides reminder on rules for Contract Formation in FIFA Club World Cup Broadcasting Dispute

Background:

The dispute related to the sublicensing of broadcasting rights for the FIFA Club World Cup 2025 in South Korea. FIFA, the owner of these rights, licensed them globally to DAZN. DAZN entered into negotiations with Coupang, a South Korean e-commerce and streaming platform provider, to sub-license the rights on a co-exclusive basis with DAZN. The negotiations occurred over several months beginning in December 2024 primarily via WhatsApp messages, emails and calls. These exchanges culminated in a $1.7 million offer from Coupang on 27 February 2025. DAZN replied on 3 March 2025 confirming acceptance of Coupang’s offer and indicated that it would begin drafting a written agreement. However, DAZN later received a better offer from Coupang’s competitor and took the position that no binding contract had come into effect. In summary, DAZN contended that there was no formal offer and that there was no executed contract.

The High Court held that a contract had been concluded between the parties. Coupang was entitled to specific performance and was granted injunctive relief to restrain DAZN from breaching the contract and entering into a contract with Coupang’s competitor.

The Court of Appeal’s decision:

The Court of Appeal upheld the High Court’s finding that a binding contract had been formed, identifying numerous factors which demonstrated that the parties intended to be legally bound having had regard to the negotiations as a whole:

• Acceptance of the offer: There was clear offer and acceptance via the emails on 27 February 2025 and 3 March 2025.
• Formalisation of Agreement: Moving from informal WhatsApp exchanges to email for the final terms signalled formalisation of each party’s position, as evidenced by the emails on 27 February and 3 March 2025.
• Agreement on essential terms: The parties had agreed essential terms of the contract via email, including terms such as price, exclusivity and rights granted.
• Industry Practice: The Court of Appeal considered evidence that it was commonplace in the industry practice for negotiations to take place through informal channels and for the key terms to be confirmed via email with a contract to follow at a later date.
• Subsequent communications: Following acceptance, the parties acted consistently with having entered into a binding contract. This was evidenced by the language and tone of finality used, despite it not being formally documented in an agreement and the threats of legal action if DAZN reneged.
• Urgency of the deal: The parties were negotiating under time pressure ahead of the FIFA Club World Cup. The parties were considered to have understood their agreement to have been final, rather than conditional on further negotiations.
• Absence of “subject to contract” used: The parties did not qualify their discussions with language reserving their position.

Key takeaways:

The Court of Appeal’s decision reinforces the importance of clear communication in commercial negotiations, particularly in fast-moving industries. The key takeaway is that the absence of an agreement on every issue does not preclude the formation of a contract, if the parties’ words and conduct objectively demonstrate an intention to be bound. A signed agreement is not required to create a legally binding contract. In determining whether a contract has been made, the courts will look beyond formalities and focus on whether the key elements of a contract are present during the entire course of negotiations. Subsequent conduct of the parties can also reveal whether the parties acted as though the agreement was final.

If a party does not intend to be legally bound until a formal written contract is concluded, it should make this explicitly clear to the other party in its communications and conduct for  example by using “subject to contract” wording during negotiations. It is important that teams negotiating deals understand that exchanges via informal channels can give rise to binding obligations. Where possible, all offers and acceptances should be communicated via formal channels and businesses should continue to review ways in which commercial deals are negotiated and approved internally.

This decision is an important reminder for all businesses of the significance of involving legal teams as early as possible to avoid any misunderstandings and to help manage and minimise such contracting risks.

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