Kieran Looney v Trafigura Beheer BV (2011)
An early termination provision in the contract between the parties was not subject to any reasonableness requirement.
The claimant (L) claimed damages for breach of contract against the defendant (T). T was a substantial commodities trading company with its principal offices in London and Switzerland. The group had some 1,700 employees in total. L was a training and development coach who offered a performance management system programme. T and L entered into an agreement for L to provide his programme to between 20 and 25 of T's senior managers. The agreement provided for L to receive remuneration of £3 million each year for three years. The agreement permitted T to terminate in the first year on payment of an early termination fee of £1 million. T exercised the early termination provision, paid the early termination fee of £1 million to L and returned the programme materials to L. T took the view that it was not in its interests to continue with the programme because it was becoming repetitive, L was not easy to work with, there were time-consuming disputes about intellectual property rights, the programme was not as well-prepared as T had expected, continuing the programme for a further two years would be very expensive and the majority of the board remained unconvinced of the benefits of the programme. In addition to engaging L, T had purchased proprietary software which included a performance management module and which was used throughout the group under the name TrafiTalent. L contended that the termination was repudiatory; the early termination provision could only be operated in proper and reasonable commercial circumstances; it was not reasonable for T to exercise the termination provision in circumstances where L's ideas and methodology had migrated into TrafiTalent. T contended that the early termination provision was not subject to any reasonableness requirement, and, in any event, there had been no significant migration from L's programme to TrafiTalent.
There was no relevant restriction on T's ability to terminate the contract under the early termination provision. In particular, T was not only entitled to terminate on "proper and reasonable grounds" or in "proper and reasonable commercial circumstances". The provision did not expressly refer to reasonableness whereas other provisions of the agreement did. The provision made commercial sense; there was nothing nonsensical about T being given an unfettered right to terminate if it paid L £1 million. The termination clause was not tied to any breach of contract, Dominion Corporate Trustees Ltd v Debenhams Properties Ltd (2010) EWHC 1193 (Ch), (2010) 23 EG 106 (CS) distinguished. In the circumstances, T was entitled to bring its contract with L to an end pursuant to the early termination provision. In any event, there were reasonable and proper grounds for terminating. T had contracted to buy TrafiTalent before entering into the agreement with L, L's programme had no significant impact on the development of TrafiTalent and TrafiTalent had no bearing on T's decision to terminate its contract with L (see paras 89-95 of judgment).