MAX MEDIA FZ LLC V NIMBUS MEDIA PTE LTD

[2010] SGHC 30, Singapore High Court, Andrew Ang J, 26 January 2010

Contract - Breach - Whether payment obligations were conditions - Whether repudiatory breach entitling defendant to post-termination damages - Penalty clause

The defendant acquired the right to exhibit advertising material during cricket matches broadcast in the Middle East. In April 2007 the parties entered into an Advertising Sales Agency under which the claimant was appointed exclusive sales agent for three years. The ASA provided for minimum guaranteed sums to be paid to the defendant, secured by a bank guarantee for US$2,475,000 for the first year. The bank guarantee was duly provided, but the claimant was late with payments due in the first year of the contract, and problems were encountered in the provision of the bank guarantee for the second year. In June 2008 the defendant gave notice of termination by reason of the claimant's failure to provide the second bank guarantee and of late payment. It was undisputed that the claimant owed at least US$700,378 to the defendant, but a dispute arose as to the claimant's liability for post-termination damages in the form of sums that would have fallen due but for termination. The court held as follows. (1) The right of the defendant to draw down and retain the full amount of the bank guarantee until outstanding sums were paid was not a penalty clause. (2) The failure of the claimant to pay sums due and to provide the bank guarantee amounted to a repudiation of the ASA, because time was of the essence, so that the defendant was entitled to post-termination damages. Even if the terms could not be classified as conditions but were purely innominate, the claimant was in repudiatory breach by reference to the consequences of its failure to perform.