Grumpy? Van Morrison?

These columns have been much concerned with issues relating to the termination of contracts. Another example of the pitfalls of termination arose in a recent case that attracted quite a lot of publicity in the tabloid press. Without wishing to detract from the erudite quality of this magazine, perhaps I can comment on it too?

The case featured the singer Van Morrison. He was hired through his company, Exile Productions, by Gary Marlow to appear at The Crown Hotel in Everleigh, Wiltshire, for a guaranteed fee of £20,000. About a month before that performance, Morrison's accountant wrote to Marlow alleging a blatant breach of contract and stating that the singer would not perform.

Morrison took exception to certain interviews and articles conducted by Marlow that portrayed the seminal artist in an unflattering light. In a BBC Radio Ulster interview, the following exchange apparently occurred: The reporter asked, "Has Van Morrison asked you for anything [particularly] demanding?" Marlow said, "Well, of course he does have a reputation doesn't he for … being …" and the reporter interposed "grumpy". Mr Marlow replied, "You said it."

There were also articles in The Guardian and some local papers. The evidence suggested that when these were drawn to Morrison's attention, his response was, "Right, speak to the lawyers."

Mr Morrison's lawyers alleged total disregard of the following obligation: "The promoter shall have the right to use the name and approved pictures and photographs of the artist solely for the promotion of the performance hereunder. The name of Van Morrison shall not be used directly or indirectly to sponsor or be tied in with any commercial product, company or service including any newspaper, magazine, radio or television station … Exile must approve in advance, in writing, all advertising and promotional materials, in any form whatsoever …"

Exile did not approve the interviews.

Marlow's solicitors argued that, since Van Morrison had indicated that he would not appear, there was a wrongful repudiation of the agreement.

The judge interpreted the prohibition on the use of the name of Van Morrison strictly – it was only concerned with pictures and photographs of him. It did not prohibit responding to press enquiries. It did not require Marlow to say to a reporter, "Before I speak to you I must get approval in writing."

So Marlow was not in breach, Exile repudiated the contract and Marlow was entitled to damages. If you get it wrong when you terminate, you become the guilty party.

Van Morrison took exception to certain interviews and articles that portrayed him in an unflattering light

The case then looked at Marlow's recoverable damages – he was claiming a six-figure sum. It seems he couldn't pay his debts as they fell due and the judge found that he had tried "to maximise his claim without regard to the underlying realities".

Having savagely reduced the sum claimed, the judge then had to look at a limitation on liability provision in the context of Unfair Contract Terms Act 1977: "… the promoter [Exile] shall not be liable for any other damages … in excess of the amount payable to the artist."

In applying the "reasonableness" test, the availability of insurance cover if the concert did not go ahead was a decisive factor – even though Marlow did not take out this insurance. The judge was also influenced by the fact that Exile knew very little about the financial standing of Marlow's business and could not have anticipated the losses that he was likely to suffer. Hence, it was reasonable for them to cap liability. In the end, the judge awarded Marlow damages in the amount of the fee.