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Concession agreements: how to fight the good fight
Court cases involving concessions are rare. This may be because brands are often reluctant to take on the big name department stores in which they are housed. However, a recent High Court judgment involving Harrods shows how Court proceedings can be critical to enabling a brand to survive, or at the very least to obtain leverage in separate negotiations.
In this case, the brand sought (and obtained) an interim injunction preventing Harrods from acting on a notice it had given to the brand to terminate the concession in the store. A side letter to the main contract between Harrods and the brand extended the period of their relationship to 2022, but the side letter contained a provision that either party could terminate the agreement by giving six months’ written notice.
At the end of August 2017, Harrods gave the brand six months’ notice of termination. The brand argued that there was an oral agreement between it and Harrods that the notice would not be acted upon before the expiry of the contract. This was on the basis that the notice provision was merely a requirement of Harrods’ bankers.
The Court was satisfied that there was a serious issue to be tried on the brand’s claim that there was an oral agreement and granted the interim injunction for a period of three months until trial.
As a result of the brand making an application for (and obtaining) an interim injunction before the expiry of the notice period, it was therefore able to preserve the status quo and carry on with its business until trial or further order. In the event, it appears that the case settled shortly after the brand obtained the interim injunction, such that the trial did not need to proceed.
This case shows how making an application for urgent interim injunctive relief can help a brand improve its bargaining position and achieve a more favourable settlement of a dispute than might otherwise be the case if no action is taken.
Rebecca Richardson is a Senior Associate in Fox Williams’ dispute resolution department and a member of the Fashion Law team.