In Kigen v NOR Capital [2024] EWHC 3164 (Ch), which was not a franchise case, the High Court was asked to interpret a clause to establish whether a “Success Fee” was payable. The case sets out the principles of contractual interpretation, that apply in the United Kingdom.
The clause required a Success Fee to be paid to Nor Capital if it obtained third party funding for Kigen. The court concluded that the clause was capable of being read in two ways. Carrying out the iterative process of interpretation, the Court first considered the language of the clause by itself, then the clause within the wider agreement, and finally the factual background and commercial implications of the rival interpretations.
Just focusing on the wording of the clause the court favoured the conclusion that no success fee was payable.
Considering the wider agreement, the court concluded that the purpose of the agreement was to find and “secure” external investors and not to seek third party funding from Kigen’s parent company.
Although the facts of this case are unlikely to apply in a franchise context, it does provide a good illustration of the application of established principles of interpretation by an English court.
Link to the Judgment: Kigen v NOR Capital
John Pratt, IDI Country Expert for Franchising in the UK.
