Sports agent loses commission claim against Formula One team

A marketing company that specialises in introducing sponsors to sports teams has lost a commission claim against a Formula One racing team.

The case involved Sports Mantra India Private Ltd and Force India Formula One Team Ltd (in liquidation, 2019).

The two parties made an agency agreement in 2009 stating that: "If Force India enters into a sponsorship agreement with [a potential sponsor] within twelve months of an introduction effected by the Agent (Sports Mantra) in accordance with this agreement, Force India will pay a commission."

In July 2009, Sports Mantra introduced a potential sponsor. Sponsorship discussions continued until March 2011, after which Mantra had no further role.

In October 2011, Force India’s parent company made an investment agreement, under which the potential sponsor purchased some of its shares. The team's name was changed to incorporate the new investor’s name and its logo appeared on the team's cars.

Mantra alleged that part of the price paid for the shares was to do with sponsorship rights. It was therefore a sponsorship agreement and they were entitled to commission.

It submitted that "Force India" in the agreement should be read as including the parent company, or a term should be implied to that effect.

The court found in favour of Force India, saying that the agency agreement was unambiguous. "Force India" was a defined term and did not refer to the parent company. There was no room for an implied term.

It also held that the investment agreement was not a sponsorship agreement but an agreement to purchase shares in the parent company. While the name change, the logo and the hospitality rights were like sponsorship rights, they were incidents of part ownership of the parent rather than sponsorship rights.

In addition, for commission to be earned, Force India had to enter into a sponsorship agreement within 12 months of the introduction. There was no ambiguity in the words. Mantra had no prospect of success with their claim.

Please contact us if you would like more information about the issues raised in this article or any aspect of agency agreements and contract law.