In brief - Mel B dispute with Seven Network highlights need to
document variations to an option agreement carefully
The NSW Supreme Court decision in the dispute between Seven
Network and former Spice Girl Mel B highlights the need to document
variations to an option agreement carefully and accurately before a
party proceeds to exercise rights under an option.
Mel B seeks to terminate contract with Seven Network and sign
up with Channel Nine
She was contracted to the Seven Network for a number of its
shows, including "Dancing with the Stars" and "X
The Seven Network purported to exercise its option for a further
one year's provision of services to the X Factor show. Mel B,
through her husband/manager, sought to walk away from the
arrangement with the Seven Network and sign up for a competing show
with the Nine Network.
Dispute over variation of agreement after attempt to terminate
contract with Seven Network
Before the Seven Network exercised its option, there were
significant discussions and email correspondence about variations
to the arrangement.
First, due to a perceived personality conflict with one of the
other judges on Dancing with the Stars, Mel B indicated that she
only wanted to renew her contract as a judge of X Factor.
She then ran into some difficulties with her former spouses over
custody matters, due to her desire to bring her children from
previous marriages to Australia while she performed her amended
duties for the Seven Network.
This led to significant discussions between her husband/manager
and executives of the Seven Network, which led him to try to
terminate the contract.
Court examines correspondence to ascertain intentions of the
Ultimately, the dispute arose due to the rather casual way in
which both parties approached recording the variation (and in the
case of Mel B, the alleged termination) of the agreement.
The court looked at the correspondence (which constituted
exclusively emails, written in a rather casual fashion) and the
surrounding facts and circumstances to evidence the intention of
the parties. The court also looked at conduct of the parties
following the discussions and the language in various emails to
cast light on what the intentions of the parties really were.
Parties did not have common understanding that contract was to
Ultimately the court held that the intention of the parties,
when all the facts and circumstances were weighed up and the
correspondence was looked at, amounted to a variation of the
original agreement and that there was never a common understanding
that the agreement was to come to an end and be terminated.
Certainly the conduct of the executives from the Seven Network
was held by the court to evidence a presumption of the continuance
of the contract.
The Seven Network's search for a replacement judge for Mel B
was a pragmatic one in case the immigration matters surrounding her
children were unable to be resolved. The Seven Network's
conduct was held only (as a matter of commercial reality) to amount
to it looking at continuing the involvement of Mel B in its
programs in a more limited role, rather than losing her services
Implications for property transactions of Seven Network v
You may well ask what this interesting case has to do with
Very often, during property transactions where options have been
granted, delays with authorities, changed circumstances or the
discovery of matters by virtue of the prospective purchaser's
due diligence during the option period mean that the parties have
discussions about varying the option terms.
In situations where such discussions take place and variations
to the option terms are agreed, the case of Mel B and the Seven
Network highlights the following:
The terms must be committed to writing. This is even more so
the case where you are dealing with land, as this is a requirement
Conveyancing Act, as it is a dealing with an interest in
The writing must clearly set out what parts of the original
option arrangement continue, which ones no longer apply or are
varied and how they are varied.
Where there is no consideration (payment or other benefit) for
the changes, then the changes must be set out in a deed to be
Informal, "chatty" communications by way of email are
not really appropriate for documenting changes to a significant
legal relationship, if for no other reason than the fact that they
lack clarity and precision.
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