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Terms of agreement should be clear between contracting parties

By June 5, 2022December 1st, 2023No Comments

The parties to an agreement should be clear to each other and each of the parties should know precisely what their obligations and responsibilities is. This was held in a judgement delivered by the Small Claims Tribunal in MBR Publications Limited -v- Testa Catering Concepts Limited on 20 May 2022. The Tribunal was presided over by Dr Kevin Camilleri Xuereb.

The plaintiff company claimed a payment of €649 for services rendered to the defendant Company and asked the Tribunal to order payment.

The defendant company pleased that he does not owe any money because the services were not rendered as agreed. The agreement was that the defendant company should have been interviewed by a journalist and the article should have been approved before publication.

The Tribunal pointed out that the claim was with regard to marketing services and advertising. The legal point was on how the agreement between the two was concluded and what was the obligations of both parties. This dispute arose because the plaintiff company, was of the opinion that it carried out services, while the defendant company expected that an interview should have been conducted. The plaintiff company would be successful if it proves that the services were carried out and therefore the defendant company should pay for them. The problem is that there is no written agreement between the two which spells out their respective obligations. The parties exchanged and string of emails, which was summarised by the Tribunal. These were between September and November 2019. Although there was several email exchanges, there was still room for interpretation on what were the contractual responsibilities of the Parties. Each party was not clear with one another and there was no precision of what was expected from them both. The Tribunal quoted from Milton in that reading the emails there was “confusion worse confounded”.  The plaintiff company never informed with precision what services it was offering, and the defendant company never asked for a precise explanation. A written agreement or contract would have spelled out the terms and conditions and may have avoided the dispute.

The establishment of contractual obligations implicates that the parties will act on those obligations. If not, then there is lack of fulfilment of the obligations. The parties would be a debtor and creditor on one another. The plaintiff company in this case is the creditor because it is expecting payment but is also a debtor because it had to fulfil an obligation. The defendant company is in the same position in that it was debtor since it had to pay the plaintiff company, while it was a creditor as it was expecting a service.

From the evidence produced the plaintiff company did publish an advert in its magazine. The dispute is on the interview, where there was to be interviewer, interviewing an official of the defendant company. What took place is the plaintiff company did send a number of questions by email and they were replied to by the defendant company. The plaintiff company published verbatim what was sent by email. The defendant company expected that the replies to the questions would have been corrected. The Tribunal was of the opinion that what was published was not an interview. The Tribunal held that what was done what that the defendant company gave comments to the questions, but these were published. The plaintiff company did not verify whether the replies were correct. The plaintiff company knew that it was in the wrong because it offered an additional advert.

The Tribunal pointed out that the norms of good faith, should prevail in all contractual relationships. This would allow a code of conduct between the contracting parties.

The Tribunal held that although the plaintiff company was not perfect in its obligations, it did fulfil some of its obligations and there was an element of publicity in the magazine it published. The Tribunal also found that the defendant company was at fault, since it took a passive role. It acted when it was asked to pay. As such the Tribunal ordered that the defendant company should pay half the amount of the amount claimed.

The Tribunal moved to order the defendant company to pay the plaintiff company €324.50.

Av Malcolm Mifsud

Partner

Mifsud & Mifsud Advocates

The article is available on MaltaToday