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Never mind the estoppel, here’s the implied term

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A harsh outcome does not an implied term make

The former members of English punk band the Sex Pistols brought their unique brand of anarchy to contract law, in a dispute over the construction, effect and enforceability of the band member agreement they entered into in 1998.

The dispute concerned the exploitation of the band’s music for a proposed television series. John Lydon, AKA “Johnny Rotten”, took against the series, and refused to give his consent for the use of the music. The agreement provided that the Sex Pistols’ music could be licensed on the basis of majority (rather than unanimous) approval. The other band members therefore invoked the majority voting provisions of the agreement, but Lydon still resisted.

The other band members brought a claim for declaratory relief to establish Lydon’s obligations under the agreement. Lydon, however, contended that he was not obliged to participate in the grant of the music rights on the true construction and effect of the agreement, and that the claimants were estopped from relying on the majority voting rules, on the basis that the agreement had never been relied upon and any band member could always veto a grant of rights. 

Lydon relied on every type of estoppel known to English law, and a “combination or amalgam” of those types. The court, having reviewed the twenty examples of events that Lydon relied on to establish the assumptions, understandings, representations or acquiescences needed to establish an estoppel, rejected his claim, holding that the claimants could invoke the agreement’s majority voting rules against Lydon.

The court then considered the law on contractual construction and the implication of terms. It held that the agreement contained an implied term that the parties were obliged to give consents and sign and execute all such licences and other documents as required to give effect to the decisions of the relevant majority in relation to the grant of music rights. It was necessary to imply this term to give business efficacy to the contract.

Judgment: Jones v Lydon

Postscript: Lydon has not reacted well to the judgment. In a statement on his website following the judgment, he explained that he was “dumbfounded”: “I am the lead singer and songwriter, front man, image, the lot, you name it. I put it there. How is that not relevant?”


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