Following lengthy negotiations for the acquisition of cable television rights to the 2016 Olympics, Alice and Bruce sign the following document:
Heads of Agreement – Cable Television Rights
This document records the completion of negotiations of the Heads of an Agreement by virtue of which Alice and Bruce agree to execute a formal contract which gives effect to each of the terms set out below.
- Alice agrees to acquire from Bruce, and Bruce agrees to grant, the exclusive right to exploit the licence that Bruce holds to televise the 2012 Olympics.
- Alice agrees to televise all events at the 2012 Olympics and to provide facilities sufficient to enable appropriate overseas telecasts.
- Alice agrees to pay a sum of $3 million on the signing of the formal contract.
- Alice agrees to pay such sum as Bruce considers to be sufficient in respect of the revenue obtained from:
- (a) approved sponsors; and (b) overseas telecasters.
- Such other terms as may be agreed between the parties, acting in good faith and in a spirit of co-operation appropriate to the event to which the Agreement relates. All such terms to be:
- (a) necessary for the efficacy of the venture; and (b) of a kind normally found in contracts of this type.
Alice decides that the price is too high and refuses to comment on a draft of the formal contract prepared by Bruce’s solicitors. The draft in fact contains a large number of additional terms, including an obligation that Alice spend no less than $2 million in promoting the telecast and obtaining sponsors.
Advise Bruce whether he has any contractual rights against Alice.