00s multi-platinum girl group the Pussycat Dolls are lawyering up. The long running game of cat and mouse came to a head last week when Robin Antin issued proceedings against co-founder Nicole Scherzinger at the Los Angeles Superior Court.
According to Antin, Scherzinger is refusing to participate in the group's rescheduled reunion. That sent Antin onto a hot tin roof because in her opinion Scherzinger's refusal was a breach of an agreed Memorandum of Understanding ("MoU").
Under the MoU, the Dolls distributed shares of the tour takings. But they also carved up stakes in a new Pussycat Dolls business venture called PCD Worldwide - 49% to Scherzinger, 51% to Antin. Despite clearly taking naming inspiration from Prestige Worldwide, PCD Worldwide was going to manage the Pussycat Dolls brand in the future along with projects including a "new generation" of S Club Juniors inspired Pussycat Dolls - so, Pussykitten Dolls?
However, COVID killed the cats’ hopes of a 2020 tour. Allegedly Scherzinger refused to reschedule unless her new demands were met - including a revised 75% share of PCD Worldwide because of alternative opportunities that Scherzinger would now have to forego.
Antin, deciding there's more than one way to skin a cat, abandoned negotiations and brought a claim for breach of the MoU, seeking damages resulting from Scherzinger's refusal to perform.
Scherzinger vehemently denied the claims, retorting that Antin was "trying to impose obligations...that simply do not exist".
The Limits of MoUs & HoTs
This one sounds like a classic question of - to what extent do MoUs or Heads of Terms bind? And it's worth recapping the position under English law because it can be nuanced and, if poorly navigated, can lead to the unfortunate position of being bound by terms you didn't think took effect or attempting to rely on terms that aren't actually binding.
Under English law, Heads of Terms (which can refer to any form of MoU, letter of intent, heads of agreement etc.) have their limits. Their agreement does not necessarily equate to contractually binding terms. They can be non-binding, binding or partially binding - it all depends on the extent to which the terms satisfy usual contractual formation principles. Those are of course - an offer, that is accepted, with consideration passing, with an intention to create legal relations and certain terms.
Key points to consider
It's generally on the last two principles where issues around HoT arise. So if you, like Ms Antin, want to convince the court that your HoT do bind then you should keep the following issues in mind:
- Intention to create legal relations: Whilst there is a rebuttable presumption in commercial cases that parties intended to create legal relations it's harder to establish when it comes to HoT because they can be entered at an early stage before parties' intentions are clearly settled. If ambiguous intentions are coupled with unclear or "non-legal" drafting - which high level HoT can be susceptible to - a court might find the requisite intention is not present and the terms aren't binding.
- Agreements in principle: If your HoT record agreements on key matters but leave important points unsettled then a court might find the agreement is only one in principle and its terms are therefore incomplete and unenforceable. Naturally this can be an issue when establishing whether HoT bind.
- "Subject to Contract": Just because a document is marked this way doesn't mean you can't convince a court its terms are binding. Courts look beyond labels to assess the actual content of any principle agreement and can still conclude that the parties intended to be bound. This can occur, for example, if parties begin work before the terms are finalised or if their conduct otherwise supports the conclusion that a binding agreement was reached.
- Uncertain terms: If your HoT are unclear or lack adequate legal precision then even if you intended to create legal relations a court might still conclude they are unenforceable. However, it's not an absolute. Courts can fill in gaps in agreements by implying terms of reasonableness and/or commercial practice.
- Agreements to Agree: The general principle is courts won't enforce agreements to agree if the term is no more than the parties deferring their agreement on a contractual term to a later point (with either party free to agree/disagree). But, agreements to agree can bind if the aspects remaining to be resolved in the future are based on some objective criteria or mechanism which the courts can assess pursuant to the parties' agreement.
- Good Faith: Unlike other jurisdictions there is no general duty to negotiate in good faith under English law. If you want to enforce such a duty then it will need to be an agreed term in the HoT.
Antin’s claims are “a desperate attempt to divert blame for her own failures by trying to impose obligations on Nicole that simply do not exist”.