DAZN v Coupang: WhatsApp, Intent and Enforceable Contracts in the Digital Age

Background

This case involved a sub-license by DAZN to Coupang of the live broadcast rights and the VOD rights in South Korea to the FIFA Club World Cup 2025. The deal was negotiated predominantly through WhatsApp messages and voice calls. When the main terms (including rights, territory, exclusivity and financial consideration) seemed agreed, Coupang sent an email to DAZN summarising them as a “proposal” and closing: “We are very excited to land this new deal with you, and eager to move on to the contractual phase, so that we can start planning on content utilisation.” A week later, DAZN responded: “I am pleased to inform you that we will accept Coupang Play’s offer for the FIFA Club World Cup 2025 we will start contract drafting and hope to share the draft for your agreement soon.” DAZN subsequently received a more lucrative bid from a third party and informed Coupang that it intended to proceed with that bid rather than Coupang’s.

Court Decisions

Upon application by Coupang, the Commercial Court of England and Wales found that a contract had been formed between DAZN and Coupang, ordered specific performance thereof by DAZN, and prevented DAZN from granting a sub-license of the rights to any third party. The Court of Appeal unanimously upheld the decision of the Commercial Court and, in so doing, the Court of Appeal confirmed that:

• It is possible for parties to conclude a binding contract through emails and other informal communications even though a formal document will follow (which may include terms which have yet to be agreed). This will happen where there is a clear offer and acceptance, agreement on essential terms, and an intention to create legal relations.
• In determining whether the parties intended to create legal relations, the courts will make an objective appraisal of the parties’ words and conduct throughout the entire negotiation – both before and after the binding contract is said to be created. In the DAZN case, the court put significant weight on subsequent communications that showed that the parties considered themselves to have made a binding contract – including congratulatory messages exchanged between the parties upon acceptance and understanding responses from a representative of DAZN to the threat of legal action by Coupang. Prompt steps towards implementing the agreement were also considered to indicate an intention to be bound.
• Whilst common practices such as stating “Subject to Contract” may be used to indicate that the parties do not yet intend to create a binding contract, using such a phrase is not determinative on its own and its absence is not conclusive of an intention to create legal relations.
• Where there is some urgency to the performance of the contract, the courts may consider that it is more likely that the parties wish to be bound even in the absence of a formal contract or with further details to be agreed. In the DAZN case, the FIFA Club World Cup was fast approaching and there was only a short window for Coupang to market its rights.
• Specific performance may be an appropriate remedy in disputes relating to the grant of media rights to a major sporting event such as the FIFA Club World Cup.

Practical Takeaways

There may be circumstances where a party may consider that the overall benefit of sealing a rights sale/acquisition may outweigh the legal and operational uncertainty resulting from a failure to agree all contractual (non-essential) terms. However, this should be a deliberate determination made together by the party’s lawyers and their commercial counterparts. This assessment should be revisited throughout the course of a negotiation as circumstances evolve.

• That decision should also take into account that without a formal contract the jurisdiction and governing law for disputes may not be clear cut. One party may be able to leverage a legal system more sympathetic to their situation. In this case the South Korean company Coupang successfully chose to issue proceedings in the English courts.
• Where a party determines that it does not want to conclude a binding contract before a formal document is agreed:
• This intention should be communicated to the other party in clear and express terms at the start of negotiations and, thereafter, in all relevant communications. Common formulations such as “Subject to Contract” may be useful but will not be definitive as the courts will look objectively at the parties’ conduct and communications as a whole. More express wording may be advisable.
• It should avoid communications and actions which suggest that a binding contract has been concluded, such as approving or making press releases, treating the written agreement as a mere formality, or permitting the exercise of any of the relevant rights.
• Lawyers should provide their commercial colleagues with clear guidance on how avoid creating the impression that there is a binding agreement.