'Breach Of Any Material Term' Means Same As 'Material Breach Of A Term': And Illustration Of Importance Of Including A Term Requiring Compliance With Laws

Soccer Savings (Scotland) Ltd v Scottish Building Society [2013] ScotCS CSOH 51

Soccer Savings Limited (NB not the claimant) established a football affinity savings scheme with Dunfermline Building Society under which SSL undertook with DBS to make introductions to members of the Scottish Football Association in return for commission. At its peak, the scheme had nearly 16,000 account holders and 22 partner football clubs. DBS ran into financial difficulties and was taken over by the Nationwide Building Society, which was perceived by SSL as having less interest in the scheme.

As a result, SSL entered into discussions with the Scottish Building Society to set up an alternative scheme. SBS had concerns about being in dispute with DBS, so SSL set up a new shelf company, the claimant here SSSL, "to operate at arms' length from the existing scheme". On that basis, SSSL and SBS signed an agreement for a new scheme. The agreement between SSSL and SBS provided that either party could terminate if the other committed a breach of any material term of the agreement. There was also provision that the parties would use reasonable endeavours to comply with the Data Protection Act and that they would take appropriate technical and organisational measures against unauthorised or unlawful processing of personal data (clause 13).

It was key to success of the new scheme that a significant proportion of DBS accounts transferred to SBS. SSSL eventually signed contracts with a few clubs, but was disappointed with the lack of new accounts and account transfers. To remedy this, SSL wrote to some DBS scheme account holders enclosing promotional materials and inviting them to transfer their accounts to SBS. This resulted in DBS terminating its agreement with SSL for flagrant breach. Nationwide pointed out that DBS customers had not consented to use of their personal data for the marketing of a similar product by another financial services provider. Fearing that the account holders would be transferred elsewhere, SSSL then persuaded two clubs to write letters to their fans promoting the new scheme, claiming to SBS that it and the football clubs were joint data controllers of fan details.

Eventually SBS also terminated its agreement with SSSL. In the litigation that ensued, two of the points for consideration were when a party could terminate under the clause which permitted termination if the other party committed a breach of any material term of the agreement and...