SWIRE & MACLAINE LTD AND ANOTHER v. KENTUCKY FRIED CHICKEN INTERNATIONAL CORPORATION AND ANOTER

SWIRE & MACLAINE LTD AND ANOTHER v. KENTUCKY FRIED CHICKEN INTERNATIONAL CORPORATION AND ANOTER

Clause 8 of the Letter Agreement grants KFC an unqualified, unfettered option to decide whether to renew the Letter Agreement for a further ten years; the phrase 'aforementioned renewals' refers only to the franchisees' individual outlet renewals and not to KFC's master option; the IFAs (Clause 3) do not confer exclusivity preventing KFC from selling or granting franchises to others during the currency or renewal of those IFAs; Plaintiffs have no right to compel renewal.

Citation
SWIRE & MACLAINE LTD AND ANOTHER v. KENTUCKY FRIED CHICKEN INTERNATIONAL CORPORATION AND ANOTER
Parties
1st Plaintiff: Swire & Maclaine Limited; 2nd Plaintiff: Swire Marketing Limited; 1st Defendant: Kentucky Fried Chicken International Corporation; 2nd Defendant: Kentucky Fried Chicken International Holdings, Inc.
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
8 December 1995
Case Number
HCCL81/1995
Procedural Posture
Commercial List Contractual Construction / Trial of Preliminary Issues (judgment on Preliminary Issues)
Outcome
Preliminary issues answered in favour of the 2nd Defendant
Legal Topics
Contract Interpretation, Option to Renew, Exclusive Franchise, Renewal Conditions, Construction of Written Agreements
Source Language
EN
Contract Law Franchise Law Commercial Law Contract Interpretation Option to Renew Exclusive Franchise Renewal Conditions Construction of Written Agreements

Case Brief

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Parties

Swire & Maclaine Limited

1st Plaintiff

Swire Marketing Limited

2nd Plaintiff

Kentucky Fried Chicken International Corporation

1st Defendant

Kentucky Fried Chicken International Holdings, Inc.

2nd Defendant

Procedural Posture

Commercial List Contractual Construction / Trial of Preliminary Issues (judgment on Preliminary Issues)

Legal Issues

  1. 1 Whether Clause 8 of the Letter Agreement obliges the 2nd Defendant not unreasonably to withhold renewal
  2. 2 Whether Clause 8 gives the 2nd Defendant an unqualified option to renew
  3. 3 Whether Plaintiffs or any other person have a right to renew the Letter Agreement

Ratio Decidendi

Clause 8 of the Letter Agreement grants KFC an unqualified, unfettered option to decide whether to renew the Letter Agreement for a further ten years; the phrase 'aforementioned renewals' refers only to the franchisees' individual outlet renewals and not to KFC's master option; the IFAs (Clause 3) do not confer exclusivity preventing KFC from selling or granting franchises to others during the currency or renewal of those IFAs; Plaintiffs have no right to compel renewal.

Court Disposition

Preliminary issues answered in favour of the 2nd Defendant

Orders

  • Costs nisi of the trial of the preliminary issues to the 2nd Defendant