Legal Updates

When a middleman does not act transparently the other party to the agreement may promote a transaction through another

September 17, 2024
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Two parties entered into an agreement for cooperation for the purpose of supplying medical equipment to the Hungarian government. However, after a preliminary conversation, the middleman made it clear to the party that “Hungary became obsolete”. The equipment supplier turned to another middleman and communicated through it with the Hungarian government despite a non-circumvention clause in the agreement with the first middleman which also stated that the middleman should be transparent regarding the factor it wishes to contact.

The Court held that the equipment supplier acted lawfully. When a contract is one concluded between business parties, the language of the contract takes precedence. Here, the two parties are commercial ones, where the non-circumvention clause stated that the middleman must behave transparently with the supplier and must confirm the content of the request and the identity of the party with the supplier or create a relationship between the supplier and that party in order not to overlimit the supplier. Therefore, after the middleman himself informed the supplier that activity in Hungary was not relevant and that the contact with it was not perfected, the supplier was entitled to try and promote the relationship with the Hungarian government through another middleman. Therefore, the supplier did not breach the contract with the middleman.

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