The action was brought by a companies called Internet Trading
Clubs (ITC) and UKNet which wanted the court to order that
Freeserve should continue linking to the site of UKNet, set up as a
joint venture between Freeserve and ITC. In terms of a business
plan, ITC were solely responsible for the design and content of the
web site, the operation of which was to be "directed and managed
exclusively by ITC personnel".
However, when the site launched in April 2000, it was
immediately clear that the site did not meet the standard required
in the agreement between ITC and Freeserve and that it was failing
to meet the revenue targets anticipated. By December that year, 80%
of the site was no better than it had been at launch and Freeserve
pulled out of the joint venture agreement.
ITC argued that the fault was that of UKNet, the joint venture
company, not the fault of ITC, and that Freeserve was in breach of
contract by removing the link. These arguments had won ITC a
temporary court order that required Freeserve to maintain the link
to the web site until trial. However, the High Court dismissed both
ITC’s arguments and its temporary order against Freeserve.
The court reasoned that the obligation on ITC personnel to
manage the site, which was contained in the business plan, had
become part of the joint venture agreement, and ITC could not
simply blame UKNet. The court also considered the scale of the
site’s inadequacies so grave as to justify Freeserve’s withdrawal.
The court added that, even if it had agreed with ITC’s arguments,
it would not have forced the parties to cooperate with one
another.
