Out of Home Legal: Can a client refuse to pay because of a delay in posting?

Can an out of home client refuse to pay if there is a delay in posting a billboard or if they allege that a sales rep misrepresented benefits of the advertising?  No.  That’s the lesson of OUTFRONT Media vs Hart and Associates.  Here are the facts

  • In May 2016 the Atlanta Law firm Hart and Associates signed an out of home advertising contract with OUTFRONT Media to run advertising on 15 billboards for one 4 week period followed by 20 billboards for eleven 4-week periods.
  •  The contract included a clause allowing Hart and Associates to cancel with 30 days notice after the sixth advertising period. The contract also included language stating that if OUFTRONT “failed to timely meet its posting requirements, any resulting loss in advertising shall not be deemed a breach or termination of this Contract.”  The remedy for a posting delay was an extension of the contract.
  • Prior to execution of the contract, an OUTFRONT rep told one of Hart’s employees that the billboard advertising would increase the call volume to Hart’s phone number.
  • There was a 17 day delay in the original posting of the billboards.
  • Hart paid for two periods but then stopped paying.  After failed negotiations OUTFRONT filed suit claiming that Hart had received all the billboard advertising it had contracted for but had never paid for the final 10 advertising periods.
  • Hart opposed the suit claiming that:
    1. It exercised its right to cancel when a Hart’s CEO told Outfront at a December meeting that Hart “was inclined to cancel”
    2. OUTFRONT breached the contract by failing to timely post billboards.
    3. Outfront had fraudulently induced Hart to enter the contract by claiming the billboards would cause Hart’s call volume to rise.
  • Superior Court and the Arizona Court of Appeals ruled in favor of OUTFRONT.  The courts found
    1. That the CEO’s statement in a meeting that he “was inclined to cancel” was not a clear, positive an unequivocal termination of the Agreement and that the CEO’s subsequent behavior suggested a motivation to amend rather than terminate the contract.
    2. That the remedy for the 17 day delay in posting the billboards was an extension of the contract, not the termination of the contract.
    3. That the statement by the OUTFRONT sales rep was “puffery” but not fraud.

Insider’s take:  If you give a client the right to terminate the contract make sure that the notice must be in writing to avoid confused who-said-what-at-which-meeting disagreements.  Also make sure that your contracts say that the remedy for a posting delay is an extension of the contract, not termination.  OUTFRONT’s contract did and the courts upheld it.  We’ll address the issue of sales reps promising results in a future post.

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