I am not convinced that the term "material" does leave the door open to spin. In fact, if there is no contract they might find themselves in the "doggie doo"
Here's why.
A contract has a specific legal meaning. A contract is built on specific legal principles (e.g. an intention to form a legal arrangement, consideration, it is enforceable etc.).
In my view, (and probably many others) a material contract is a contract that has or will have a significant effect or impact upon the operations of a company.
TV2 will have enforceable contracts with many suppliers and customers (e.g. the local electricity supplier) it is a contract but it is not a material contract. That is - the supply of electricity is a reasonably mundane business necessity - but it could hardly be called a material contract. But it is a contract nonetheless. Having a contract for the supply of office stationary is much the same example.
A material contract has the potential to effect key aspects or the nature of the company. It will impact the material operations of a company (cash flow - operations - financial arrangements - product or service delivery etc.)
Legally, if TV2 have informed the market that they have a material contract to announce then that contract of which they speak must have been signed and executed prior to the announcement. If it has not, then the management would not be entitled to call it a contract.
A contract is a specific thing - you can't have half a contract or the mere intent to make a contract and tell everyone you have a contract. It is either legally executed or it is not.
If it is not legally executed then it is capable of being called many things (an agreement or a memorandum of understanding perhaps) but it most definitely could not be called a contract.
Hope that makes sense?
Just my view.
TV2 Price at posting:
2.0¢ Sentiment: None Disclosure: Held
