Velocity Frequent Flyer Pty Ltd v BP Australia Pty Ltd

Velocity Frequent Flyer Pty Ltd and BP Australia Pty Ltd were parties to a contract under which BP was a rewards partner in Velocity's loyalty program. BP alleged that Velocity breached the contract by entering into another agreement that allowed customers of another loyalty program to convert points into Velocity points. BP argued that this arrangement was in breach of an exclusivity clause in their contract and sought to terminate the contract on that basis. Additionally, BP claimed that Velocity was obliged to offer BP the opportunity to enter into a similar contract if the original contract was terminated for breach of a material obligation.

The court was required to determine whether Velocity's actions constituted a breach of the contract sufficient to justify BP's termination of the contract. The court also needed to interpret the contractual provision that required BP to offer Velocity the chance to enter into a similar contract if the original contract was terminated for breach of a material obligation. Specifically, the court had to ascertain whether this obligation applied even if the contract was terminated due to a breach by Velocity.

The court found that Velocity had not breached the contract as BP contended. The court held that the arrangement with the other loyalty program did not contravene the exclusivity clause in the contract. Consequently, BP's termination of the contract was unjustified, and Velocity's claim was dismissed. The court further declared that BP had validly terminated the contract by notice dated 4 May 2017, effective from 1 July 2017. However, it was not found that BP was obliged to offer Velocity the opportunity to enter into a similar contract if the contract was terminated for breach of a material obligation.