Guidance on interpretation of contractual audit clause

In a case involving Paddington bear merchandise (Pixdene Limited v Paddington and Company Limited [2020] EWHC 2765 (IPEC)), the High Court has provided some useful guidance on the interpretation of a contractual audit clause under which one party was given the right to inspect documentation belonging to the other.

Facts

In March 2013 Paddington and Company Ltd (Paddington) entered into a royalty distribution agreement with Pixdene Ltd (Pixdene) under which Pixdene was entitled to a 10% share of the net worldwide merchandising income from Paddington Bear.