Occasionally, we can be tempted to carry out work without having agreed a price. Sometimes it is a lot of work. We do it on trust, hoping and believing that we will get paid. Some recent cases throw this into doubt. Sometimes a court will award nothing. Even if something is payable it may be significantly less than expected.
The moral of these tales? Don’t rely on oral contracts. Make sure the terms are clearly agreed and set out in writing.
In the case of AMP Advisory and Management Partners AG -v- Force India Formula One Team Limited (in liquidation) [2019] EWHC2426 (Comm) the claimant was unsuccessful in establishing the existence of a contract with the defendant. However, on the basis that the defendant would otherwise have benefitted through the work done by the claimant to broker a commercial deal the court decided to award damages of £150,000. However, since the deal that it had brokered was valued at €74 million, AMP might have felt significantly aggrieved that they were unable to recover the 15% commission that they argued had been orally agreed.
It is notable that some weight was attached to observations in a previous case that:
“the best approach for a judge to adopt in the trial of a commercial case is to place little, if any, reliance on witnesses’ recollections of what was said in meetings and conversations and to base factual findings on inferences drawn from the documentary evidence and known or probable facts.”
The communications relied upon used words such as “happy to pay” and “all agreed” but the court was not satisfied that these amounted to a clear acceptance of the terms to pay.
In the parallel case of Moorgate Capital (Corporate Finance) Limited-v-HIG European Capital Partners NLP [2019] EWHC 1421(Comm), the claimant claimed a £1 million success fee for services it had rendered in relation to the acquisition of a target company. They argued that the fee agreement was made orally by the parties’ principals at a marketing drinks event. Alternatively, the claimant sought a Quantum Meruit award in the same amount. The defendant denied the existence of the alleged oral agreement and indeed then also denied that the claimant had in fact provided valuable services or anything for which payment might be expected!
The court rejected the claimant’s primary case in contract, rejecting the suggestion that a contract with such a high value of that nature would realistically have been formed orally at a social event.
However, in this case the claimant’s secondary claim for a Quantum Meruit payment also failed. The judge stressed that there was no general right to payment for requested services in the absence of a contract. He took the view that the claimant could have contracted with the defendant for the fees. It did not do so but nevertheless proceeded to provide the services in the hope of payment or some other advantage. Therefore, it bore the risk of not being paid and the Quantum Meruit claim was not appropriate.
For further information:
If you are worried about the enforceability of a contract, get in touch.
Comments