Posted: Tuesday, 1 August 2017 @ 14:09
The recent high profile case between Jeffrey Blue and Mike Ashley has brought a reminder from the High Court on how a contract is formed in English law and why it is so important to record any agreement in writing.
On 26 July 2017 Mr Justice Leggatt gave his judgment in a claim brought by the investment banker Jeffrey Blue against the well known tycoon Mike Ashley, owner of Sports Direct and Newcastle United F.C
Simply put Jeffrey Blue claimed that he had reached an agreement with Mike Ashley that Ashley would pay Blue £15 million if Blue got the Sports Direct share price to £8. The problem was that in spite of the enormity of the alleged promise it was not recorded in writing or indeed referred to in subsequent correspondence more or less until the claim was pursued in vengeance. The other problem was that the alleged discussion took place in a pub, the Horse and Groom in Great Portland Street London, during the evening of 24 January 2013, when neary all present had consumed considerable quantities of beer and were in a boisterous mood.
Having heard all the evidence the judge concluded: although it was possible for contract to be made in English Law which is not in writing or evidenced by writing, no reasonable person present would have thought that the offer to pay Mr Blue £15 million was serious and was intended to create a contract, and no one present including Mr Blue actually thought that it was anything more than a joke. It was merely "banter" with no serious intent. he also repeated a warning made in an earlier case of his that memory evidence is notoriously unreliable and "that the best approach in a commercial case is for the judge 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."
So the moral of the story is that everyone, particularly those involved in commercial enterprise, should take care to record all agreements in writing at the time they are made. If that is not possible they should be recorded in written correspondence as soon as possible with all parties who should be invited to confirm what was agreed. This could just be an exchange of e-mails, which of course should be preserved!.
At the end of the day judges have an unenviable task of piecing together historical threads and will always start off with written evidence. They will always view oral evidence with suspicion, and in commercial cases more so. Businessmen should act accordingly and record their dealings in writing. It is common sense and best practice, and may save a considerable amount of money in the event of a dispute.
Blog by Nigel Musgrove
Nigel has been providing dispute resolution advice as a solicitor for over 35 years. As well as advising SMEs and business owners on disputes he also offers a specialist licensing law service. View profile
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