Dispute prevention: Don’t forget to put it in writing!

The recent High Court case of Stonard v Green Shoots Capital UK Limited [2021] EWHC 927 (Ch) serves as a useful reminder of the importance of ensuring that contractual terms are put in writing.

In this case, a consultancy agreement was entered into, partly in writing, between the parties dated 28 November 2014 and signed on 1 December 2014. The agreement was also partly oral, based on a conversation had between the Claimant and the Defendant’s Managing Director on 1 December 2014. In the written agreement, reference was made to a schedule to set out the Claimant’s remuneration on a fee sharing basis, however, the schedule itself did not exist.

A dispute arose between the parties about the precise basis on which the Claimant would be
remunerated, and whether this would be based on a percentage amount or by some other method of calculation.

The Court was required to determine how the Claimant’s remuneration would be calculated. In doing so, the Court asked itself the question of whether the parties were bound by the schedule that had been referred to in the written agreement, which said the schedule and agreement should be read in conjunction with each other, and a copy of the schedule would be made available to the Claimant on her request. However, the first time the Claimant received the schedule from the
Defendant was when their relationship had already started to deteriorate.

Given the schedule was clearly of importance, as its purpose was to stipulate the basis of how much the Claimant was to be paid, the Court found that the parties had not agreed to be bound by a document (the schedule) which was to be created in the future. The Court concluded the parties were not bound by the terms of the schedule, because the document was merely contemplated and had not come into existence. The parties had agreed orally that a particular fee sharing arrangement would be in place, until at least such time as a schedule was created. Based on the oral agreement between the parties, with the fee share being 70:30% in the Claimant’s favour, the Court found the parties were bound by the oral agreement.

This case serves as a useful reminder to parties of the importance of ensuring the contractual terms to agreements are all recorded in writing. It also helpfully serves as a reminder of the principle that, where parties have written the terms of agreement in a contract, generally speaking what the parties say afterwards is irrelevant. However, this is not the case where a contract is made partly by oral agreement and in writing, as seen in this case.

If you are contemplating entering into an agreement, you should always ensure that the terms of agreement are recorded in writing. Whilst at the time of making the agreement, parties may feel their relationship is strong and a dispute will not arise, but sadly this is not often the case, and a
differing of opinion can cause an insurmountable strain on even the strongest of relationships. In order to avoid uncertainty and preserve a commercial relationship, it is prudent to record everything agreed in writing by all parties concerned.

If you require assistance in the drafting of a contractual agreement, or you have any concerns or queries relating to a potential or existing dispute, contact Gemma Newing or a member of our Rooks Rider Solicitors’ Dispute Resolution team for advice and assistance.

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Written by Elizabeth Sam, Conveyancing Paralegal in the Real Estate team at Rooks Rider Solicitors….