Oral Agreements are an Invitation to a Dispute

Oral contracts are notoriously fraught with legal difficulty and it is always wise to get a solicitor to accurately record in writing the agreements that you reach. One property company found that out to its cost in a telling High Court case.

The company specialised in promoting its client’s land for development. It claimed to have reached an agreement with a farming family that it would perform that role in respect of their land and that it was thus entitled to 20 per cent of the proceeds if that land were sold with the benefit of a strategic development allocation.

The company generally entered into written promotion agreements with its clients, but had not done so on this occasion. However, it argued that an oral contract had been agreed with the family at a face-to-face meeting and in a series of telephone calls. The agreement was said to have been sealed by a formal shaking of hands, but the family denied that any such contract had been completed.

In rejecting the company’s arguments, the Court found that, although the family may have been enthusiastic and encouraging at the meeting, it had not been established that they had moved beyond considering the proposed deal. Nothing that was said during the subsequent telephone calls, nor in the whole course of dealings, was of sufficient substance to prove that a binding oral contract had been reached.

(Gladman Developments v Sutton)