LET’S SHAKE ON THAT!

Under English law a contract does not have to be in writing to be enforceable. Obviously an oral contract will be more difficult to prove if there is a dispute, especially as to what was agreed.

But when is a deal concluded with some spit and a handshake enforceable through the courts? Last week, the High Court found in favour of Sports Direct boss, Mike Ashley, in rejecting a claim for £15M alleged to have been promised by Mr Ashley to a corporate finance consultant, in the course of an evening of heavy drinking in a pub in January 2013. The reason? In lawyer speak, because the promise was made in the context of “pub banter” with no intention of creating a legally binding contract. The claimant, Mr Blue, alleged that Mr Ashley offered to pay him £15M if he could, within 3 years, get the share price of Sports Direct to £8. At that time the share was trading at around £4. On 25 February 2014 the share price reached £8, but Mr Ashley did not pay Mr Blue the £15M, instead £1M was paid which Mr Ashley said was for some other work Mr Blue had carried out. Mr Blue sued, and after losing he now has to pay Mr Ashley’s legal bill of £1.5M on top of his own of about £1M.

Some years ago, we acted for a client who frequently referred to a friend as “my partner” when they were stood at the roulette table in a London casino, and when he won £3.2M in the national lottery our client had to fight off a claim for a half share from this “partner”.

It doesn’t of course mean that one cannot make a legally binding contract when one is drunk, or when in a pub. Each case will depend on its own special facts to determine if there is a legally binding agreement. If you have a disagreement that you cannot resolve, come and speak to the experts.

Brendan Pang