Agreement? Get it in writing!

Posted: 28th November 2013

HandshakeThe potentially dire consequences of failing to finalise contracts in writing could not be better illustrated than by a case in which project managers failed in a claim for more than $20 million in respect of a prestige development at the Russian equivalent of Oxford Circus.

A group of French companies argued that they had been firmly engaged to manage the project in St Petersburg in return for a £4.5 million success fee and a share of profits. The group had not been paid after the completed development was sold to an international bank for $1.1 billion.

The group issued High Court proceedings against three corporate defendants and one individual, claiming that its contract – which it argued had been agreed orally at various meetings – had been wrongfully repudiated. However, two of the defendants sought summary dismissal of the claim on the basis that no concluded agreement had ever been reached.

The Court found that, whatever words had been spoken at the meetings, they were ‘far too equivocal’ to establish a binding contract. The parties’ subsequent conduct also did not establish the existence of a concluded agreement. The group’s pleading of the purported agreement was ‘obscure and defective’ and parts of its case were ‘completely speculative’.

Ruling that the group’s case, based upon the alleged contract, had no real prospect of success, the Court granted summary judgment to the two defendants who had made the application. The group was given 28 days to show cause why its claim against the other two defendants should not also be dismissed.