By Kevin Rogers
Wilson Browne Solicitors
OFTEN, we think we know what this means- but what if the other sides does not agree?
A case in September looked at what happens where there is no written contract, and one party alleges that terms were never actually agreed.
AMP Advisory (AMP, a sports marketing agency) & Management Partners AG v Force India Formula One Team Limited (in Liquidation) saw AMP claim a percentage of receipts that arose under a sponsorship agreement between Force India and BWT AG. AMP claimed that either an oral contract had been reached for an unspecified amount of commission, or that a rate of 15 per cent had been agreed. If none of that stuck, then the claim was that Force India would be 'unjustly enriched' if they failed to pay AMP anything for the work that they had done.
What did the court look at?
The court found it unlikely that a contract had been reached. Very limited information had been exchanged. The parties did circulate, later, a draft written contract but Force India had included the words in the agreement 'shall take effect upon signature'. Although Force India had used 'happy to pay' and 'all agreed' in correspondence, AMP kept chasing signature and neither side had agreed to waive the need for the document to be signed. Expert evidence was that there were no such arrangements in this sector (Formula One) whatsoever that would go ahead without a signed contract.
As both claims in contract had failed, the court looked at whether AMP had what is known as a 'quantum meruit' claim, which went forward on the basis that Force India had been 'unjustly enriched' by failing to pay sums to AMP either for the introduction or the work undertaken and brokerage services that led to the conclusion of the BWT contract.
There were four questions:
1. Whether the defendant was actually enriched?
2. Was it at the claimant's expense?
3. Was it unjust?
4. Was there any defence?
The brokerage claim was successful as AMP's 'contribution' to getting the deal done was recognised, but was also limited in nature. The court agreed that it would be unjust not to pay AMP. They had clearly always intended to be paid, would not provide the services for free on a normal basis and, although the emails back from Force India did not satisfy the contractual test, they had been encouraging and AMP had been led to understand that they would indeed be paid.
Basis of payment
The court accepted that amount was 'the price which a reasonable person in the defendant's position would have had to pay for the services'. On the facts the court awarded a sum that reflected the limited nature of the actual work undertaken: £150,000.
Although payment was received by the claimant in this case it is yet another reminder that parties to a contract should get a contract written, signed and exchanged before performing the work that they attach a value to, or indeed before taking on any liability to make payment. These claims are common and I have had many cases over introduction and brokerage fees involving agents, deal brokers and the like. For these types of professionals it can be all too easy, in the heat of the moment, to focus on the deal and the excitement (and time pressures) of bringing people together, but a contract is vital.
Kevin Rogers is Chairman of and Partner in Wilson Browne Solicitors and nationally recognised in the Legal 500. He can be reached at email@example.com and the first chat is always free.