People make promises every day, and such agreements form the basis of contract law. A contract is, simply, a legally binding agreement and, through years of case law, the courts have established guidelines specifying which agreements are binding, and which are not. In a recent case in the High Court, set out below, emphasises the importance of observing these rules when considering whether or not to bring a contractual claim.
What is a contract?
In order to form a contract - a legally binding agreement - you need to have two key elements: an offer and an acceptance. Analysing these two elements is the first step in establishing whether or not you have entered into a contract.
A common area of dispute is over the terms of the contract. Any acceptance must be on the same terms as the offer that has been made: you cannot be talking at cross-purposes. The terms of an offer are usually relatively clear in written contracts. However, contracts can also be formed orally, which is often when disagreements over the terms arise.
White v Parton and others
In a recent High Court case, the well-known celebrity chef, Marco Pierre White, brought a contractual claim against the Yew Tree Inn, a gourmet pub in Berkshire, and two of its directors, Messrs Parton and Featherman. The dispute concerned whether or not a contract had been made and, if so, on what terms.
Mr White, who has trained chefs such as Gordon Ramsey, alleged that he made an oral contract with the directors on 9 November 2007. He stated that one of the terms of that contract was that he would gain a 38 per cent interest in a new company set up to run the Yew Tree Inn. However, he claimed that he never received these shares, which amount to £174,000.
By contrast, the directors accepted that they had agreed to give Mr White an interest in the new company, but claimed that this was in return for the use of “his name over the door”. They contended that, although the pub had been called “Marco Pierre White’s Yew Tree Inn” until 2010, Mr White had then withdrawn the company’s right to use his name.
The judge, Mr Justice Morgan, dismissed Mr White’s claim. He agreed with Mr White that there was no contract in relation to the use of his name, but that therefore there was no contract in relation to the 38 per cent interest in the company. The judge stated that: “if there was no contract as to an essential part of the plan it cannot seriously be said that there was a contract as to any part of the plan.”
Mr White’s claim was not helped by the fact that he changed his case on numerous occasions. He did not mention the use of his name in his written pleadings, then stated that there was a separate contract in relation to his name in his witness statement, but in cross-examination he appeared to agree with the directors.
This case comes as a warning to those seeking to exaggerate their contractual rights. The judge gave Mr White 14 days to pay the first £240,000 of a likely £500,000 in legal costs, saying, “I think that it is not a bad thing for Mr White to face up to the consequences of his actions.”