Jul 17, 2015

Business contract is loose? You lose!

Loose business relationships – here’s how it can affect you.

When one thinks of the word contract one automatically things of a written document but that is a fallacy, contract simply means an enforceable agreement which need not be in writing or embodied one particular document as long as there is offer and acceptance principle and nothing to void it.

Electronic communications are becoming more and more prevalent in today’s business world and the courts do take a commercially sensibly view on them. There have been some recent decisions in this area in Golden Ocean Group Limited -v- Salgaocar [2011] EWHC 56 (Comm), agreement for a shipping charter with guarantee and Nicholas Prestige Home -v- Neal [2010] EWCA Civ 1552 concerning a seller contracting with estate agent to sell their home.

We will not bore you with facts but in principle this is what follows from both cases;
1. Where the e-mails amounted to clear offer and acceptance there will be a contract in place.
2. There will not be any restrictions in the evidence that the court will examine in reaching the conclusion of contract
3. The use of a forename at the end of any e-mail will generally be a signature
4. Not reading an email properly will not amount to defence (this is so important commercially) which is similar in principle to signing a document without reading to a previous older case.
5. Unless you wish to become bound, either the subject line should always state Subject to Contract or the signature must have suitable provisions as otherwise negotiations could give rise to a contract.

Solve are specialists in business contracts. We offer advice and drafting, if you think you need our help please call us on 020 3026 6321.